We are supposed to dislike the NYT’s for many reasons, but there are times when researchers do good work even if some truths hurt. Such is the case with Rex Tillerson and Igor Sechin.
MOSCOW — It’s June 2014. War is underway in eastern Ukraine, and Russia has recently annexed Crimea. Western countries are introducing sanctions against Russian companies and the people in President Vladimir V. Putin’s inner circle. It seems that Russia will soon be completely isolated from the rest of the world.
But the 21st World Petroleum Congress is taking place in Moscow. The atmosphere at the Crocus Expo International Exhibition Center, where the congress is being held, is decidedly nonconfrontational. On a stage, two men in suits hold an amicable conversation, addressing each other as “my friend.” The men are captains of the global petroleum industry: Rex W. Tillerson, the chief executive of Exxon Mobil, and Igor I. Sechin, the head of Rosneft, Russia’s state oil company, and one of Mr. Putin’s longtime allies.
Mr. Sechin is not just the chief executive of Rosneft, he is also one of the heroes of contemporary Russian politics. He is believed to have served as a K.G.B. agent in Africa and had no real experience in the business world until he was over 40. He didn’t come to lead the state oil company because of his business acumen; he earned his position through his loyalty to Mr. Putin.
After the collapse of the Soviet Union, Mr. Sechin aligned himself with Mr. Putin, another former K.G.B. officer, as he began consolidating power in post-Soviet politics. Everywhere Mr. Putin went, Mr. Sechin was by his side as a trusted aide and adviser.
In 2003, Russian authorities arrested Mikhail Khodorkovsky, the owner of Yukos, a huge oil company. At the time, Mr. Sechin was working as Mr. Putin’s deputy chief of staff, and though he had no formal judicial or investigatory authority, Mr. Khodorkovsky accused him of initiating his arrest — and the campaign that followed to nationalize Yukos. It’s impossible to know, but it seems likely. Following Mr. Khodorkovsky’s arrest, Rosneft absorbed Yukos’s assets. In 2004, Mr. Sechin was appointed to head Rosneft’s board.
Mr. Sechin isn’t just a businessman, though. He’s an influential political figure and a crucial Putin ally who has demonstrated his power. The arrest last month of Aleksei Ulyukayev, the minister of economic development, on charges of bribery was widely viewed as an act of revenge by Mr. Sechin. With the arrest, the first of an active government minister in post-Soviet Russia, he again confirmed his image as the most sinister man in the president’s inner circle.
Earlier this year, Mr. Sechin’s expansion was so aggressive that it seemed plausible that Mr. Putin himself would get tired of him, and would try to rid himself of such an odious comrade in arms.
Now Mr. Sechin has nothing to fear. A gift has arrived from across the ocean. This man, whose international experience up to this point has been limited to his friendship with Hugo Chávez, the deceased president of Venezuela, has an exclusive international trump card that even Foreign Minister Sergey V. Lavrov lacks. More here.
Amid controversy over the extent of Kremlin penetration into the American electoral system (detailed last week in Investigative Bulletin), Donald Trump has doubled down on the Russian connection with his nomination of ExxonMobil CEO Rex Tillerson to become the next secretary of state.
Mr. Trump has been signaling a new Russia tilt for months and Mr. Tillerson seems an excellent candidate to carry it out. Whether this is sound policy or sheer folly remains to be seen, but from an anti-corruption perspective—taking Mr. Trump at his pledge to “drain the swamp”—the Tillerson nomination is strange indeed.
Mr. Tillerson is up to his eyeballs in Russian oil deals with Vladimir Putin, whose kleptocratic regime makes the Washington swamp look like the pool at Mar-a-Lago. Last week, U.S. intelligence leaked a new estimate of Mr. Putin’s personal wealth: $85 billion.
His Kremlin salary: $144,444.
You lie down with dogs, you get up with fleas. Mr. Tillerson’s role in the Rosneft oil deal is a case in point. Rosneft is a Russian energy giant closely allied with Mr. Putin. Mr. Tillerson negotiated a deal with Rosneft giving ExxonMobil access to vast Russian oil reserves in the Arctic and Black Sea. ExxonMobil pledged millions to provide the technology and expertise for exploration and drilling. In return, it received a one-third stake in the venture. Successful exploitation of the oil fields could bring more than $100 billion into ExxonMobil coffers.
Rosneft was formerly known as the Yukos Oil Company, Russia’s largest energy enterprise. In 2003, Mr. Putin decided he wanted it.
Yukos’s founder, the oligarch Mikhail Khodorkovsky, was becoming a threat to Mr. Putin. He jailed Mr. Khodorkovsky on bogus fraud charges, seized Yukos assets and bankrupted the company. Mr. Khodorkovsky served ten years behind bars. Other Yukos officials were jailed or fled the country. American and Russian investors were robbed. The Permanent Court of Arbitration at The Hague awarded investors $50 billion in damages, but the decision was later overturned.
Some might say Mr. Khodorkovsky got off easy. Here’s a list of Putin critics who ended up dead.
Yukos was raped and pillaged and its assets were transferred to Rosneft. Control of the company was given to a key Putin lieutenant, Igor Sechin. Like Mr. Putin, Mr. Sechin is a former KGB agent. Mr. Sechin is a leading figure in the siloviki—literally, “strongmen”—faction of former law enforcement, military and intelligence figures around Mr. Putin.
In 2012, Mr. Tillerson struck his deal with Rosneft. “Today really is a historic day,” Mr. Tillerson said at the signing ceremony.
Former Yukos officials and shareholders felt differently. When the Mafia or a drug cartel washes its ill-gotten gains into a new, “clean” financial entity, that’s called money laundering. “Through today’s agreement with Exxon,” the Committee for Russian Economic Freedom declared, “Rosneft has finally managed to give an aura of legitimacy to the theft of assets stolen from Yukos.” The former CFO of Yukos wrote in the Moscow Times that “Exxon is investing with a company whose largest assets were stolen from Yukos shareholders by the Russian government.”
Mr. Tillerson has a long history with Mr. Sechin. In 1998, Mr. Tillerson ran ExxonMobil’s oil and gas enterprise on Sakahalin Island, off the coast of Siberia. Mr. Sechin took over the Russian side of the project in 2004. Mr. Tillerson’s ExxonMobil predecessor as CEO tried to buy into Yukos but was driven off by the jailing of Mr. Khodorkovsky.
Mr. Tillerson persisted. The Rosneft deal giving ExxonMobil access to Arctic and Black Sea oil fields elevated the relationship between Mr. Tillerson and the Kremlin leadership. Mr. Tillerson calls Mr. Sechin a “friend.” Mr. Sechin says he wants to come to the United States to ride motorcycle with Mr. Tillerson. In 2013, Mr. Putin awarded Mr. Tillerson the Russian Order of Friendship for his “big contribution to developing cooperation in the energy sector.”
The bromance hit a rough patch in 2014 when the U.S. government sanctioned Russian officials and entities—including Mr. Sechin and Rosneft—for annexing Crimea and sending forces into Ukraine. The Rosneft deal was put on hold. Losses to ExxonMobil are estimated at more than $1 billion. In 2015, Mr. Tillerson declared at a conference, “We’ll await a time in which the sanctions environment changes or the sanctions requirements change.”
He may not have to wait much longer.