ExxonMobil challenges 'fundamentally unfair' $2mn fine deals with Russia’s Rosneft

ExxonMobil challenges 'fundamentally unfair' $2mn fine deals with Russia’s Rosneft
ExxonMobil filed a legal challenge against the US government immediately after the Treasury Department slapped the oil producer with a $2 million fine over its partnership with Russia's Rosneft, which the government believes is in violation of US sanctions.

The American oil giant maintains that at no point has its dealings with Rosneft violated the sanctions imposed by Washington on Russia in the wake of the Ukrainian crisis three years ago.

In the legal challenge filed against the Treasury Department’s Office of Foreign Assets Control (OFAC), ExxonMobil insists that it followed guidance from the Obama administration which OFAC proceeded to retroactively change.

“OFAC seeks 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,” ExxonMobil’s filing in the US District Court, said.

Just prior to filing its complaint, the company based in Irving, Texas was fined $2 million by the US Treasury for signing eight deals with Russian oil giant Rosneft, which allegedly violated Ukraine-related sanctions.

The deals, all signed in May 2014, have been sealed while current Secretary of State Rex Tillerson was the company’s CEO.

According to an OFAC statement, the restrictions were violated by ExxonMobil’s US subsidiaries “by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the President of Rosneft OAO, and an individual identified on OFAC’s List of Specially Designated Nationals and Blocked Persons.”

The American oil giant, however, maintains that Rosneft was not subject to any sanctions at the time the documents were signed.

“Instead, the sole basis of OFAC’s July 20, 2017 penalty notice… is that the documents were signed on behalf of Rosneft by its President and Chairman, Igor Sechin, who at the time was subject to sanctions only in his individual capacity,” the legal complaint said.

Sechin was added on the US sanction list days before the deals were signed for allegedly demonstrating “utter loyalty” to Russia's President Vladimir Putin.

ExxonMobil argues that Obama's executive order and the White House’s guidance emphasized that only personal assets of the sanctioned individuals were subjected to sanctions.

“When Mr. Sechin was designated, the Treasury Department made clear that Rosneft was not designated and that Mr. Sechin was being designated as an 'individual',” the 21-page complaint reads.

Considering the circumstances, ExxonMobil called the Treasury's ruling “fundamentally unfair”, and in violation of due process.

The company also said that it has been dealing with Rosneft since the late ‘80s and that the US government “has historically supported those activities.”

Thursday's legal showdown is heavily influenced by the current political landscape. The deals between ExxonMobil subsidiaries and Rosneft were signed while Tillerson was the company’s CEO. Back then, Tillerson firmly opposed the anti-Russian sanctions.

After leaving ExxonMobil to take up his top government post, Tillerson has made a U-turn on his anti-Russian sanctions stance, and has now adopted the US establishment’s mainstream position.

READ MORE: ExxonMobil boosts Russian oil assets by 450% in 2014, despite sanctions

A Treasury spokesman said OFAC only engaged with ExxonMobil's lawyers, and “did not discuss this case with Secretary Tillerson,” before ruling on the fine, Reuters reported.