Leak:Rex Tillerson was director of Bahamas-based US-Russian

[frigidmagi]

the guardian

Since his nomination, Tillerson’s Russia ties have become a source of bipartisan concern. In 2013, Putin awarded him the Russian Order of Friendship. Tillerson is close to Igor Sechin, the head of Russian state oil company Rosneft and the de facto second most powerful figure inside the Kremlin. A hardliner, Sechin is ex-KGB.

Tillerson’s award followed a 2011 deal between ExxonMobil and Rosneft to explore the Kara Sea, in Russia’s Arctic.

It was put on hold in 2014 after the Obama administration imposed wide-ranging sanctions against Russia. The sanctions were punishment for Putin’s Crimea annexation that spring and Russia’s undercover invasion of eastern Ukraine.

The ban covers the US sharing of sophisticated offshore and shale oil technology. Exxon was supposed to halt its drilling with Rosneft. The firm successfully pleaded with the US Treasury department to delay the ban by a few weeks, with the Kremlin threatening to seize its rig. In this brief window Exxon discovered a major Arctic field with some 750m barrels of new oil.

Tillerson has criticised the US government’s policy on Russia. In 2014 he told Exxon’s annual meeting that “we do not support sanctions”. He added: “We always encourage the people who are making those decisions to consider the very broad collateral damage of who they are really harming.”

It is widely assumed by investors that the new Trump administration will drop sanctions. This would allow the Kara joint venture to resume, boosting Exxon’s share price and yielding potential profits in the tens of billions of dollars. According to company records, Tillerson currently owns $218m of stock. His Exxon pension is worth about $70m.

The Senate foreign relations committee is currently split 10 to 9 between Republicans and Democrats. But several heavyweight Republicans, including John McCain, have raised doubts about Tillerson’s nomination and his lack of experience to be America’s top diplomat after four decades spent exclusively in the oil industry.

Republican senator Marco Rubio – who sits on the committee – said on Tuesday that he had “serious concerns” about giving Tillerson the job. Rubio praised him as a “respected businessman” but said that the next secretary of state “must be someone who views the world with moral clarity [and who] has a clear sense of America’s interests”.

Tillerson is likely to get rid of his Exxon stock if the narrowly Republican-majority Senate confirms his appointment.

Controversy over his links with Russia comes at a time when the topic is politically red hot, after the CIA said earlier this month that Kremlin hackers had stolen emails from the Democratic National Committee and top Democrats in order to help Trump. The president-elect has dismissed the CIA’s assessment, calling it “ridiculous”. The Democratic presidential candidate, Hillary Clinton, says Putin targeted her for reasons of personal revenge.

As well as on oil and gas, the Obama administration has imposed personal sanctions on Putin’s friends, including Sechin. Sechin has said that one of his ambitions is to “ride the roads in the United States on motorcycles with Tillerson”. Currently, Sechin is forbidden from entering the country.

This new revelation about Tillerson’s directorship sheds light on the use by multinational companies of contrived offshore structures, now under scrutiny following April’s massive Panama Papers leak.

Exxon Neftegas’s most important oil and gas project is Sakhalin-1. It is located in the sub-Arctic, off the frozen and difficult-to-access north-east coast of Russia’s Sakhalin island. This is 10,700km (6,650 miles) away from the subsidiary’s official business home in Nassau, the semi-tropical capital of the Bahamas. The Bahamas is notorious for secrecy and has a corporate tax rate of zero.

The documents from the Bahamas corporate registry were shared by Süddeutsche Zeitung with the Guardian and the International Consortium of Investigative Journalists in Washington DC. They show that Exxon registered at least 67 companies in the secretive tax haven, covering operations in countries from Russia to Venezuela to Azerbaijan.


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Exxon Neftegas features in about 25 leaked offshore documents. The oil firm was incorporated in 1998 by a law firm in Nassau, Higgs & Johnson. Another veteran law firm, Lobosky Management Ltd, subsequently took over as registered agent. The company secretary, Sophia Kishinevsky, signed the paperwork and made annual filings.

Exxon said it had no comment on whether Tillerson should now divest his Exxon holdings and resign from his positions with all Exxon entities. It said the oil firm had incorporated some of its affiliates in the Bahamas because of “simplicity and predictability”.

“It is not done to reduce tax in the country where the company operates,” Exxon said. “Incorporation of a company in the Bahamas does not decrease ExxonMobil’s tax liability in the country where the entity generates its income.”

The firm was one of the largest taxpayers in the world, with an effective global tax rate in 2015 of 34%, it said. Its effective tax rate over the past three years – 2013, 2014, 2015 – was 43%, it added. This compared favourably with other Fortune 100 companies, which “have substantially lower effective tax rates than ExxonMobil”.

The Senate seems unhappyabout this.