Exxon Mobil Corp sued the U.S. government on Thursday, blasting as “unlawful” and “capricious” a $2 million fine levied against it for a three-year-old oil joint venture with Russia’s Rosneft.
The Treasury Department on Thursday morning slapped the world’s largest publicly traded oil producer with the fine for “reckless disregard” of U.S. sanctions in dealings with Russia in 2014 when Secretary of State Rex Tillerson was Exxon’s chief executive, Reuters reports.
The lawsuit and the Treasury’s unusually detailed statement on Exxon’s conduct represented an extraordinary confrontation between a major American company and the U.S. government, made all the more striking because Exxon’s former CEO is now in President Donald Trump’s Cabinet.
Exxon took the government to court despite the fact that the fine, the maximum allowed, would have a minor impact on the company, which made $7.84 billion in profit last year.
The fine came after a U.S. review of deals Exxon signed with Rosneft, Russia’s largest oil producer, weeks after Washington imposed sanctions on Moscow for annexing Ukraine’s Crimea region, Reuters reports.
Between May 14 and May 23, 2014, Exxon executives signed eight documents with Igor Sechin, the head of state-run Rosneft, the Treasury’s Office of Foreign Assets Control (OFAC) said in the statement on its website.
According to OFAC, Exxon had “demonstrated reckless disregard for U.S. sanctions requirements” by signing the deals with Sechin just weeks after the United States blacklisted him, OFAC said in the three-page statement.
The Treasury imposed sanctions on Sechin in April 2014 as part of measures to pressure Russia over its intervention in Ukraine, saying Sechin had shown “utter loyalty” to Russian President Vladimir Putin.
The sanctions prohibit U.S. citizens or people in the United States from dealing with those on the blacklist, such as Sechin. Rosneft itself is subject to narrower U.S. sanctions that still allow Americans to deal with the company on some transactions.
Exxon said in a statement that OFAC’s action was “fundamentally unfair,” and sued the U.S. government in Texas in an effort to overturn the decision. The company is based in Irving, Texas.
In its 21-page complaint, Exxon argued that Sechin “was subject to sanctions only in his individual capacity” and that guidance from the Obama administration at the time made clear that the sanctions “applied only to the ‘personal assets’ of the sanctioned individuals and emphasized that the sanctions did not restrict business with the companies those individuals managed.”
Tillerson left Exxon late last year to become secretary of state after 10 years running the company. He is now responsible for U.S. foreign policy, which includes helping make sanctions decisions.
The State Department referred questions about the fine to Exxon and the Treasury. State Department spokeswoman Heather Nauert told reporters on Thursday that the agency was alerted to the fine on Wednesday.
A Treasury spokesman said OFAC engaged with Exxon’s lawyers only, and “did not discuss this case with Secretary Tillerson.”