What Does ‘Services’ Mean? U.S., Exxon Spar on Meaning of Russian Sanctions
06 Nov 2019

U.S. Treasury Secretary Steven Mnuchin said Exxon Mobil Corp. is warping the definition of “services” to dodge a claim that it violated Ukraine-related sanctions in 2014 by striking a series of oil and gas deals with a powerful ally of Russian President Vladimir Putin.

Exxon is using an “overly narrow understanding” of the word to justify doing business with Moscow-based Rosneft PJSC while its chief executive officer, Igor Sechin, was on the Treasury’s list of sanctioned Russian nationals, the department said in a filing Monday in federal court in Dallas.

The dispute stems from a $2 million fine Treasury levied in 2017 against Exxon over a series of contracts the oil company reached with Rosneft in 2014, after the U.S. under President Barack Obama levied sanctions in response to Russia’s invasion of Ukraine. Obama’s executive order barred “the receipt of any contribution or provision of … services” from a company or person under sanction.

Exxon sued, arguing it was being wrongfully penalized for doing business with Rosneft, which wasn’t under sanction, simply because Sechin signed the deals. Citing Webster’s, Exxon argued in an Oct. 21 filing that “service” is defined as “the performance of work commanded or paid for by another,” a “servant’s duty” or “an act done for the benefit or at the command of another,” and said none of these definitions applied to Sechin’s role.

By Erik Larson, Bloomberg, 5 November 2019

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