Tillerson's Exxon violated Russian Federation sanctions, Treasury says

U.S. Secretary of State Rex Tillerson left arrives in the prime minister's official residence to meet Japanese Prime Minister Shinzo Abe in Tokyo Japan Thursday

Exxon's filing in US court said the OFAC action is "fundamentally unfair and constitutes a denial of due process under the Constitution".

Former U.S. Ambassador to Russia Michael McFaul said that while it is a small fine, it is not wholly insignificant.

Treasury stated that "ExxonMobil's senior-most executives knew of Sechin's status as an SDN when they dealt in the blocked services of Sechin".

The violation, which the Treasury Department announced July 20, occurred in May 2014, just weeks after President Barack Obama announced the sanctions against Moscow for its annexation of Ukraine's Crimea Peninsula.

Treasury's enforcement action said that the executive order, its guidance for companies and the administration's public statements "all clearly put ExxonMobil on notice that OFAC would consider executing documents with [people subject to sanctions] to violate the prohibitions in the Ukraine-Related Sanctions Regulations". That same month, Neil Duffin, president of subsidiary Exxon Mobil Development, signed several deals to continue their work on the massive Sakhalin oil and natural gas project on Russia's eastern coast.

The Office of Foreign Assets Control "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", he said.

ExxonMobil claimed that there was confusion over Sechin's "professional and personal capacity" as an agent of the Russian government, but due to the lack of such a distinction in both the executive order and original Ukraine-Related Sanctions, the Treasury determined the fine was justified.

"You could have Sechin standing over the guy's shoulder", said Mortlock, now an attorney at Willkie Farr & Gallagher LLP in Washington.

The fine is minor to ExxonMobil, which made $7.84 billion in profit in 2016. Tillerson said in 2014 that the company did not support sanctions because they are not effective "unless they are very well implemented".

The company has long opposed sanctions on Russian Federation.

The deal came at a time when other oil companies, including BP and Total SA, were clamoring to enter Russian Federation, aiming to tap its vast oil and natural gas reserves. The company was allowed to finish drilling a well in the Russian Arctic in the fall of 2014 but could not produce oil.

With rising tensions between Russian Federation and Ukraine in 2014, western powers, including the US, imposed economic and technological sanctions against Moscow.

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