Tuesday, December 13, 2016

Rex Tillerson: It's the Conflict of Interest Stupid

The drug being offered by the doctor in the cartoon above may be the right drug, and it might help the patient, but the conflict of interest concerns us. Doctors should not put themselves in such a position. Rex Tillerson, president-elect Trump's choice for Secretary of State, is a virtuous Texan. But he should not become Secretary of State because he has an unavoidable conflict of interest that would undermine the office and bring into question the administration's decision making process. He may have the right message, but he's the wrong messenger.

Tillerson was born on March 23, 1953 in Wichita Falls, Texas where his father was stationed as a career staffer with the Boy Scouts of America. "As the family moved between Boy Scout offices in Wichita Falls, Stillwater, Okla., and Huntsville, Scouting was ever-present for Tillerson," reported the Dallas News in 2012.  "As a child and into adolescence, he racked up not just merit badges but some of Scouting’s highest awards, designated for leadership abilities and dedication." He scouted his way through college, along with playing in the marching band, and kept on scouting, rising to become president of the organization in 2010-12.

Tillerson studied engineering at the University of Texas where he was a member of Alpha Phi Omega fraternity.  Houston attorney James Flodine, a fraternity brother of Tillerson told the Dallas News: "Instead of throwing keggers à la Animal House, brothers spent their time wheeling disabled students around campus or acting as intermediaries between police and students protesting the Vietnam War." Tillerston, said Flodine, "was one of those guys who ... went to school for a purpose, and it wasn’t to drink beer and goof off. … When he was getting ready to leave, he told me he was going to work for Exxon, and I thought, he’s an Exxon sort of guy.”

And so he turned out to be. Tillerson joined Exxon as a production engineer in 1975. Fourteen years later he rose to general manager of the central production division of Exxon USA. In 1995 he became president of Exxon Yemen, Inc. In 1998 he became responsible for Exxon's holdings in Russia and the Caspian Sea area. And in 2006 Tillerson was elected as chairman and CEO of Exxon-Mobil. 

He has been an effective leader and a diplomat. During his stint on the executive leadership board of the Boy Scouts of America he was instrumental in moving the Boy Scouts to accept openly gay youth as members (2013). In 2011 he negotiated a deal to develop oil fields in the Kurdish region of Iraq, contrary to the wishes of both the Iraqi government and the Obama administration. That same year he signed a deal with Russia for Exxon-Mobil to explore in the Russian Arctic, a deal which was interrupted due to American economic sanctions on Russia following Russia's invasion of the Crimea (2014). 

Tillerson "has forged close relations with both President Vladimir Putin and Igor Sechin, the close Putin ally who runs Rosneft, one of Russia’s oil-and-gas giants," says Steve Coll at the New Yorker. Some Republicans in Congress, including Marco Rubio, John McCain, and Lindsay Graham, have expressed concern about the close relationship between Tillerson and Russia. One of the concerns is that Tillerson would seek to reduce or eliminate sanctions against Russia in order to help Exxon's interests in that country.  

Here is how Steve Coll expressed his concern: 
In nominating Tillerson, Trump is handing the State Department to a man who has worked his whole life running a parallel quasi-state, for the benefit of shareholders, fashioning relationships with foreign leaders that may or may not conform to the interests of the United States government. In his career at ExxonMobil, Tillerson has no doubt honed many of the day-to-day skills that a Secretary of State must exercise: absorbing complex political analysis, evaluating foreign leaders, attending ceremonial events, and negotiating with friends and adversaries. Tillerson is a devotee of Abraham Lincoln, so perhaps he has privately harbored the ambition to transform himself into a true statesman, on behalf of all Americans. Yet it is hard to imagine, after four decades at ExxonMobil and a decade leading the corporation, how Tillerson will suddenly ... embrace a vision of America’s place in the world that promotes ideals for their own sake, emphatically privileging national interests over private ones.
On global warming, Tillerson would not be as bad as many in this incoming administration. Exxon-Mobil as a corporation has supported the levels of carbon emissions adopted by the international community in Paris last year.  Tillerson himself has said that climate change is a global problem that warrants action.  See WSJ. Under his leadership, Exxon-Mobil has lobbied for a carbon tax as the best tool for combatting global warming.  

Exxon-Mobile is rule bound, says Steve Coll, has built up a relatively strong safety record, "and has avoided problems such as prosecutions under the Foreign Corrupt Practices Act, even though it operates in many countries that are rife with corruption."  

Conflicts of interest are harmful because they call into question motivations and the integrity of decision making.  We don't want judges overseeing a case to have a close relationship with one of the litigants because it brings into question the judge's impartiality, and impugns the fairness and outcome of the proceeding. It doesn't matter how fair and correct the judgment is in fact, the appearance of impropriety, and the suspicions created by the conflict undermine the process. Tillerson was presented a Russian Order of Friendship medal by Putin, their relationship and Exxon-Mobil's financial interests in Russia will bring into question Tillerson's motives if he were to advocate for an end to sanctions on Russia. As Politico reports, by the end of October 2016, the Crimea sanctions have cost Exxon-Mobil more than $1 billion. The U.S. does much less trade with Russia than the EU, and it seems likely that no other American company is affected by American sanctions against Russia like Exxon-Mobil is. And Exxon-Mobile, the fifth largest company in the world, has many other interests around the world that are often not the same as American national interests, and that would bring into questions the motivations of Rex Tillerson as Secretary of State. Do we really want our representatives to be subject to such conflicts of interest? 

As a company, Exxon-Mobil has been firmly opposed to international sanctions in general, unless they are very tightly and very well executed, Tillerson has said. There is surely some merit to this position. What have we accomplished with our sanctions on Cuba for the last fifty years? We have sanctioned Russia after Crimea to a) punish Russia, and to b) deter further Russian incursion into Ukraine, or into the Baltic states. But it’s not clear to me that if sanctions were lifted and Exxon could go through with its deal of exploring the Russian arctic shelf for oil that this might not lead to positive things. Are these sanctions actually deterring Russia in a meaningful way? Is it holding back the normalization of relations?  The answer to these questions are not clear.  

What is clear is that someone with a very substantial conflict of interest like Tillerson is not the right person to be deciding such questions on behalf of the country. Even if what he argues is wise and correct, the existence of the conflict undermines the integrity of government and calls into question the decision making process. Even if Tillerson were to have the right message, he would be the wrong messenger.

Follow me on Twitter @RolandNikles


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