Politics

Documents Highlight More Tillerson Ties to Russia

December 18th 2016

By:
Lucy Tiven

President-elect Donald Trump's Secretary of State nominee Rex Tillerson is under scrutiny yet again for his business ties to the Russian government.

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Tillerson, the chief executive of Exxon Mobil, has served as the director of a Bahamas-based US-Russian oil firm since 1998, according to a public corporate registry obtained by the Germany newspaper Süddeutsche Zeitung and reported by the Guardian.

The firm, Exxon Neftegas, is Exxon Mobil's Russian subsidiary.

From the Guardian:

"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."

Tillerson's business relationship with Russia and President Vladimir Putin has already spurred a good deal of eye brow raising, and Sunday's development is adding fuel to the fire.

Tillerson business dealings have raised questions that he may advocate for the lifting of sanctions against Russia, which were imposed in 2014 following its annexation of Crimea. During the company's 2014 meeting, Tillerson said he did not support the use of sanctions in general because they were not effective, CBS reports.

However, the link revealed in the documents is not especially surprising, reporter Dan Murphy argued in a tweet.

Since Tillerson is the chief executive of Exxon Mobil, it makes sense that he directed the company's Russian subsidiary. Tillerson's business dealings with Russia are no secret. They earned him an Order of Friendship award several years ago — the highest honor bestowed upon a foreign civilian by Putin and the Russian government.

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Murphy also argued tweet that characterizing the story as a "leak" is misleading.

The Guardian story itself concedes that "nothing untoward about this directorship," but speculates that the reporting "is likely to raise fresh questions over Tillerson’s relationship with Russia ahead of a potentially stormy confirmation hearing by the US senate foreign relations committee."

The practice major corporations incorporating subsidies in tax-havens like the Bahamas is common, as well.

Hiding money offshore can result in IRS penalties, while some of these practices are arguably unethical but not technically illegal, CNN Money explains. This practice received a lot of attention in April 2016, when over 11.5 million leaked documents known as the Panama Papers exposed these dealings.

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Setting up businesses overseas ultimately comes out of the pocket of those who would benefit from programs funded by corporate taxes: ie. those living in poverty. Tillerson may have to divest his Exxon Mobil holdings or stay out the company's negotiations if he is confirmed for the position, Fortune reports.

You can read the documents and full report on the Guardian.