Blowout

by Rachel Maddow

  “While we can assure you that ExxonMobil and its affiliate in EG take the utmost care to conduct our operations in a legal, ethical and above board manner, for competitive reasons, we do not provide the details of our business activities.”

  We do not provide the details of our business activities—sort of says it all. By 2010, that oft-repeated phrase (see ExxonMobil public relations team template) represented almost a century’s worth of standard operating procedure for Big Oil. “Oil,” after all, “is where you find it.” Sometimes American corporations had to make deals with unsavory sorts to get at it, sure, but remember, even with domestic energy production on the rise in 2010 (thank you, fracking), the United States still needed to import about half of the crude oil it consumed. The oil companies could always make the claim, with that actual fact as evidence, that they were doing it…for us.

  Everywhere they operate on earth, oil and gas companies are incentivized to push as far as they can on extraction (that’s how they make their money) and to escape negative consequences caused by that extraction. That’s the basic math that produces their profit, their market share, their stock price, and the happiness of their shareholders. Because oil and gas are found all over the freaking place, though, oil and gas companies need a rudimentary foreign policy to maximize shareholder happiness by maximizing their ability to produce their product. And it turns out, rationally and understandably, the foreign policy priorities of the oil and gas industry are stability, access, control, simplicity. Countries may come and go, but oil and gas companies need to think bigger than that: they make big expensive investments that cost a ton up front, and they need to be assured they’ll be able to collect the promised payoff after all that work and expense. So, the longer the relevant foreign ruler is in power, the better. And if the local autocrat is happily on the payroll, no one’s going to bother anyone about cleaning up any mess that oil production might cause in his country. And if any of the citizens of that country do step out of line and make a fuss, the ruling family (and its well-paid paramilitary forces and its expensive PR firms) will take care of that, too. And everyone else will look the other way.

  That global system of anti-governance driven by Western energy companies—that corporate shadow foreign policy—persists year in and year out, as American presidencies come and go. But occasionally, its costs become too much to ignore. By 2009, two important American politicians had decided that the costs of looking the other way in Equatorial Guinea were too high. Senator Richard Lugar (R-Ind.) and Senator Ben Cardin (D-Md.) did not appear at a glance to have a lot in common. Lugar was a six-term senator and former Rhodes scholar with the calm demeanor of an old-school midwestern patrician; Cardin was a first termer, grandson of Russian Jewish immigrants, graduate of a state law school, who had a gait and cadence earned on the streets of Baltimore. They were both, however, increasingly fed up with the status quo, especially after Lugar’s staff finished a long investigation that resulted in a 125-page Senate Foreign Relations report titled “The Petroleum and Poverty Paradox: Assessing U.S. and International Community Efforts to Fight the Resource Curse.” The “excrement of the devil” part was only implied.

  As Lugar wrote in an introductory letter to the report, “Too often, oil money that should go to a nation’s poor ends up in the pockets of the rich, or it may be squandered on the trappings of power and massive showcase projects instead of being invested productively and actively.” The Resource Curse, Lugar noted, “affects us as well as producing countries. It exacerbates global poverty which can be a seedbed for terrorism, it dulls the effect of our foreign assistance, it empowers autocrats and dictators, and it can crimp world petroleum supplies by breeding instability.” Lugar’s study took the measure of oil-rich, governance-challenged countries in Africa, Asia, Europe, Latin America, and the Middle East. His solution was elegant and straightforward: transparency. Companies operating in extractive industries (from oil to diamonds) needed to provide the details of their business activities in foreign nations. And the countries needed to be more open about reporting what money came into state accounts and how it was spent. “When oil revenue in a producing country can be easily tracked,” Lugar wrote, “that nation’s elite are more likely to use revenues for the vital needs of their citizens and less likely to squander newfound wealth for self-aggrandizing projects.”

