Press release | Jan. 10, 2017

Rex Tillerson shares Exxon’s tax transparency problems

This op-ed was originally published in the Morning Consult.

US citizens need to know that the people running our country respect the fundamental principles of our democracy. So it matters that former Exxon CEO Rex Tillerson is refusing to provide his tax returns before becoming US Secretary of State. 

Donald Trump didn’t provide his tax returns before he was elected either, unlike every other presidential candidate in recent history. They appear to believe that the usual rules don’t apply to them. This raises fundamental questions over their suitability for the highest positions in our country, and it also makes one wonder what they have to hide. As Tillerson prepares for the Senate to review his ability to serve, these questions are more relevant than ever.

Tillerson’s refusal to open up to public scrutiny is consistent with Exxon’s track record of secrecy.  In addition to facing allegations that it misled the public over the science behind climate change, the company refuses to open up about its US taxes.

Defenders of Trump and Tillerson argue there are valid privacy concerns behind holding back their tax information. Privacy is important, as enshrined in US law - but it has to be balanced against the public good. As candidates for high public office, Trump and Tillerson’s right to privacy is far outweighed by the need for the public to know that they have paid their dues to society.  As President Nixon said, “people have got to know whether or not their president is a crook” – the same applies to their top diplomat. To eliminate any doubt, Tillerson should release his returns to the Senate, just as dozens of Republican and Democrat nominees have done before him.

This raises questions about one of the pillars of the Trump victory. When he speaks about “draining the swamp” it’s easy to imagine a massive cull of political elites corrupted by financial interests.  What’s happening now is very different.  In casting itself as a team of political outsiders, the Trump campaign has managed to shield itself from accountability and protect its business interests. They are merging the worlds of big business and its regulators, without recognition of the impact this will have on the people they are there to serve.  The heads of big business, with secretive financial dealings and no public service record whatsoever, are moving into our nation’s highest seats of power, and disregarding norms designed to hold them to account. 

Exxon’s track record under Tillerson on transparency is dire. The natural resource sector is famously corrupt – the world’s most corrupt industry according to the OECD. But Exxon and other oil companies can no longer hide behind the excuse of confidentiality. Increasingly, companies are expected to disclose what they pay in taxes and other payments to governments of countries whose natural resources they extract. This is now required under laws of the US and 30 other countries, as well as international initiatives. The Extractive Industries Transparency Initiative (EITI) is a global standard which aims to put information about government revenues from natural resource deals into the public domain in 51 countries including the United States. This includes the taxes these companies pay, which is key to ensuring citizens know what benefits they get from their natural resources.

An ongoing anti-corruption probe involving Exxon in Nigeria highlights the need for strong transparency rules. Authorities in Nigeria are investigating how Exxon reportedly paid $600 million to renew three oil licenses that may have been valued by the Nigerian government at $2.55 billion, according to documents seen by Global Witness. Improved payment transparency will shed light on and deter these types of questionable deals.

Exxon publicly supports these transparency efforts: it has long maintained a seat on the EITI’s international board, and also has a representative on the domestic US EITI governing body. In reality, however, Exxon has mastered the art of paying lip service to transparency while doing all it can to undermine these efforts   behind the scenes. Exxon is refusing to publish its US tax payments, in contrast to some of its competitors such as BP and Shell. And like Trump, Exxon is not just side-stepping the rules – it is actively trying to bring them down. Mr. Tillerson served as a chairman of the American Petroleum Institute, a powerful oil lobby group that has fought against a Congressionally-mandated regulation to disclose natural resource payments.

It is now the Senate Committee on Foreign Relations’ job to decide whether Tillerson is the right person for such an important appointment. With his and Exxon’s track record of keeping critical information away from scrutiny and actively undermining attempts to fight corruption, they must consider if he is really fit to serve the American people.

Zorka Milin is a senior legal advisor at Global WitnessThis op-ed was originally published in Morning Consult.