Examining Rick Perry’s and Rex Tillerson’s Potential Conflicts of Interest
A few things to know about Donald Trump’s picks for Energy secretary and Secretary of State.
Many eyebrows have been raised by President-elect Donald Trump’s nomination of former Governor Rick Perry to serve as energy secretary. At a glance, it certainly looks like a curious appointment. Perry once promised to disband the U.S. Department of Energy, but not before forgetting the agency’s name in his infamous “oops” debate snafu. He has been out of politics for almost two years after suffering two failed presidential campaigns (in fact, he has most recently made headlines for his high-energy performances on Dancing With The Stars). And Perry, a guy who scored mostly C’s and D’s at Texas A&M, including a D in a mysteriously named “Meats” course, will be succeeding as energy secretary other men whose credentials include a Nobel Prize in physics and decades spent on the faculty at MIT.
But a closer look at Perry’s energy policy while he served as governor reveals a “nuanced” legacy, as the Texas Tribune notes, and Politico has reported that Perry isn’t such an unconventional pick despite his lack of educational background in science. Yet some critics argue that Perry could have potential conflicts of interest he would need to resolve should he be confirmed by the Senate.
The energy secretary’s role is, in part, shepherding the nation’s transition to clean energy (although, to be clear, at this point we have little idea of how the department might operate under Trump). According to the White House’s website, one of the department’s stated goals is that it “eliminates inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to address the threat of climate change.” With that in mind, Perry’s relationship to the oil and gas industry is worth examining.
Donors from the oil and gas industry contributed more than $11 million to Perry’s candidacies for governor and president. One of his most loyal donors has been Kelcy Warren, the CEO of Dallas-based Energy Transfer Partners, which is the company behind the controversial North Dakota Access Pipeline. Just a month after Perry left the governor’s office in 2015, he joined the board of directors for Energy Transfer Partners and its subsidiary, Sunoco Logistics Partners.
According to Energy Transfer Partners’s 2016 annual report, Perry owns $154,000 worth of partnership units in the company, in addition to being compensated $82,420 in cash in 2015 for his role on the board of directors. Perry remained on the board throughout his short-lived 2016 presidential campaign, even though many presidential candidates remove themselves from their private sector roles while running their campaigns (see, for example, Jeb Bush). As of publication, Perry was still listed on Energy Transfer Partners’s website as a member of the company’s board.
Perry’s 2015 presidential financial disclosure report reveals even more ties to oil and gas companies. Last year, his wife owned up to $15,000 in investments in Energy Transfer Partners as well as Sunoco Logistics, while Perry identified investments in QR Energy ($15,000-$50,000), Diamondback Energy ($15,000-$50,000), and Grey Rock Energy ($50,000-$100,000).
The report also shows Perry earned $250,000 “consulting” for Holt Cat, a San Antonio-based firm that sells and services equipment to companies in oil and gas, among other industries. The company is led by Peter Holt, whose family owns the San Antonio Spurs and has been a big donor to Perry throughout his political career. When Perry decided in 2013 to retire rather than run for re-election as governor, he made the announcement at Holt Cat. Both Holt and Warren served on Perry’s PAC’s eighty-member advisory committee during his most recent presidential campaign.
The oil and gas industry was pleased after Trump chose Perry to lead the Department of Energy, according to Reuters; others also cheered Trump’s Secretary of State nomination, Wichita Falls native Rex Tillerson to be Secretary of State, who was CEO of ExxonMobil up until his retirement last Wednesday.
But, as with Perry, the annoucement of Tillerson drew a chorus of concern over his potential conflicts of interest. Some pointed to Tillerson’s major financial investments in Exxon—to be specific, he owns about $218 million in stock and has a pension plan worth about $69.5 million, according to the Washington Post. Others focused on the ties he forged with foreign powers—particularly Russia—during his long career serving Exxon, which some fear could loom large over international policy decisions. The New Yorker’s Steve Coll, who published a book on ExxonMobil (2012’s Private Empire: ExxonMobil and American Power), wrote earlier this week that Tillerson’s success at the helm of Exxon was “attributable in part to the work he has done in Russia.” Coll wrote that if Tillerson is confirmed, “he would be in a position to benefit the corporation where he spent his career, by, for example, advocating for the easing of Russian sanctions.”
According to the Washington Post, Tillerson oversaw a project for Exxon on Russia’s Sakhalin island in the nineties, during which time he developed a “working relationship” with current Russian President Vladimir Putin, and, in 2011, Exxon signed a contract a Rosneft, a Moscow-run oil company, to work together in the oil-rich Arctic and Siberia regions. Writes the Post:
After inking the deal in New York, Tillerson and Rosneft chairman and Putin confidant Igor Sechin dined on caviar at the luxury Manhattan restaurant Per Se, according to one account. The next day, they gave oil analysts black pens with the date of the agreement engraved in gold.
Concerns of connections to Russia have been exacerbated by the fact that in 2013, Putin awarded Russia’s “Order of Friendship” prize to Tillerson. While the award’s name makes it sound like it goes to Putin’s best buds, it’s apparently not based purely on a contender’s friendship status with Putin—still, if you receive the honor, it’s safe to say that you’re on Putin’s good side.
In light of the recent revelations that the U.S. government is “confident” that Russia was involved in hacking the Democratic National Committee and other Democratic organizations, Putin’s good side is an interesting place for the potential future Secretary of State to be. Especially when one considers Exxon’s involvement with Russia in 2014, when President Barack Obama’s administration placed sanctions on Russia’s oil and gas industry in response to the country’s military aggressiveness in Ukraine and Crimea. At the time, Tillerson tried to convince the U.S. government to lift the sanctions, telling the New York Times that year that “our views are being heard at the highest levels.” Exxon was eventually told to to stop working with Rosneft in the Arctic. If the sanctions are lifted under Trump and Exxon can continue its work in Russia, Tillerson would stand to benefit, according to Politico.
As Coll notes, Tillerson has had no problem defying the U.S. government’s policies in foreign lands. For example, Tillerson broke with the U.S. State Department’s policy during Obama’s presidency, when Exxon made an oil deal on its own with the Kurdish Regional Government in Kurdistan without asking for permission from the national Iraqi government. Coll wrote that sources told him Tillerson was unapologetic afterwards while explaining his actions to State Department officials. “I had to do what was best for my shareholders,” Tillerson reportedly said.
Both Perry and Tillerson (but Tillerson in particular) could both face difficulties in being confirmed to their cabinet roles by the Senate. Republican Senator John McCain, from Arizona, has already expressed concern over Tilleron’s Russian ties, questioning Tillerson’s morality for accepting Putin’s friendship award and for opposing sanctions. Both Perry and Tillerson would also have to divest from their current conflicting financial holdings if they want to get past the Senate next year. Divesting would help to dispel some concerns, but even then, their complicated histories would be hard to ignore when they make policy decisions as members of Trump’s cabinet.