The Treasury Department fined Exxon Mobil $2 million on Thursday for signing business deals in 2014 with a Russian oil magnate who had been blacklisted under U.S. sanctions. Exxon, which at the time of the sanctions breach was led by now-Secretary of State Rex Tillerson, immediately responded by filing a lawsuit against the Treasury Department.

“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,” Exxon said in a statement, referring to the Office of Foreign Assets Control, the Treasury Department’s sanctions enforcement agency.

According to OFAC, Exxon subsidiaries signed eight legal documents with Igor Sechin, president of Russia’s state-owned energy conglomerate Rosneft. While Rosneft had not been sanctioned as part of the U.S. punishment for Russia’s seizure of Crimea and incursion in Ukraine in 2014, Sechin had been individually blacklisted. That meant U.S. entities were barred from doing business directly with him.

In Exxon’s complaint, filed in a U.S. district court in Texas, the company called the penalty “unlawful.” Exxon argued OFAC’s enforcement of the sanctions, implemented by the Obama Administration in April 2014 is “arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law.” The lawsuit also alleges that the penalty denies Exxon its due process.

In a release announcing the lawsuit against OFAC, Exxon pointed to a White House fact sheet published in 2014. The fact sheet said the purpose of blacklisting individuals was to target “personal assets, but not companies that they may manage on behalf of the Russian state.”

Effectively, the oil giant contends, doing business with Rosneft had never been illegal, and so dealing with Sechin in his capacity of its top representative should be permitted. The Treasury Department disagreed, saying there is no “exception or carve-out for the professional conduct of designated or blocked persons.”

Tillerson was Exxon’s CEO at the time of its alleged sanctions violation, and, during an annual meeting, said he did not support sanctions “unless they are very well implemented.” In January, during Tillerson’s Senate confirmation hearing, his past with Exxon and its extensive dealings in Russia raised concerns that he would be partial in dealing with Russia and its president, Vladimir Putin.

But in his short tenure as America’s top diplomat, Tillerson has worked to keep the sanctions against Russia in place. Earlier this month, in a visit to Ukraine, Tillerson said the sanctions “will remain in place until Moscow reverses the actions that triggered these particular sanctions.”

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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Though he has toyed with a number of candidates with various levels of government experience in choosing the next secretary of state, in the end President-elect Donald Trump selected a man with a résumé more in line with his own. His pick is Rex Tillerson, the CEO of petroleum giant Exxon Mobil. Tillerson, 64, has no experience in public service–he is the model “outsider” that Trump has sought out in assembling his cabinet–and has spent his entire four-decade career with Exxon.

As the nation’s top diplomat, Tillerson will have to reconcile the deep business ties he has formed with Russia. Under Tillerson’s leadership, Exxon agreed to billions of dollars worth of contracts with Rosneft, a Kremlin-backed oil outfit, to drill in Siberia and the Black Sea. Those deals were frozen, however, when the U.S. slapped heavy sanctions on Russia, after it intervened in Ukraine and annexed Crimea in 2014.

Last weekend, as Tillerson emerged as the leading candidate, a number of Republican senators expressed alarm over his extensive business dealings with Russia, whose hacks into the email servers of U.S. political operatives were done with the intention of aiding Trump, the CIA said. On Saturday, Senator John McCain (R-AZ), said Tillerson’s relationship to Russian President Vladimir Putin is “a matter of concern to me.” He added: “Vladimir Putin is a thug, bully and a murderer, and anybody else who describes him as anything else is lying.”

McCain wasn’t the only senator to question Tillerson’s relationship to Russia, and it seems the business magnate is in for a tense Senate confirmation hearing. On Sunday, Senator Marco Rubio (R-FL), tweeted: “Being a ‘friend of Vladimir’ is not an attribute I am hoping for from a #SecretaryOfState.” Putin awarded Tillerson with the Order of Friendship in 2013. While that is not necessarily a rare honor, or even one that indicates an unusual personal relationship with Russia or Putin, it’s Tillerson’s business dealings, specifically the ones that hinge on U.S. sanctions being lifted, that most trouble his skeptics.

But for Trump, those same dealings seem to have attracted him to Tillerson. “He’s much more than a business executive; he’s a world-class player,” Trump said in an interview with Fox News on Sunday. “He knows many of the players, and he knows them well. He does massive deals in Russia — for the company, not for himself.” Tweeting on Tuesday morning, Trump doubled down on his support of Tillerson’s massive network of business deals, which span six continents and 50 countries, including the semiautonomous region of Kurdistan and Qatar:

The thing I like best about Rex Tillerson is that he has vast experience at dealing successfully with all types of foreign governments.

— Donald J. Trump (@realDonaldTrump) December 13, 2016

Tillerson, a native of Wichita Falls, Texas, has been at the fore of Exxon’s shift from being a company that denied climate change to one that cleaned up its practices and even advocated for a carbon tax. He also helped the company reduce its emissions. And in 2012, Tillerson played a key role in allowing openly gay children to join the Boy Scouts, an organization which he was a member of and remains actively engaged in.

Though he beat out Mitt Romney, former New York mayor Rudolph Giuliani, and Senator Bob Corker (R-TN) for the position, Tillerson will likely face tough questioning from the Senate, and will have trouble getting confirmed if three or more Republicans vote to block him. Aside from Rubio and McCain, Senator Lindsey Graham (R-SC) also expressed concern about Trump’s appointee: “I expect the US-Russian relationship to be front and center in his confirmation process,” he said, adding that his Order of Friendship from Putin is “unnerving.”

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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