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updated 10:20 AM UTC, Dec 13, 2023

ExxonMobil Launches Legal Challenge Over $2m Fine Levied For Oil Deal With Russia

Unic Press UK: ExxonMobil has launched a legal challenge, contesting a finding of the United States Treasury Department’s Office of Foreign Assets Control (OFAC) that it violated U.S. sanctions against Russia in 2014.

OFAC in a statement ‘Enforcement Information for July 20, 2017’, said: ExxonMobil Corp., Irving, Texas and its U.S. subsidiaries ExxonMobil Development Company and ExxonMobil Oil Corp. (collectively, “ExxonMobil”), were assessed a civil monetary penalty of $2,000,000.00 for violating Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589 (Ukraine-Related Sanctions Regulations) when in May 2014 the oil giant signed eight legal documents on oil and gas projects in Russia with Igor Sechin, the President of Rosneft.

In a swift reaction to the $2,000,000.00 fine, ExxonMobil said in a press statement:

“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.

OFAC alleges that ExxonMobil violated sanctions when it signed certain documents in May 2014 that were countersigned on behalf of Rosneft by Sechin acting in his official capacity as a Rosneft executive. OFAC has acknowledged that White House and Treasury Department officials repeatedly said sanctions involving Sechin applied only to his personal affairs and not to companies that he managed or represented.

A March 17, 2014, White House Fact Sheet 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.”

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.

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 – a non-blocked entity — that were countersigned on behalf of Rosneft by Sechin in his official capacity. At the time of the signing, those activities themselves were not under any direct sanction by the U.S. government.”

 

 

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