Leak reveals Rex Tillerson is director of Bahamas-based US-Russian oil company
Although there is nothing untoward about this directorship, it has not been reported before and is likely to raise fresh questions over Tillerson’s relationship with Russia
Rex Tillerson, the businessman nominated by Donald Trump to be the next US secretary of state, is the long-time director of a US-Russian oil firm based in the tax haven of the Bahamas, leaked documents show.
Tillerson – the chief executive of ExxonMobil – has been a director of the oil company’s Russian subsidiary, Exxon Neftegas, since 1998. His name – RW Tillerson – appears next to other officers who are based at Houston, Texas; Moscow; and Sakhalin, in Russia’s far east.
The leaked 2001 document comes from the corporate registry in the Bahamas. It was one of 1.3 million files given to Germany’s Süddeutsche Zeitung by an anonymous source. The registry is public but details of individual directors are typically incomplete or missing entirely.
We always encourage the people who are making those decisions to consider the very broad collateral damage of who they are really harming
ExxonMobil’s use of offshore regimes – while legal – may also jar with Trump’s avowal to put “America first”.
Tillerson’s critics say he is too close to President Vladimir Putin – and that his appointment could raise potential conflicts of interest.
ExxonMobil is the world’s largest oil company and has for a long time been eyeing Russia’s vast oil and gas deposits. Tillerson currently has Exxon stock worth more than US$200 million.
Since his nomination, Tillerson’s Russia ties have become a source of bipartisan concern. In 2013 Vladimir Putin awarded him the Russian Order of Friendship. Tillerson is close to Igor Sechin, the head of Russian state oil giant 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 750 million 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 US$218 million of stock. His Exxon pension is worth about US$70 million.
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.
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.
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 (6,650m) away from the subsidiary’s official business home in Nassau, the warm semi-tropical capital of the Bahamas. The Bahamas is notorious for secrecy. It has a corporate tax rate of zero.
