Tillerson Vow to Keep Away From Exxon Runs Into World of Oil
(Bloomberg) -- Exxon Mobil Corp. boasts that it drills for oil and gas on six continents and sells fuel and chemicals in almost every country on the planet. That global reach will pose a wealth of conflict-of-interest questions for former CEO Rex Tillerson now that he’s the U.S. secretary of state.
Tillerson, who spent his entire 41-year career at Exxon, cut his financial ties under an ethics agreement after Donald Trump nominated him, giving up deferred stock rights in return for a $180 million cash payout to an independently managed trust. Tillerson also must recuse himself from decisions “directly and substantially related to” his former employer for two years under the president’s ethics order for his appointees.
“He has severed himself in a pretty final and conclusive way, and I just don’t see him being influenced given the structure of his disengagement,” Stan Brand, an ethics lawyer at Akin Gump Strauss Hauer & Feld, said in an interview.
Yet the $350 billion company is so big, and so deeply entrenched in countries around the world, that Tillerson’s past will inevitably shadow him, critics say. They say that no ethics agreement can protect against Tillerson viewing the world through “oil-coated glasses,” as Senator Ed Markey, a Massachusetts Democrat, said this week.
Democrats like Markey and other critics argue that Tillerson, who won Senate confirmation on Wednesday, should recuse himself from decisions related to Exxon for his whole term.
“Some people didn’t like Rex because he actually got along with leaders of the world,” Trump said, referring to such criticism in remarks Thursday at the annual National Prayer Breakfast. “I said, no, you have to understand that’s a good thing. He’s respected all over the world, and I think he’s going to go down as one of our great, great secretaries.”
Russia, Iraq, Mexico
From day one, Tillerson will find his agenda dominated by issues that will directly affect Exxon’s bottom line. Among the most pressing: Trump’s pledge to build better relations with Russian President Vladimir Putin -- and perhaps to ease financial sanctions imposed in 2014 that froze the company’s $1 billion exploration project in the remote Kara Sea.
Then there’s the company’s investment in Iraq, where the U.S. is working with the military to fight Islamic State terrorism. In Mexico, a brewing trade war could strain relations after Exxon won the right to explore for deepwater oil.
In Asia, Exxon has partnered with Vietnam to explore in the South China Sea, which China claims as its territory. And globally, the veteran oilman will inherit stewardship of the Paris climate-change accord that Trump has threatened to walk away from.
Ten Democratic senators led by Markey wrote Tillerson that it’s hard to conclude that “you could be an objective participant in decisions that would affect the company’s financial interests.” They cited “your four decades of employment at the company, your personal involvement in securing lucrative deals in Russia, and your previous outspoken opposition to policies such as sanctions that would directly impact” Exxon.
Trump administration officials cited Walter Shaub, the head of the Office of Government Ethics, who called Tillerson’s agreement to sever ties with Exxon a “sterling model.” Under the agreement, Tillerson will give up his rights to restricted Exxon shares and stock units, and the trust will pay him according to the same 10-year schedule over which those stock awards would have vested.
That means he wouldn’t see any financial benefit if he took actions that benefited Exxon.
Tillerson said during his Senate confirmation hearing that he would honor the agreement he reached with the Office of Government Ethics but wouldn’t expect to recuse himself from issues concerning the oil and gas industry generally. He vowed to “serve only the interest of the American people” if confirmed.
Within Exxon, Tillerson’s new job is viewed with ambivalence. At company headquarters in Irving, Texas, managers are concerned the public will see Exxon as having special access or privileges, according to a longtime executive who asked not to be identified because he wasn’t authorized to speak publicly.
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