Two-Year Exxon Probe Tests Judge’s Patience

MANHATTAN (CN) — An attorney for ExxonMobil vented his frustration Friday at the pace of a  securities-fraud investigation that has forced the company to turn over millions of documents related to climate change.

“This is a political witch hunt,” Paul Weiss attorney Ted Wells said Friday morning, about midway through a 2.5-hour hearing in Manhattan.

In this Courthouse News file photo, New York Attorney General Eric Schneiderman unveils a fraud complaint Wednesday against the state’s largest internet service provider.

Since November 2015, New York Attorney General Eric Schneiderman has left no stone unturned in hunting for documents he hopes will show that Exxon misled shareholders about how man-made global warming would affect their bottom line.

Manhattan Supreme Court Judge Barry Ostrager appears to have grown weary about the length of his office’s investigation, needling Schneiderman’s prosecutors repeatedly this morning to wrap up evidence gathering.

“I don’t think the scope of this investigation is so massive, and the issues they’re investigating are so arcane and requires so much sleuthing to get to the bottom of [it], that ExxonMobil’s entire business has to be audited,” the judge said.

For Assistant Attorney General John Oleske, the office’s senior enforcement counsel, the delay was a function of ExxonMobil’s own intransigence.

“They just deliberately left out the documents as a matter of policy,” the prosecutor said.

The first investigation to look for fraud in a fossil-fuel company’s climate-change rhetoric, Schneiderman’s probe has been likened to the landmark case against R.J. Reynolds for denying smoking’s link to cancer.

And ExxonMobil has thrown up several roadblocks to oppose it, filing a federal lawsuit in its home state of Texas to shut the probe down and unsuccessfully attempting to quash its accountant’s subpoena. Industry-friendly U.S. lawmakers have even subpoenaed environmental groups for their communications with prosecutors to help undermine the investigation.

With ExxonMobil’s counteroffensive currently floundering, Oleske told a judge today that the attorney general’s office obtained “inculpatory information” from the oil giant’s accountant, PricewaterhouseCoopers.

Schneiderman’s office filed an opposition brief on June 2 that says the newfound “significant evidence of potential materially false and misleading statements by Exxon” required them to expand their investigation.

Prosecutors demanded depositions from nine ExxonMobil officials, a new round of interrogatories, and a new batch of documents, including files the company previously provided to the Securities and Exchange Commission.

Bristling under the demands, Wells said that ExxonMobil already has sought documents from 142 custodians in a global hunt for records, a process that he said took months and cost hundreds of thousands of dollars.

“They can never clear us, as innocent as we may be,” he said.

Oleske responded that the company’s expenditures so far pale in the face of the “virtually unlimited resources” of the largest oil company in the United States, but he denied the judge’s suggestion that Exxon proved the subpoena burdensome.

“Exxon is inviting the court to decide how the attorney general should stage the investigation,” he said.

Reserving decision on the document requests, Judge Ostrager repeatedly expressed impatience with the length of the investigation, and argued it would be more efficient for prosecutors to try to obtain the information through other means.

“Respectfully, there’s a hard way to do things, and there’s an easy way to do things,” he said.

With the investigation still ongoing, Ostrager refrained from opining on the merits of the case.

“You have a different view of the world,” he said. “I’m just trying to call balls and strikes.”

If Ostrager were to extend his baseball metaphor, the judge may have given both teams the pressure of a full count.

“If you’re asking me to state for the record that Exxon has behaved in an exemplary manner, I decline to do so,” he said. “If you’re asking me to state for the record that attorney general has behaved in an exemplary manner, I decline to do so.”

The stage is now set for depositions for top Exxon officials from around the world, including an employee from the its Canadian subsidiary Imperial, whom prosecutors believed was directed not to apply a climate-change “proxy cost” to the company’s oil sands projects.

While Exxon denied control of Imperial, Oleske said that subsidiary’s president is on the company’s payroll.

The judge invited both Exxon and Schneiderman’s office to appeal his ruling, but neither announced a decision on that before press time.

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