ExxonMobil fine shows ‘Deep State’ alive and well

In the past year, the term “Deep State” has become part of our lexicon, describing the gradual erosion of constitutional government and the rise of government by the administrative state, which means the unelected. There is no better example than the Treasury Department’s fine of ExxonMobil for violating sanctions on Russia. 

The sanctions in question apply to the CEO of Rosneft, an integrated oil company that is owned by the Russian government. ExxonMobil’s claim that it was dealing with the company and not its CEO might at first seem like hair-splitting, but it is not. A review of the history of the sanctions makes clear that they targeted individuals; in this case, the CEO of Rosneft, Igor Sechin. 

{mosads}The significance of this matter is not whether the public would like stronger sanctions against Russia or whether its dislike of oil companies leads it to applaud the charge and fine. What is at issue is the rule of law and treating all people and all companies fairly under that law. That is a bedrock principle of our constitutional government. 

The sanctions in question were imposed by the Obama administration in 2014. At the time, the White House and Treasury made clear that the focus was on individuals and their assets; not companies. The New York Times, the Wall Street Journal, and Foreign Policy magazine all reported on Obama administration officials stating that the sanctions against Sechin would not affect U.S. companies’ ability to do business with Rosneft. 

In addition, a White House fact sheet very clearly stated on March 17, 2014, “Our current focus is to identify … individuals and target their personal assets, but not companies that they may manage on behalf of the Russian state.” 

Ironically, the CEO of British Petroleum — an American named Bob Dudley — is on the Rosneft board of directors and was given government assurances by the Treasury Department that he could participate in board meetings as long as they involved Rosneft business and not Sechin’s. This double standard behavior is clearly arbitrary and capricious and will have a chilling effect on any American company’s ability to do business anywhere in the future.

For its part, ExxonMobil is fighting back, as it should. The company immediately filed a legal challenge to Treasury’s finding in the Northern District of Texas U.S. District Court. The company stated, “[The Office of Foreign Assets Control] seeks to retroactively enforce a new interpretation of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today.” 

Their legal challenge announcement further detailed a consistent sequence of events in which the Obama administration provided written assurances to the company that they were compliant with Treasury’s sanctions.

Guidance and three years of history should provide a good road map for companies doing business in Russia. Do business with companies; don’t do business with sanctioned individuals. ExxonMobil’s alleged violation is that it signed documents with Sechin as Rosneft CEO. Clearly, the Treasury bureaucrats do not understand how business is conducted. It is common for CEO’s to sign agreements with their foreign counterparts and heads of state. 

Since the documents in question pertained to ExxonMobil and Rosneft business, there should be no question about their being in compliance with the sanctions.  That being the case, it is reasonable to explore other explanations for the action taken by the Treasury Department. One that readily comes to mind is based on Occam’s Razor, which holds that “Among competing hypotheses, the one with the fewest assumptions should be selected.”

In this instance, the most straight forward assumption of motivation is a desire to embarrass President Trump and his secretary of state, the former CEO of ExxonMobil.

The public, members of Congress and the media should take this more seriously than it only being a $2 million fine against one of the largest corporations in the world. The heart of this issue is whether we will fight to remain a nation of laws or give in to becoming an administrative state governed by the unelected, “Deep State” bureaucrats.

William O’Keefe is the founder and president of Solutions Consulting,a firm that specializes in strategic counseling in public policy and management. He formerly served as CEO of the George C. Marshall Institute, a nonprofit that conducted technical assessments of scientific issues with an impact on public policy.

The views expressed by contributors are their own and not the views of The Hill.