The ExxonMobil chief nominated by Donald Trump to be Secretary of State was a director of an offshore company that had close dealings with Russia
Rex Tillerson, the ExxonMobil chieftain nominated by Donald Trump to be Secretary of State, was a director of an offshore company in the Bahamas that is at the heart of Exxon’s close business dealings with Russia.
Tillerson was appointed in 1998 as a director of Exxon Neftegas, an ExxonMobil subsidiary involved in oil and gas operations in Russia, according to leaked documents from the Bahamas corporate registry received by the German newspaper Süddeutsche Zeitung and shared with ICIJ.
Tillerson was named president of Exxon Neftegas in the same year, but his position on the board of the Bahamas-based company has not been previously reported. The Bahamas’ corporate tax rate is zero and it is known for financial secrecy, dubbed by The Economist this year as “the holdout” even among island havens for its reluctance to share tax data.
ExxonMobil said that it incorporates in the Bahamas because of the “simplicity and predictability” of the country’s laws for setting up companies.
“Incorporation of a company in the Bahamas does not decrease ExxonMobil’s tax liability in the country where the entity generates its income,” said Exxon spokesman Scott Silvestri.
The document highlights Tillerson’s business dealings with Russia, which have drawn new attention as he prepares to face confirmation hearings before the U.S. Senate. Under Tillerson’s leadership, Exxon Neftegas managed a major oil and gas project near the island of Sakhalin in Russia’s Far East. After Tillerson was promoted to CEO of ExxonMobil, the oil giant launched a partnership to search for new reserves in the Arctic with Rosneft, a Russian state-owned company.
As Trump prepares for his presidential inauguration, the connections to Russia of people who will likely serve in his administration have come under scrutiny.
In 2013, Vladimir Putin awarded Tillerson with the Order of Friendship, a state decoration for foreigners whose work improves their countries’ relations with Moscow.
"I don’t know what Mr. Tillerson’s relationship with Vladimir Putin was, but I’ll tell you it is a matter of concern to me,” Sen. John McCain, a Republican who will cast an influential vote on Tillerson’s nomination, said last week.
The records also show Tillerson’s direct involvement in Exxon’s extensive network of companies based in the Bahamas. ExxonMobil created at least 67 companies based in the island tax haven, which were involved in operations spanning from Russia to Venezuela to Azerbaijan, according to ICIJ’s documents from the Bahamas corporate registry.
ExxonMobil is headquartered in Irving, Texas.
These far-flung corporate holdings raise questions about the scope of Tillerson’s financial interests. Federal ethics laws require cabinet officials to avoid conflicts of interest, traditionally by divesting their assets and resigning their positions in companies whose value could be affected by their actions in government.
“If he’s a director of corporate entities outside the U.S. including in jurisdictions that are more secretive, it could make it more difficult to ensure that he did divest fully,” said Alexandra Gillies, a specialist on the oil and gas sector governance at the Natural Resource Governance Institute. “It shows that there’s going to have to be a lot of scrutiny on that divestment process.”
Tillerson currently holds an estimated $228 million in Exxon stock, whose value stands to be affected by State Department policies on issues from climate change to sanctions against Russia.
Silvestri, the ExxonMobil spokesman, declined to comment on whether Tillerson would divest from his holdings with ExxonMobil. He noted that Tillerson is retiring from the company, but did not specify whether his retirement as ExxonMobil’s CEO also meant stepping down from board positions at ExxonMobil entities.
The Trump transition team did not respond to ICIJ’s inquiries about whether it was reviewing Tillerson’s offshore directorships and possible financial holdings, or whether it would require him to disclose and divest from these positions.
The document showing Tillerson’s directorship of Exxon Neftegas was among more than 12 million leaked files that were provided anonymously to Süddeutsche Zeitung and then shared with ICIJ, resulting in the Panama Papers and Bahamas Leaks investigations.