· On Thursday, 20 July, the US Treasury Department’s Office of Foreign Assets Control (OFAC) fined Texas energy corporation ExxonMobil $2,000,000 for violating “Ukraine-related” sanctions on Russia.
· The OFAC said Exxon’s actions in 2014 constituted a “reckless disregard” for US sanctions.
· The sanctions in question, among other restrictions, effectively barred US entities from financial dealings with Igor Sechin, the CEO of Russian state-owned oil company Rosneft.
· According to the Treasury Department, Sechin is identified on OFAC’s list of “Specially Designated Nationals and Blocked Persons” — which “expressly states” that Americans “are prohibited from the receipt of any contribution or provision of funds, goods, or services from the designated person.”
· According to OFAC, the measures — issued by former President Barack Obama in three 2014 executive orders in response to Russian military presence in Ukraine and Crimea — were designed “to identify individuals and target their assets instead of the companies they manage.”
· Exxon’s violation of sanctions took place under the tenure of its former CEO, and current US Secretary of State, Rex Tillerson.
· In a statement challenging the OFAC fine, Exxon argued that the Obama White House and Treasury Department, “in numerous  briefings and media reports,” specifically stated that US sanctions applied only to Sechin “in his individual capacity and with respect to his personal assets,” and not Roseneft, “a non-blocked entity.”
· The statement went on to explain:
“ExxonMobil 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… that were countersigned on behalf of Rosneft by Sechin in his official capacity…
OFAC’s action is fundamentally unfair and constitutes a denial of due process under the Constitution and violates the Administrative Procedure Act because market participants, including ExxonMobil, did not have notice of the interpretation OFAC now seeks to retroactively enforce.”
· Exxon also filed a lawsuit challenging the Treasury fine on Thursday with the US District Court for the Northern District of Texas, in Dallas.
· Exxon wrote in the legal complaint that the “imposition of [the fine] without fair notice deprive ExxonMobil of due process in violation of the United States Constitution,” and, that the Treasury Department has “retroactively enforce[d] a new interpretation” of the March 2014 executive order that instated sanctions against Russia.
· In recent weeks, the issue of US sanctions against Russia (and their ramifications for US officials and firms,) has been complicated by congressional efforts to pass new sanctions bills targeting Russia.
· Last month, Sen. Mike Crapo (Rhode Island) successfully amended the The Countering Iran’s Destabilizing Activities Act of 2017, codifying existing sanctions against Russian firms and individuals, and constraining the president’s ability to lift them.
· Secretary of State Rex Tillerson, testifying before the House Foreign Affairs Committee the day of the Senate bill’s passage, expressed apprehension about the administration supporting any effort to limit the president’s “flexibility” to lift or revise sanctions “to meet the needs… [of an] evolving diplomatic situation.”
· The Treasury Department’s actions against Exxon come less than two weeks after President Trump’s 9 July meeting with global leaders at the G20 Summit, in Hamburg, Germany, where Russian president Vladimir Putin and Trump held face-to-face talks for the first time.
· Following the summit, Trump tweeted that he and Putin did not discuss US sanctions on Russia, and that their discussions centered on Syria, Russian meddling in US elections, and forming an “impenetrable [international] Cyber Security unit.”
Donald J. Trump
Sanctions were not discussed at my meeting with President Putin. Nothing will be done until the Ukrainian & Syrian problems are solved!
10:31 PM - 9 Jul 2017
Donald J. Trump
I strongly pressed President Putin twice about Russian meddling in our election. He vehemently denied it. I've already given my opinion.....
9:31 PM - 9 Jul 2017
Donald J. Trump
...We negotiated a ceasefire in parts of Syria which will save lives. Now it is time to move forward in working constructively with Russia!
9:37 PM - 9 Jul 2017
Donald J. Trump
Putin & I discussed forming an impenetrable Cyber Security unit so that election hacking, & many other negative things, will be guarded..
9:50 PM - 9 Jul 2017
· Nine days after the summit, the Washington Post’s Karen DeYoung and Philip Rucker reported that Trump had a previously “undisclosed” second meeting with Putin in Germany, wherein Putin was “attended only by his official interpreter.”
· An unnamed “European senior official” present at the meeting told the Post that “there was nothing unusual in a meeting with no aides present,” referencing Trump’s one-on-one meetings with French President Emmanuel Macron in Paris.
· In response to the story of the second exchange between Trump and Putin, then-White House Deputy Press Secretary Sarah Huckabee Sanders told reporters that “They [Putin and Trump] had a brief conversation, and I’m not going to get in the specifics of the conversation.”
· Sanders, addressing more reporters’ questions about the exchange, continued:
“There’s a very different standard that you guys [the press] like to draw between this White House and previous administrations, and you try to create a situation that frankly just wasn’t there… It seems silly that we would disclose a dinner that we had already announced he was participating in… It was part of the official G20 schedule, so to act as if this was some secret is just absolutely absurd.”
