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Excerpt: "Rex Tillerson, the businessman nominated by Donald Trump to be the next US secretary of state, was the long-time director of a US-Russian oil firm based in the tax haven of the Bahamas, leaked documents show."

Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston. (photo: Daniel Kramer/Reuters)
Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston. (photo: Daniel Kramer/Reuters)

Leak Reveals Rex Tillerson Was Director of Bahamas-Based US-Russian Oil Firm

By Luke Harding and Hannes Munzinger, Guardian UK

19 December 16


Documents from tax haven will raise more questions over suitability of Donald Trump’s pick for US secretary of state

ex Tillerson, the businessman nominated by Donald Trump to be the next US secretary of state, was the long-time director of a US-Russian oil firm based in the tax haven of the Bahamas, leaked documents show.

Tillerson – the chief executive of ExxonMobil – became a director of the oil company’s Russian subsidiary, Exxon Neftegas, in 1998. His name – RW Tillerson – appears next to other officers who are based at Houston, Texas; Moscow; and Sakhalin, in Russia’s far east.

The leaked 2001 document comes from the corporate registry in the Bahamas. It was one of 1.3m files given to the Germany newspaper Süddeutsche Zeitung by an anonymous source. The registry is public but details of individual directors are typically incomplete or missing entirely.

Though there is nothing untoward about this directorship, it has not been reported before and 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. Exxon said on Sunday that Tillerson was no longer a director after becoming the company’s CEO in 2006.

ExxonMobil’s use of offshore regimes – while legal – may also jar with Trump’s avowal to put “America first”.

Tillerson’s critics say he is too close to the Russian president, Vladimir Putin, and that his appointment could raise potential conflicts of interest.

ExxonMobil is the world’s largest oil company and has for a long time been eyeing Russia’s vast oil and gas deposits. Tillerson currently has Exxon stock worth more than $200m.

Since his nomination, Tillerson’s Russia ties have become a source of bipartisan concern. In 2013, Putin awarded him the Russian Order of Friendship. Tillerson is close to Igor Sechin, the head of Russian state oil company Rosneft and the de facto second most powerful figure inside the Kremlin. A hardliner, Sechin is ex-KGB.

Tillerson’s award followed a 2011 deal between ExxonMobil and Rosneft to explore the Kara Sea, in Russia’s Arctic.

It was put on hold in 2014 after the Obama administration imposed wide-ranging sanctions against Russia. The sanctions were punishment for Putin’s Crimea annexation that spring and Russia’s undercover invasion of eastern Ukraine.

The ban covers the US sharing of sophisticated offshore and shale oil technology. Exxon was supposed to halt its drilling with Rosneft. The firm successfully pleaded with the US Treasury department to delay the ban by a few weeks, with the Kremlin threatening to seize its rig. In this brief window Exxon discovered a major Arctic field with some 750m barrels of new oil.

Tillerson has criticised the US government’s policy on Russia. In 2014 he told Exxon’s annual meeting that “we do not support sanctions”. He added: “We always encourage the people who are making those decisions to consider the very broad collateral damage of who they are really harming.”

It is widely assumed by investors that the new Trump administration will drop sanctions. This would allow the Kara joint venture to resume, boosting Exxon’s share price and yielding potential profits in the tens of billions of dollars. According to company records, Tillerson currently owns $218m of stock. His Exxon pension is worth about $70m.

The Senate foreign relations committee is currently split 10 to 9 between Republicans and Democrats. But several heavyweight Republicans, including John McCain, have raised doubts about Tillerson’s nomination and his lack of experience to be America’s top diplomat after four decades spent exclusively in the oil industry.

Republican senator Marco Rubio – who sits on the committee – said on Tuesday that he had “serious concerns” about giving Tillerson the job. Rubio praised him as a “respected businessman” but said that the next secretary of state “must be someone who views the world with moral clarity [and who] has a clear sense of America’s interests”.

Tillerson is likely to get rid of his Exxon stock if the narrowly Republican-majority Senate confirms his appointment.

Controversy over his links with Russia comes at a time when the topic is politically red hot, after the CIA said earlier this month that Kremlin hackers had stolen emails from the Democratic National Committee and top Democrats in order to help Trump. The president-elect has dismissed the CIA’s assessment, calling it “ridiculous”. The Democratic presidential candidate, Hillary Clinton, says Putin targeted her for reasons of personal revenge.

As well as on oil and gas, the Obama administration has imposed personal sanctions on Putin’s friends, including Sechin. Sechin has said that one of his ambitions is to “ride the roads in the United States on motorcycles with Tillerson”. Currently, Sechin is forbidden from entering the country.