  Lugar then introduced the Energy Security Through Transparency Act. The legislation required companies in the extractive industries to make an annual report of all payments they made to foreign governments for the purpose of “commercial development of oil, natural gas, and minerals.” Cardin signed on as lead co-sponsor. “This was a bipartisan bill,” Cardin later explained. “[Senator Lugar’s] interest in this was solely because he believes in transparency and he believes in good governance.” Cardin believed that transparency would improve the bang we got for our foreign aid bucks and act as a hedge against corruption. “The United States spends the most on soldiers and weapons than any country in the world,” Cardin said. “If we had less corruption in the world, we would need a smaller budget on soldiers and weapons.”

  The legislation eventually got a dozen more co-sponsors—Republican, Democrat, and independent. But it did not make it out of the Banking Committee before the end-of-the-year recess. So Lugar and Cardin cleverly got it attached as an amendment to a legislative juggernaut of 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was the administration’s best effort to curtail the financial shenanigans that had led to the epic near collapse of the world economy just before Obama’s election.

  Cardin’s public explanation for putting what became known as Section 1504 in the Wall Street bill was “so investors can make intelligent decisions based upon the information on the companies they’re being asked to invest in.” And yes, that was a bit of a fig leaf, but it also made sense. “Look at the squandered resources,” an investment industry trade group spokesman said at an event with Cardin. “Our interest as investors is to gain access to data, hard data, hard numbers…to evaluate risk. That’s the business that we’re in. And there are hardly any more acute sources of risk in the extractives industry globally, than those connected with corruption around revenue payment. So there’s this, for us, coincidental, but happy coincidence here, a convergence of interests with civil society.”

  The co-founder of Global Witness, a group that had been pushing for transparency for a decade, liked that Section 1504 put the onus on both government and business. “It takes two to tango,” Simon Taylor said. “We’re stuck in this world with despotic leadership and lack of good governance and somehow companies fly above the fray….The entire structure, the modus operandi of those companies in certain places, in certain corrupt places, is to be involved in illicit transfers of funds. Whether they’re illegal or not is a different matter.”

  As Dodd-Frank raced toward passage in 2010, no amount of lobbying from the big oil companies could unhorse the Section 1504 rider. Law firms serving the industry began preparing client alerts explaining that it might soon be time to set up systems to track all payments to foreign governments and foreign officials—even if there were five hundred contracts to sort through in a little place like Equatorial Guinea. Beyond that, the lawyers warned, new SEC rules regarding Section 1504 might require the reports to be posted online, available to the public. “Affected companies,” Hunton & Williams attorneys would counsel, if the legislation passed, “should thus begin preparing for any potential public relations issues that may arise out of the public disclosure of payments of the type contemplated by Dodd-Frank.”

  Positively disgusted by that prospect, Rex Tillerson decided it was time to act. ExxonMobil had been dispatching its lobbyists over to Capitol Hill to argue against this legislation since Lugar’s bill was first introduced, and continued after the Lugar-Cardin measure became Section 1504 of Dodd-Frank. But the damn thing was still alive. So one day in early 2010, in betwee
n picking up awards in Houston, dealing with the Deepwater Horizon fallout, and trying to close deals with the oil tsar Igor Sechin for big new joint ventures with Russia, Rex Tillerson finally decided to just do it himself. He flew to Washington and got himself a one-on-one meeting with the architect of Section 1504, Senator Richard Lugar.

  One of Lugar’s key staff members on the Senate Foreign Relations Committee, Jay Branegan, was in the room that day and could tell that quashing this little transparency movement meant a lot to Tillerson. “He was the only CEO to come in to lobby personally,” Branegan later told a reporter. Tillerson tried to explain to Lugar that forcing American companies to report all these foreign payments, and divulge specific dollar amounts, would disadvantage ExxonMobil in its competition against oil companies from other countries. And somebody at that meeting would remember in vivid detail that when Lugar said he wasn’t going to stand down on Section 1504, the ExxonMobil CEO did something altogether unexpected and uncharacteristic. Rex Tillerson lost his cool. “He got red-faced angry,” that person told The New Yorker’s Dexter Filkins in 2017. Tillerson denied this, but Filkins’s source was adamant. “He lifted out of his chair in anger. My impression was that he was not used to people with different views.”