· Following the announcement of the previously undisclosed meeting with Putin, Trump tweeted:
Donald J. Trump
Fake News story of secret dinner with Putin is "sick." All G 20 leaders, and spouses, were invited by the Chancellor of Germany. Press knew!
10:53 AM - 19 Jul 2017
· On Friday, 21 July, the day after Exxon’s fine was announced, Russian Foreign Minister Sergey Lavrov gave an interview with NBC’s Keir Simmons, and mentioned the exchange between the two presidents.
· In the interview, Lavrov dismissively said that Trump and Putin might have met more than once, and that the two leaders “might have met even much more than just three times.”
US Sanctions & Exxon’s Russian Energy Interests
· In 2011, Exxon and Rosneft agreed to a joint venture in which the pair would explore for oil in the Black Sea and the Kara Sea in Siberia.
· Exxon’s Rosneft venture was halted in March 2014 when, in response to Russian actions on the Crimean peninsula and in Eastern Ukraine, the Obama administration sanctioned Russia.
“These actions, in close coordination with our EU and international partners, send a strong message to the Russian government that there are consequences for their actions that threaten the sovereignty and territorial integrity of Ukraine. The [US] together with international partners, will continue to stand by the Ukrainian government until Russia abides by its international obligations. The [US] is prepared to take additional steps to impose further political and economic costs.”
· On 17 March 2014, the Obama White House issued two press releases detailing US policy on Russian sanctions: a “Fact Sheet” of Ukraine-related sanctions, and a transcript of a briefing by a “senior administration official on Ukraine.”
· Both releases stated that the administration’s “current focus” was to “identify… cronies of the Russian government and target their personal assets and wealth, rather than the business entities and industries that they may manage or oversee.”
· On 28 April 2014, the Treasury Department stated in a press release that because of Russian activities in Ukraine, “transactions by US persons or within the United States involving the individuals and entities designated [by the administration] are generally prohibited.”
· Further restrictions were also placed on the transfer of oil technologies to Russia, in addition to targeted sanctions aimed at Rosneft, after Russia was accused by a Dutch-led independent investigation of assisting in the downing of a Malaysian airliner over Ukraine in 2014.
· The following month, on 23 May, Sechin, acting in “his official capacity as Rosneft’s president,” signed documents relating to a potential oil plant, in partnership with Exxon, in Far East Russia.
· Nearly two months later, OFAC contacted Exxon regarding a possible violation of US sanctions against Russia.
· Three years later, in April 2017, the Trump administration denied a waiver, originally filed by Exxon in 2015 with the Obama administration, for exemption from sanctions arguing that European nations allow their oil companies more flexibility to fulfill parts of their contractual obligations with Russia.
· Two months later, on 20 June 2017, the Trump administration reinforced existing sanctions against Russia (originally issued under Obama), and issued new sanctions, in response to sustained Russian activities in Ukraine and Crimea.
· The sanctions targeted a host of companies and individuals, most of them Ukrainian, “involved in the ongoing conflict” in Eastern Ukraine.
· The new sanctions followed the passage of the Russian sanctions Senate bill amended by Sen. Crapo, which was passed four days earlier.
· According to House Majority Leader Kevin McCarthy, the House will vote on proposed sanctions on Russia, Iran, and North Korea on Tuesday, 25 July, having establishing tentative support for the legislation with the White House.
· The Whim asked former Russian Energy Minister (2001-2004) Igor Yusufov about the significance of the G20 Putin-Trump exchange, particularly in light of current US sanctions.
· Yusufov said that while he is cautious about defining the first meeting between the two leaders, it is clear that the Americans and the Russians have two decades of cooperation in energy-related matters.
· Yusufov told The Whim:
“I am sure that energy could have been behind many points of the historic meeting agenda…”
· On US sanctions, Yusufov — who now heads a $3 billion energy company called Corporation Energy, the third largest in Russia — said he “would not completely agree, that politically-motivated sanctions really ‘choke’ Russia.”
· Yusufov said he “foresee[s] a new start in which a definite Chinese wall could be built between political motives and pragmatic intensions declared by the Trump Administration.”
· He added:
“Okay, neither Foreign Minister Sergei Lavrov nor Secretary of State Rex Tillerson has mentioned an energy agenda for this meeting. But the gist of the matter is that the close acquaintance and the first talks of the presidents of the two energy superpowers have set a constructive tone for solving of important problems facing Russia and the United States in the field of the economy in general, and in energy in particular.”
· Yusufov also said he “completely agree[s] with Tillerson,” whom he insists “contributed greatly to the success of the Russian-American energy dialogue of early 2000s.”
· In a statement this week, the Treasury Department wrote that “by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the President of Rosneft OAO” — and because Exxon “did not voluntarily self-disclose the violations to OFAC” — the sanctions violations “constitute an egregious case.”
Ken Silverstein and Christopher Putney contributed to this report.