Anti-Corruption Watchdogs Call for Rex Tillerson’s Recusal From Influencing New Oil Regulation

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Anti-Corruption Watchdogs Call for Rex Tillerson’s Recusal From Influencing New Oil Regulation

February 20, 2018, Washington, D.C. – Publish What You Pay-United States (PWYP-US), EarthRights International (ERI), Oxfam America, and Citizens for Responsibility and Ethics in Washington (CREW) called today for Secretary of State Rex Tillerson to formally recuse himself from any involvement in the drafting of a regulation aimed at curbing corruption in the oil, gas, and mining industries.

The U.S. Securities and Exchange Commission (SEC) is required by law to develop a regulation ensuring that oil, gas, and mining companies listed on U.S. stock exchanges disclose the details of payments made to governments during their operations. By making these payments public, the law helps to fight corruption and prevent conflict in resource-rich countries. As part of the drafting process, SEC is expected to look to the views of the State Department.

Before joining the government, Secretary Tillerson was a visible and vocal opponent of the regulation and the underlying law, Section 1504 of the Dodd Frank Wall Street Reform and Consumer Protection Act. As CEO of ExxonMobil and a senior official at the American Petroleum Institute, Mr. Tillerson lobbied actively and personally against the underlying law, arguing that the transparency measure would harm Exxon’s relations with Russia.

When Secretary Tillerson joined the government, he committed to recuse himself from matters where his impartiality might be questioned. The letter sent today to the State Department’s ethics officials argues that there is substantial reason to do so in this instance.

The State Department has long been a champion of the Section 1504 anti-corruption law and has advocated for its full implementation at the SEC. But Secretary Tillerson’s prior position with ExxonMobil, and his continuing financial relationship with a trust established by the company, give substantial reason to believe that Secretary Tillerson would seek to alter the long standing position of the State Department to serve the interests of his former employer.

Statements

“The request for recusal is a no brainer. Investors worth $10 trillion, US citizens and citizens from 60 countries publicly support the law and strong SEC rules. Secretary Tillerson’s clear conflicts cannot be allowed to undermine much needed U.S. leadership on fighting corruption in the oil, gas and mining industries.” Isabel Munilla, Policy Lead for Extractive Industries Transparency, Oxfam America

“Mr. Tillerson spent years at Exxon leading the company’s efforts to prevent implementation of the landmark payment transparency law aimed at combating corruption in a notoriously corrupt industry. He personally lobbied Congress to try to keep Exxon’s financial arrangements with Vladimir Putin secret. The American people need to know that Mr. Tillerson is serving their interests, and not the interests of his former employer and the foreign governments they deal with.” Marco Simons, General Counsel of EarthRights International, PWYP-US Coalition member

“Secretary Tillerson spent his career in the oil and gas industry and continues to have substantial connections and interests there, so he should recuse himself from rule-making on requirements for oil and gas companies to disclose payments to foreign governments. He appears to have a significant conflict of interest.” Noah Bookbinder, Executive Director, CREW

Background

On February 15, 2018, PWYP-US, ERI, Oxfam America and CREW sent a letter to the State Department Legal Advisor’s Office and the Ethics Office, calling for Secretary Tillerson’s recusal.

In his written ethics commitments, Secretary Tillerson stated that he would recuse himself from certain matters where “a reasonable person with knowledge of the relevant facts would question [his] impartiality in the matter.” We believe that a recusal is appropriate in this case.

Rex Tillerson was employed by Exxon for more than 40 years, including serving as Chairman and CEO up until his nomination to be Secretary of State in December 2016. Until his nomination, Mr. Tillerson also served on the executive committee of the American Petroleum Institute, an industry lobbying group of which Exxon was and remains a prominent member. Both entities have spent nearly a decade aggressively lobbying members of Congress to oppose any payment transparency legislation, including Section 1504 specifically, and publicly spearheaded the opposition to the SEC’s efforts to finalize strong transparency regulations implementing Section 1504.

Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1504, also known as the Cardin-Lugar amendment, requires oil, gas and mining companies listed on U.S. stock exchanges to publicly report, for each project, all payments made to governments for access to natural resources. The SEC was mandated to develop a regulation to implement the law.

In June 2016, the SEC released its regulation implementing the groundbreaking transparency provision. Thirty other countries have implemented laws modeled on the U.S. law.

On February 3, 2017, Congress passed a resolution that voided the SEC rule, using the Congressional Review Act. President Trump signed the resolution on February 14, 2017 as his first act of legislation. The SEC is now preparing to begin a new rulemaking period to develop a regulation implementing the law.

In February, PWYP-US filed a grievance with the Extractive Industries Transparency Initiative (EITI), calling for their removal from their prestigious International Board for their role in undermining the EITI Code of Conduct during Rex Tillerson’s tenure as CEO. By refusing to abide by the EITI rules in the US, and by lobbying to repeal Section 1504 and its regulations, Exxon violated not only its founding principles, Articles of Association, Code of Conduct, and United States governing documents.

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PWYP-US is a civil society coalition dedicated to creating a more open and accountable extractives sector. The coalition played a leading role in securing a strong Section 1504 rule.

EarthRights International (ERI) is a nongovernmental, nonprofit organization that combines the power of law and the power of people in defense of human rights and the environment, which we define as “earth rights.” We specialize in fact-finding, legal actions against perpetrators of earth rights abuses, training grassroots and community leaders, and advocacy campaigns, and have offices in Southeast Asia, the United States and Peru. More information on ERI is available at http://www.earthrights.org.

Oxfam is a global organization working to end the injustice of poverty. We help people build better futures for themselves, hold the powerful accountable, and save lives in disasters. Our mission is to tackle the root causes of poverty and create lasting solutions.

CREW is Citizens for Responsibility and Ethics in Washington (CREW) is a nonprofit legal watchdog group dedicated to holding public officials accountable for their actions.