  Another thing still remembered long after that meeting was this: “[Tillerson] listed a number of his and the industry’s objections to the bill,” Branegan told a reporter, “including that it would harm Exxon’s relations with Russia.”

  Marquette Road in Montclair, New Jersey, was the sort of suburban tree-lined street designed to discourage unwanted bustle and traffic. The road itself was just a third of a mile long, a slow arc of unlined pavement neatly edged with Belgian block, ending in a tight little circle of a cul-de-sac. Which meant Marquette Road led to nowhere—unless, of course, you lived in one of the three dozen mid-century colonial/split-level houses on the street. If that were the case, then Marquette Road led home, and happily so. The street was always quiet. The sidewalks straight and mostly smooth. The houses were set back from the road at a respectful remove, so the yards were ample, and each was diligently mowed and landscaped after the American middle-class fashion, with easy-to-maintain plants and shrubs and bushes you could pick up on a Saturday or Sunday at the Home Depot a convenient few miles away, just the other side of the Garden State Parkway.

  Not much unexpected happened on Marquette Road, which was the way everybody there seemed to prefer it. The same cars pulled in and out at regular hours most workdays, the same people walked their dogs (on leash) up and down the sidewalk, the same children came bounding down the block every afternoon on the way home from the school bus stop just around the corner. When somebody new moved in, it didn’t take long for an ad hoc Welcome Wagon to come knockin’ with some wine, or flowers, or sundry genial offers. We have a teenager who babysits! And it didn’t take long to become familiar with the daily rhythms of the new residents. Take the Murphy family, who had moved into the boxy beige 1950s-era four-bedroom colonial ($481,000, anybody could look it up on Zillow) in August 2008, just when a new school year was about to kick off. The Murphys seemed like something of a cliché in the New York suburbs: solidly middle-class, middle-aged professionals willing to give up the easier commute for an extra bedroom or two, a real yard, and, of course, the promise of good schools for their two young daughters. Probably the house was a stretch for the Murphys, financially, the way things looked. After almost two years in Montclair, the couple still hadn’t traded up for something better than their twelve-year-old Honda Civic.

  Richard Murphy was a stay-at-home dad. He wasn’t what you’d call outgoing or friendly, but he was polite and seemed like a man who could be counted on. He escorted his two daughters, Katie and Lisa, to the bus stop every morning and saw them off the big yellow school bus in the afternoons. He knew his way around a hamburger grill, mowed his own lawn, and favored Coors Light. His wife, Cynthia, was clearly the breadwinner. She took the DeCamp commuter bus number 66 into Port Authority every weekday morning and went to her office at a financial services company down near Wall Street, where she spent most of her time doling out tax and investment advice to high-end clients. And this was New York, so “high-end” also meant well connected in business and political circles. Cynthia Murphy was already gaining a reputation among her small group of friends on Marquette Road for her wide-ranging and thoroughgoing competencies. She had just earned her MBA from Columbia University but knew her way around the kitchen. “Oh, I had your lemon squares at the block party,” Cynthia exclaimed to one neighbor. “I wanted to get the recipe.” And she knew her way around the garden, too. Mrs. Murphy was a wizard with hydrangeas.

  The budding star of the family, however, was Katie Murphy, aged eleven. She could be seen, often with her sister in tow, riding down the block on her blue bicycle, her blond pigtails athwart in the wind. Or chalking out princess stories on the sidewalk. Or manning her lemonade stand. Or stopping to make a fuss over her neighbor’s dog, the extra-fluffy keeshond. Katie had been a distinguished participant, maybe the distinguished participant, at her recent fifth-grade graduation ceremony. “I was just struck at how accomplished she was,” another parent later told reporters, after the whole unlikely story of the Murphys began to emerge. “They called her up to the stage and said, ‘Stay right here. You’re getting more awards.’ ”

  It was right around the time of Katie Murphy’s impressive fifth-grade graduation in June 2010 that Marquette Road began to take on a slightly different aspect. And you didn’t have to be a nosey parker to suss it out. Something was amiss. The traffic patterns were different for starters. A number of unfamiliar cars parked up and down the street. One driver sat in a parked sedan down near the cul-de-sac for an hour and a half or more, which was a damn sight longer than any car service guy would wait around for a tardy client who had a reservation for a ride to Newark Airport. Gas company trucks were digging up the street, too, though nobody on the block had smelled gas and nobody had called the company, as far as anyone knew. There was also a smattering of people the neighbors had never seen strolling up and down Marquette Road, walking unfamiliar dogs. And then, all of a sudden, the last Sunday in June, the street was crawling with black Ford LTDs. Who drives a Ford LTD, in 2010?

