Anyone who doubts the power of the bureaucracy ought to look into the quandary confronting ExxonMobil.
The Office of Foreign Assets Control (OFAC) at Treasury recently announced that it would levy a $2 million fine against the company for alleged violations of Ukraine-related sanctions policy while Secretary of State Rex Tillerson served as chairman and CEO of the company.
Treasury’s reason? ExxonMobil engaged in dealings with Igor Sechin. In 2014, President Obama issued an executive order that prohibited American businesses from doing business with the Russian official.
However, a cursory investigation makes it clear that ExxonMobil did not violate the president’s order. In fact, Exxon followed the explicit guidance of Obama Treasury and White House officials when it entered into the negotiations that OFAC cites in its complaint, and which its bureaucrats are now conveniently disregarding.
Here’s why OFAC’s case is preposterous: When the White House added Igor Sechin to the sanctions list, administration officials made it abundantly clear that sanctions applied only to Sechin’s personal assets and personal business dealings, and not to any outside business interests he manages. This is an important distinction, because Exxon’s dealing with Sechin were limited strictly to his role as CEO of Rosneft, an oil company mostly owned by the Russian government. The company did not enter into any agreement with Sechin as a private individual.
“Our current focus is to identify … individuals and target their personal assets, but not companies that they may manage on behalf of the Russian state,” stated a March 17, 2014, fact sheet from the Obama White House. That same clarification was given nearly verbatim in a press briefing the same day.
Tony Blinken, White House deputy national security adviser under President Obama, reinforced that clarification on PBS News Hour on April 28, 2014, stating that Igor Sechin was sanctioned in his “individual capacity” and that Rosneft itself was not designated, thereby “minimizing any impact or consequences on American companies.”
ExxonMobil hewed to the confines of President Obama’s executive order as it continued to deal with one of the world’s largest oil interests. Every single document cited by OFAC in its fine statement is related to Rosneft, not Igor Sechin as an individual.
ExxonMobil responded to the fine with a legal complaint of its own that emphasized that the company simply followed White House and Treasury guidance when it did business with Rosneft, which was not subject to sanctions by the U.S. government at the time.
As the oil giant points out in its complaint against Treasury’s ruling, the company “could not possibly have been on notice of OFAC’s current interpretation of the law.”
That’s because the federal government, at the time of the alleged violations, had not decided itself how to treat Igor Sechin’s role as head of Rosneft. If this is confusing it’s because this isn’t about enforcing an executive order or trying to stem Russian influence in Ukraine. Rather, this fine entails the so-called “deep state” using the tools at its disposal to take shots at President Donald Trump and Secretary of State Rex Tillerson. Even if it means drumming up violations against a law-abiding company with no basis in fact.
Ike Brannon is president of Capital Policy Analytics, a consulting firm in Washington.
