For Trump's Top Diplomat, Questions Loom About Conflicts Of Interest

Dec 13, 2016
Originally published on December 13, 2016 9:32 pm

Exxon Mobil CEO Rex Tillerson, President-elect Trump's nominee for secretary of state, will have his Senate confirmation hearing in January. Before then, experts say, he'll have to think hard about how to divest from a company where he has spent his entire career.

Tillerson reportedly owns 2.6 million shares of Exxon Mobil stock, which would be worth about $240 million, as of the Wall Street close on Tuesday.

When John Kerry became secretary of state nearly four years ago, he and his wife, Teresa Heinz, divested from a long list of companies to avoid any possibility of a conflict of interest.

For the same reason, George Shultz — an executive at Bechtel before serving as Ronald Reagan's top diplomat — set up a blind trust, says Davis Robinson, the State Department's legal adviser at the time.

But, Robinson says, "his was not as complicated as Mr. Tillerson, because Mr. Tillerson owns so much of Exxon Mobil stock."

Blind trusts and divestment are two of the most common options to meet the requirements of federal ethics laws. And tax breaks allow wealthy appointees to defer capital-gains taxes when they sell off assets so they can serve in government.

Paul Light, the Paulette Goddard Professor of Public Service at New York University, says divestment is the most effective cure to conflict of interest concerns.

"If you are to reassure the public that your negotiations with foreign governments have no tie to your financial interests, you divest," he says.

For Tillerson, that may not be enough. Even if he divests from Exxon Mobil stock, he will face tough questions on Capitol Hill about his past dealings, especially in Russia. Tillerson opposed U.S. sanctions on Russia, imposed after Russia annexed Crimea, that slowed a joint project between Exxon Mobil and Russian energy giant Rosneft to drill in the Arctic.

"It troubles me greatly that Mr. Tillerson would have reason to advocate for the rolling back of sanctions because that would be the best interests of his company," says Sen. Chris Coons, a Delaware Democrat who serves on the Senate Foreign Relations Committee. "And it is my hope that he's enough of a patriot to separate his decades-long affiliation with this major oil company and the genuine interest of the American people."

Russia isn't the only place of concern, Coons says. "I suspect we will be having discussions about a number of different countries where he negotiated relationships or deals with dictators or authoritarian regimes that worked for Exxon Mobil, but will not work for America's interests," he says.

Edward Verona, a former Exxon Mobil colleague of Tillerson's in Russia, now with McLarty Associates in Washington, D.C., believes the oil executive will be able to make the switch to the State Department. "I don't believe that he would, certainly not consciously, do anything that would contravene the interests of the United States for the potential benefit of his former company. That's just my sense of him," he says.

Republican Sen. Bob Corker, the Senate Foreign Relations Committee chairman, says he will chair a confirmation hearing for Tillerson in early January. But before the nominee meets with any senators, he'll need to answer the committee's questionnaire about whether and how he will sever his business relationships with Exxon Mobil.

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AUDIE CORNISH, HOST:

President-elect Donald Trump says he's nominated one of the most accomplished business leaders and international dealmakers to be his secretary of state. ExxonMobil CEO Rex Tillerson will have his Senate confirmation hearing next month. Before then, Tillerson will have to think hard about how to distance himself from the company where he's spent his entire career. NPR's Michele Kelemen reports.

MICHELE KELEMEN, BYLINE: When John Kerry became secretary of state nearly four years ago, he and his wife divested from a long list of companies to avoid any possible conflict of interest. George Shultz, who came from the private sector to serve in the Reagan administration, set up a blind trust according to Davis Robinson, who was the State Department's legal adviser at the time.

DAVIS ROBINSON: His was not as complicated as Mr. Tillerson because Mr. Tillerson own so much of Exxon's stock.

KELEMEN: There are several options to meet federal ethics laws, and there are tax breaks so that wealthy appointees who have to sell off assets in order to serve in government can defer capital gains taxes. Paul Light, a professor of public service at New York University, says divestment is the most effective cure to conflict of interest concerns.

PAUL LIGHT: If you're to reassure the public that your negotiations with foreign governments have no tie to your financial interests, you divest.

KELEMEN: For President-elect Trump's pick for secretary of state, Rex Tillerson, that may not be enough. Even if he divests from ExxonMobil's stock, he will face tough questions about his past dealings, especially in Russia.

Tillerson opposed U.S. sanctions on Russia that slowed a joint project between ExxonMobil and Rosneft to drill in the Arctic. Senator Chris Coons, a Delaware Democrat, says those were sanctions put in place after Russia annexed Crimea and stirred up a conflict in eastern Ukraine.

CHRIS COONS: It troubles me gravely that Mr. Tillerson would have reason to advocate for the rolling back of sanctions because that would be in the best interest of his company. And it is my hope that he is enough of a patriot to be able to separate his decades-long affiliation with this major oil company and the genuine interests of the American people.

KELEMEN: And it's not just Russia, says Coons, who's on the Senate Foreign Relations Committee.

COONS: I suspect we will be having discussions about a number of different countries where he negotiated relationships or deals with dictators or authoritarian regimes that worked for ExxonMobil but that would not work for America's interests.

KELEMEN: One of Tillerson's former colleagues at ExxonMobil in Russia, Edward Verona, says he thinks the oil executive will be able to make the switch to the State Department.

EDWARD VERONA: And I don't believe that he would certainly not consciously do anything that would contravene the interests of the United States for the potential benefit of his former company. That's just my sense of him.

KELEMEN: The Senate Foreign Relations Committee chairman, Republican Bob Corker, says he'll chair a confirmation hearing for Tillerson in early January. Some Senate staffers point out that even before Tillerson meets with senators, he needs to answer a questionnaire about whether and how he will sever his business relationships with ExxonMobil. Michele Kelemen, NPR News, Washington. Transcript provided by NPR, Copyright NPR.