Rex Tillerson Tied to Climate Report at Exxon Fraud Trial

Former Secretary of State Rex Tillerson, second from right, leaves a courthouse in New York on Wednesday. In a securities fraud lawsuit brought by the New York Attorney General’s Office, Tillerson, the onetime CEO of Exxon, told a court Wednesday that the energy giant’s leaders sought a full understanding of how new climate regulations would affect the company’s bottom line. (AP Photo/Seth Wenig)

MANHATTAN (CN) – A packed New York courthouse buzzed with anticipation Wednesday as five words ushered forward the key witness in a trial accusing Exxon of defrauding investors about the climate crisis.

“The people call Rex Tillerson,” said Kim Berger, a bureau chief from New York State Attorney General’s Office.

Tillerson, a former secretary of state for President Donald Trump and a decade-long CEO for Exxon, took the stand this morning in a red tie that hearkened more to his Republican bona fides than the oil giant’s green policies.

Unlike Trump, Tillerson professed to accept climate science.

“We took the issue quite seriously,” said Tillerson, 67, testifying that he had lobbied the previous administration for a carbon tax and pushed for the landmark Paris Climate Accords, a treaty that his future boss Trump would attempt to unravel.

In two reports published under Tillerson’s watch in 2014, Exxon told shareholders that the company would factor in the “cost of carbon” in assessing the risks to their business.

The New York State Attorney’s General Office claims that those alleged measures amounted to a “Potemkin Village,” put up to stave off climate action.

Berger, who heads the office’s Bureau of Internet and Technology, questioned Tillerson about how his additions to the climate report were received by other Exxon officials.

“RWT reviewed the document and found it acceptable,” wrote Robert Luttgen, a manager from the company’s office of the secretary, using initials for Rex Wayne Tillerson.

A native of Exxon’s home state of Texas, Tillerson spoke with a twang as he told the attorney that Exxon’s energy outlook had been meant to address the question: “How’s our world going to look 20 years from now, 30 years from now, 40 years from now?”

The report to which Tillerson contributed contained a color-coded map on the “proxy” costs of carbon dioxide, varying across country and continent.

A 2011 email suggested that Tillerson favored a “conservative” estimate.

Exxon’s corporate strategic planning director Tom Eizember told the company’s greenhouse gas manager Robert Balles: “Rex seemed happy with the difference previously – appeared to feel it provides a ‘conservative’ basis (but only if viewed from the perspective of claiming economics credits to reduce emissions; it is not conservative vs [Energy Outlook] from the perspective of debiting actions that increase emissions.)”

Under friendly cross-examination by Exxon’s attorney Theodore Wells, Tillerson denied the central allegations of New York’s lawsuit.

Displaying a copy of the complaint, Wells asked a series of true-and-false questions about the sentences.

“This case seeks redress for a longstanding fraudulent scheme by Exxon, one of the world’s largest oil and gas companies, to deceive investors and the investment community,” the filing begins.

Tillerson insisted it was false.

“Throughout its fraudulent scheme, Exxon in effect erected a Potemkin village to create the illusion that it had fully considered the risks of future climate change regulation and had factored those risks into its business operations,” another line states.

Tillerson bristled at that statement too.

“It was a real system,” he said.

For all of the theatricality of the exchange, the trial against Exxon is not being heard by a jury. It is a bench trial in Manhattan Supreme Court before Justice Barry Ostrager, who agreed to divest from his Exxon stock before trial.

Wells asked a series of questions suggesting that greenhouse gases would not have been an issue for shareholders because the company never made decisions based on the cost of carbon.

“I don’t ever recall GHG costs being a determining factor in any decision that we made,” Tillerson said, using an abbreviation for greenhouse gas.

Conspicuously absent from the testimony was any mention of Tillerson’s alter ego, “Wayne Tracker.”

Tillerson admitted in a deposition this past summer that he used his wayne.tracker@exxonmobil.com account as his primary email, and the state complained that Exxon failed to preserve any emails from that account before Aug. 18, 2015.

“This was caused by ExxonMobil’s failure to disable its automatic ‘file sweep’ deletion program for the Tracker Account, even though ExxonMobil turned off the automatic deletion program for every other custodian after receiving the subpoena,” Assistant Attorney General Samantha Liskow wrote in an Oct. 4 brief.

Ostrager denied the state’s motion asking him to draw an adverse inference from the failure to preserve those emails.

Despite the judge’s invitation to the state to renew that request at a later date, neither party asked about Wayne Tracker on the witness stand.

Exxon had been under increasing pressure to take action on climate change the year it released its reports.

In 2013, the year before, three pages of investors signed a letter to Tillerson asking to assess the risks of the climate crisis.

“We are an international group of institutional investors, collectively representing nearly USD 3 trillion in assets, writing to inquire about ExxonMobil’s exposure to these risks and plans for managing them,” the 72-shareholder collective wrote.

Though the group included New York State’s comptroller, New York City’s comptroller and California’s treasurer, Tillerson referred to them as “activist shareholders.”

“There’s nothing wrong with that,” he said earlier. “That’s fine.”

Tillerson also struck a conciliatory tone when asked by Exxon’s attorney how the state’s allegations made him feel.

“When you become a CEO, you know you are going to have to become willing to take a lot of criticism,” Tillerson said, adding that was not true of the company’s other workers.

“That’s who I feel badly for,” he said.

Tillerson’s memory turned hazy throughout the state’s examination, with the CEO regularly answering questions with: “I don’t recall.” He used the phrase far less often under Exxon’s cross-examination.

As the widely anticipated testimony ended, court officers ordered the press and public to remain seated while leading the ex-business titan and U.S. presidential cabinet member out of the room. Reporters were unable to solicit comment on his testimony as he left the building.

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