  The arrests themselves happened in a hurry. The FBI and whatever other law enforcement agents were involved descended on 31 Marquette Road with all deliberate efficiency, because they knew Richard and Cynthia Murphy were at home for the taking. So was their younger daughter, nine-year-old Lisa. There was, however, a little glitch. Katie wasn’t there. She arrived home a few hours after the raid commenced, entirely unaware of the unfolding kerfuffle, carrying an animal balloon party favor from the birthday shindig she had just attended. Family friends escorted Katie and Lisa out of their house later that same evening. The teenage girl next door described the scene for one of the many reporters who would shortly arrive on Marquette Road. She said the young girls were in a state of obvious confusion and fear when they walked out the front door of the house, carrying backpacks and “clutching pillows.” The neighbor girl also described watching Richard and Cynthia Murphy being taken from the house, in handcuffs. No doubt headed for jail. Cynthia remained composed even as she was paraded out past her hydrangeas and all the gawkers. “[She] was like, ‘OK, I know exactly what this is and I am not saying anything,’ ” the neighbor remembered, “ ‘I have pride.’ ”

  The Murphys were not the only suspects rolled up in what turned out to be the capper of a ten-year-long FBI counterintelligence investigation. This was a full-on sleeper cell spy ring. The captured co-conspirators numbered ten, all with similarly nondescript aliases and covers: Don Heathfield and his wife, Tracey Foley, were Canadians who had moved to Boston about ten years earlier with their two sons. Heathfield had a master’s degree from Harvard’s Kennedy School of Government and worked as an international consultant specializing in leadership and management; Foley worked in
real estate. Juan Lázaro was a citizen of Peru who occasionally taught a college course in Latin American politics and lived in Yonkers with his wife, Vicky Peláez, a firebrand columnist for a Spanish-language newspaper. Their seventeen-year-old son was already gaining a reputation as a classical concert pianist in the making. Michael Zottoli and his wife, Patricia Mills, both had business degrees from the University of Washington in Seattle and had recently moved with their two toddlers across the country to the Washington, D.C., suburbs in hopes of landing jobs in or around the federal government. Mikhail Semenko was also living in the D.C. suburbs and working at a travel agency. Just twenty-eight years old, Semenko had recently completed a master’s degree in international relations/Asian studies and an internship at the World Affairs Councils of America in Washington. He also had a bang-up LinkedIn page, which to this day still reads, “Highly creative and analytical professional with recent education and diverse experience involving development assistance, meeting and event planning, partnership building, and high-level client relations. Natural leader and communicator with in-depth knowledge of government policy research.”

  The co-conspirator who captured the greatest portion of the media attention in the days following the dragnet was the youngest and the most attractive of the suspects, Anna Chapman. Cynthia Murphy’s businesslike competency, her prize hydrangeas, and her lemon squares were no match in the press for Chapman’s flaming auburn hair and youthful allure, which netted the twenty-eight-year-old a week’s worth of covers and headlines—“Double-0 Heaven”—in the always editorially tumescent New York Post. The “leggy redhead” was billed as a modern seductress worthy of Mata Hari. Her ex-husband back in London, Alex Chapman, fanned the flames by sharing with the sleaziest tabloid then on record, News of the World, racy photos of Anna and tales of sex romps involving nipple clamps and whips. “Anna was great in bed and she knew exactly what to do,” said the jilted ex-husband. “She was awesome.” A subsequent boyfriend and sugar daddy in London told other reporters he “was very, very shocked to see this news.” He said it never crossed his mind she was a spy.