Exxon Mobil files suit against U.S Treasury office

Exxon Mobil files suit against Treasury’s Russia sanctions penalty

ExxonMobil is taking legal action challenging the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) move to penalize the oil company for alleged violations of sanctions against Russia.

In a statement on Thursday, the Treasury said OFAC had assessed a $2,000,000 civil monetary penalty against ExxonMobil for violations of the Ukraine-Related Sanctions Regulations. The sanctions were imposed in 2014 following Russia’s annexation of Crimea.

The OFAC alleges that Exxon in May 2014 violated the Ukraine-related sanctions as its directors dealt in services of an individual whose property and interests in property were blocked, 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.

Sechin was put on the sanctions list in April 2014.

OFAC claims that Exxon violated the sanction for signing documents relating to a potential liquefied natural gas plant in Far East Russia, and High Arctic Completion deeds with Sechin.

OFAC determined that ExxonMobil did not voluntarily self-disclose the violations to OFAC, and that the violations constitute an egregious case.

Exxon: Sechin acted on behalf Rosneft

ExxonMobil, however, is not having it. The oil company claims never to have violated the sanctions, as Sechin never acted in his personal capacity in his dealings with Exxon, but in his official capacity as president of Rosneft.

The company has said that the U.S. sanctions OFAC claims Exxon violated, were imposed against Sechin in his personal capacity, with respect to his personal assets, and not to companies that he managed or represented, in this case Rosneft, the Russian oil company.

To support its case, ExxonMobil has shared a March 17, 2014, White House Fact Sheet which said: “Our current focus is to identify these individuals and target their personal assets, but not companies that they may manage on behalf of the Russian state.”

Exxon also says the position was confirmed on May 16, 2014 by a Treasury Department spokesperson, who said by way of example that BP’s American CEO was permitted to participate in Rosneft board meetings with Sechin so long as the activity related to Rosneft’s business and not Sechin’s personal business.

Exxon said that in July 2014, „despite the White House and Treasury guidance that had already been given, OFAC contacted ExxonMobil to say it was still formulating its own policy. Nearly a year later, in June 2015, OFAC notified ExxonMobil through a pre-penalty notice that it had violated guidance that had not been developed when the alleged offences took place.“

OFAC issued the penalty notice on Thursday, July 20, 2017

“Unfair, retroactive”

“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,” said ExxonMobil’s filing in the U.S. District Court.

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, the filing said.

Offshore Energy Today

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