WASHINGTON/HOUSTON (Reuters) – The United States on Thursday admonished Exxon Mobil Corp for “reckless disregard” of U.S. sanctions in dealings with Russia in 2014 when Secretary of State Rex Tillerson was the global oil company’s chief executive, and fined it $2 million.
ExxonMobil said the decision was “fundamentally unfair,” and sued the U.S. government in Texas in an effort to overturn the decision.
The fine came after a U.S. review of deals Exxon signed with top Russian oil producer Rosneft weeks after Washington imposed sanctions on Moscow for annexing Ukraine’s Crimea region.
Between May 14 and May 23, 2014, top U.S.-based ExxonMobil executives signed eight documents with Igor Sechin, the head of state-run Rosneft, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) said in a statement on its website.
ExxonMobil had “demonstrated reckless disregard for U.S. sanctions requirements” by signing the deals with Sechin just weeks after the United States blacklisted him, OFAC said in an unusually lengthy three-page statement laying out its reasoning. (For the Treasury statement, see: bit.ly/2vnvQf2)
The Treasury announced sanctions on Sechin in April 2014 as part of measures to pressure Russia over its intervention in Ukraine, saying Sechin had shown “utter loyalty” to Russia’s President Vladimir Putin.
The sanctions prohibit U.S. citizens or those located in the United States from dealing with those on the blacklist, such as Sechin. Rosneft itself is subject to narrower U.S. sanctions that still allow Americans to deal with the company on some transactions.
Tillerson left ExxonMobil to become secretary of state after 10 years at the helm of the global energy power. He is now responsible for U.S. foreign policy, which includes helping to make sanctions decisions.
The State Department referred questions about the fine to ExxonMobil and the Treasury. State Department spokeswoman Heather Nauert told reporters on Thursday that the agency was alerted to the fine on Wednesday.
Though the State Department plays a part in formulating broad sanctions policy, former U.S. officials and sanctions experts said it was unlikely the agency had a role in deciding the fine announced on Thursday.
ExxonMobil had fully complied with guidance from Democratic former President Barack Obama’s administration that ongoing oil and gas business activities with Rosneft were permitted, Exxon spokesman Alan Jeffers said in a statement.
The Treasury Department “is trying to retroactively enforce a new interpretation of an executive order” inconsistent with its prior guidance, Jeffers said.
“OFAC’s action is fundamentally unfair,” he said.