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.

The documents from the Bahamas corporate registry were shared by Süddeutsche Zeitung with the Guardian and the International Consortium of Investigative Journalists in Washington DC. They show that Exxon registered at least 67 companies in the secretive tax haven, covering operations in countries from Russia to Venezuela to Azerbaijan.

Exxon Neftegas features in about 25 leaked offshore documents. The oil firm was incorporated in 1998 by a law firm in Nassau, Higgs & Johnson. Another veteran law firm, Lobosky Management Ltd, subsequently took over as registered agent. The company secretary, Sophia Kishinevsky, signed the paperwork and made annual filings.

Exxon said it had no comment on whether Tillerson should now divest his Exxon holdings and resign from his positions with all Exxon entities. It said the oil firm had incorporated some of its affiliates in the Bahamas because of “simplicity and predictability”.

“It is not done to reduce tax in the country where the company operates,” Exxon said. “Incorporation of a company in the Bahamas does not decrease ExxonMobil’s tax liability in the country where the entity generates its income.”

The firm was one of the largest taxpayers in the world, with an effective global tax rate in 2015 of 34%, it said. Its effective tax rate over the past three years – 2013, 2014, 2015 – was 43%, it added. This compared favourably with other Fortune 100 companies, which “have substantially lower effective tax rates than ExxonMobil”. your social media marketing partner


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0 # Johnny 2016-12-19 11:12
Why are Harding, Munzinger, and RSN trying to whip up hatred among the American masses for Russia? How has Russia harmed the U.S.? The U.S. and NATO are building missile bases on the Russian Border; Russia is not building missile bases on the American border.
+5 # Majikman 2016-12-19 12:28
Johnny, if you consider that our allies, the Saudies etal, want to depose Assad so that they can run their gas pipe lines through Syria to have access to Europe, thereby under cutting Russia, it makes perfect sense. Russia & Syria are allies. Since the US has so f^^ked up in the mid east and failed to depose Assad, next target is Russia itself. It's all about the oil...still.
+2 # librarian1984 2016-12-19 12:48
You speak truth but that is not much appreciated at the moment. Strangely, people seem to resent logic when they are determined to panic.

Russia and China are reaching historic economic agreements (BRICS), which will further make the US irrelevant. We had several chances to build a better relationship with Russia but that's not what the inbred oligarchs want. Maybe our losing superpower status is a good thing.

TPTB want war. The politicians and the msm are their obedient servants. The people seem unwilling to rise up against our oppressors.

Perhaps fear of Trump will encourage the rest of the world to impose sanctions on US and make us end our hostilities. We don't seem willing to do it on our own but it needs to happen.

Imagine if we stopped all but the most meager military spending. As long as we could wrest the money out of the greedy paws of the pols and oligarchs we could fund our schools, feed our children, fix our infrastructure .. invest in our people and the planet.
-1 # revhen 2016-12-19 11:41
Unfortunately, many of us remember dear, sweet Uncle Joe (Stalin)who at the time was murdering some 10 to 20 million of his people and planning to take over Europe if not the rest of the world. I'm not saying Putin is cut out of the same cloth. When the FBI and the CIA agree on ANYTHING, however, you have to listen.
+3 # librarian1984 2016-12-19 12:55
Well .. Stalin is dead, and if you are NOT saying Putin is cut from the same cloth then what is the point? Are you saying there's something in the Russian genetic pool?

Personally, when the FBI and the CIA agree, that worries me .. and it seems quite obvious that the agreement was coerced. The bs we are watching is so monumental in volume that we should be quite concerned with what is going on behind our backs.

There is NOTHING the CIA could say, EVER, that I would trust. No progressive should. There has never been a more evil organization .. and we give them carte blanche. They should be dissolved and I hope Trump does just that.
+2 # Majikman 2016-12-19 14:33
Lib "They should be dissolved and I hope Trump does just that." With an unlimited budget, absolute secrecy and no accountability it's not bloody likely... ya gotta cut off the head of the snake...defund the organization. Trump has no control over that.
0 # librarian1984 2016-12-19 16:06
Don't harsh my buzz, man :-P
+2 # Majikman 2016-12-19 19:22
Mea culpa :D
+3 # Kootenay Coyote 2016-12-19 22:09
‘A merchant has no country.’ - Gore Vidal
+1 # librarian1984 2016-12-20 00:33
Too bad the neoliberals won't be able to use this information -- and the msm will ignore it.

They don't believe in hacks.

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