The Treasury Department fined Secretary of State Rex Tillerson's old company, Exxon Mobil, $2 million on Thursday for "reckless disregard" in violating sanctions against Russia imposed after the invasion of Ukraine, by dealing with Igor Sechin, the president of Russian national oil company Rosneft.
The agency's office of enforcement said the oil giant committed the violations in May 2014, when Tillerson led the company.
The violations occurred "when the presidents of its U.S. subsidiaries dealt in services of an individual whose property and interests in property were blocked, namely, by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the president of Rosneft ... and an individual identified on OF AC's List of Specially Designated Nationals and Blocked Persons."
Treasury said Exxon Mobil demonstrated "reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of" a Russian executive on the Treasury list of sanctioned individuals, which the agency called an "aggravating factor."
The company issued a statement refuting the Office of Foreign Assets Control's assessement that Exxon violated the sanctions in interacting with sanctioned individuals, including Sechin. "OFAC's action is fundamentally unfair," Exxon said.
"Exxon Mobil followed the clear guidance from the White House and Treasury Department when its representatives signed documents involving ongoing oil and gas activities in Russia with Rosneft – a non-blocked entity — that were countersigned on behalf of Rosneft by CEO Igor Sechin in his official representative capacity," the company said.
"Based on the Enforcement Information published today, OFAC is trying to retroactively enforce a new interpretation of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today," the statement continued.
Meanwhile, environmental groups issued statements applauding the Treasury Department's actions, and noting that the violations occurred while Tillerson was in charge.
"The Treasury Department's decision to penalize Exxon Mobil, under former CEO Rex Tillerson's watch, for violating U.S. sanctions is a reminder that massive oil companies are not above the law," said Kelly Mitchell, Greenpeace USA's climate director. "Even with Rex Tillerson leading the State Department, people in this country can hold powerful corporations accountable and must continue to do so.
"This move should embolden United States attorneys general in their investigations into what Exxon Mobil and Rex Tillerson knew about the risks of climate change and the company's potential withholding of that information from the public and shareholders," Mitchell said.
The punishment comes as Tillerson is trying to make a diplomatic breakthrough in the Ukraine crisis.
The now-penalized agreements were signed days before Tillerson told shareholders that he opposed unilateral Ukraine sanctions, and said sanctions only succeed when they are implemented multilaterally.
"We do not support sanctions generally because we don't find them to be effective unless they are very well implemented comprehensively and that's a very hard thing to do," Tillerson said. "I would tell you thus far the situation surrounding abates in Ukraine has had no impact on our ability to conduct our fairs in Russia and there has been no change in anyone's posture towards us."
Tillerson is trying to negotiate an end to the fighting in eastern Ukraine, where Russian-led separatists have been fighting against the government. He appointed a special envoy known for hawkish views about Russia to spearhead talks with Moscow. In the meantime, Tillerson warned lawmakers not to pass legislation mandating the imposition of sanctions on Russia, for fear such a law would interfere with diplomacy.
"I would urge Congress to ensure any legislation allows the president to have the flexibility to adjust sanctions to meet the needs of what is always an evolving diplomatic situation," Tillerson told a House panel in June. "Essentially, we would ask for the flexibility to turn the heat up when we need to, but also to ensure that we have the ability to maintain a constructive dialogue."