‘Iran is in for the long haul’ with oil tanker hijacks, expert says, as U.S. considers more sanctions

Iranian soldiers take part in an annual military drill in the coast of the Gulf of Oman and near the strategic Strait of Hormuz.

Anadolu | Anadolu | Getty Images

The containership MSC Aries seized by Iran over the weekend marked at least the sixth vessel hijacked by Iran and its proxies in response to the Israel-Gaza war, and it’s adding to the challenges to longstanding freedom of navigation principles that maritime shipping relies on.

Before this weekend’s tanker seizure, the last vessel Iran hijacked was the St. Nikolas on January 1. According to U.S. Naval Forces Central Command, that brought the total number of vessels being held to five, and over 90 crew members hostage. Previous to that, the Iranian-backed Houthis hijacked The Galaxy Leader on November 19.

The latest development has shipping and energy experts bracing for a long-term timeline of uncertainty.

“Iran is in this for the long haul,” said Samir Madani, co-founder of Tankertrackers.com, an independent online service that tracks and reports crude oil shipments in several geographical and geopolitical points of interest.

The MSC Aries was identified by Iran as having a link to Israel. The containership has a carrying capacity of 15,000-TEUs (twenty-foot equivalent containers). MSC leases the Aries from Gortal Shipping, an affiliate of Zodiac Maritime, which is partly owned by Israeli businessman Eyal Ofer.

MSC declined to comment directly to CNBC.

In a statement released by MSC on Wednesday, it said the crew members were safe and discussions with Iranian authorities were underway to secure their earliest release and to have the cargo discharged.

Madani said he does not expect a quick release. “They will hold the MSC Aries for a long period. Iran has been holding some tankers for about a year, if not longer now,” he said.

According to Tankertracker information, Madani said the vessel is being held in the Khuran Straits, not too far from three other tankers Iran hijacked: the Advantage Sweet, Niovi, and St. Nikolas.

A Planet Labs satellite image of the location of the MSC Aries and other tankers recently hijacked by Iran.

Planet Labs PBC

As the U.S. considers more sanctions against Iran in response to its recent attack on Israel, Iran has been using the hijacked ships as a means of sanctions retaliation.

“Iran has already seized the Kuwaiti oil that was onboard the Advantage Sweet and has been loaded onto their VLCC supertanker the Navarz. Iran chose to do this as a way to compensate for sanctions,” Madani said.

While the Niovi was empty at the time of the seizure, the St. Nikolas is filled with a million barrels of Iraqi oil.

Treasury Secretary Janet Yellen said on Tuesday that the government may do more to prevent Iran’s ability to export oil despite U.S. sanctions. China’s purchases of Iranian oil in recent years have allowed Iran to keep a positive trade balance.

According to the U.S. Energy Information Agency, China, the world’s largest importer of crude oil, imported 11.3 million barrels per day of crude oil in 2023, 10% more than in 2022. Iran ranked second in oil exports to China behind Russia. Customs data indicates that China imported 54% more crude oil (1.1 million b/d) from Malaysia in 2023 than in 2022, with industry analysts speculating that much of the oil shipped from Iran to China was relabeled as originating from countries such as Malaysia, the United Arab Emirates, and Oman to avoid U.S. sanctions.

The markets continues to assess the risk of further escalation in the military tensions between Israel and Iran, which could lead to a disruption in the Strait of Hormuz, through which about 30% of the world’s seaborne oil passes, according to JPMorgan. On Tuesday, oil edged higher amid talk of sanctions.

An Iranian blockade would supercharge oil prices, but the risk is low given that the strait has never been closed off despite many threats by Tehran to do so over the past four decades, according to JPMorgan.

“They can’t close the Strait of Hormuz, but they can do significant damage to energy infrastructure, to vessels in the region,” RBC’s head of global commodity strategy and Middle East and North Africa research, Helima Croft, told CNBC on Monday, referring to Iran’s capabilities.

“While I can’t imagine Iran would want to fill up their anchorage with vessels, they want to keep the waters in a constant state of chaos,” Madani said. But with a closure, he said, “They would shoot themselves in the foot since their biggest client is China.”

Andy Lipow, president of Lipow Oil Associates, says the closure of the Strait of Hormuz would result in a spike of Brent crude oil prices to the $120 to $130 range. “This would strain ties with China and India who purchase a significant amount of Persian Gulf oil to meet much of their energy demand.”

Lipow also said Iran might be reluctant to shut the waterway for fear of antagonizing Saudi Arabia, Kuwait and Iraq, who depend on the strait being open for most of their oil exports. The bigger immediate fear in the oil market, he said, is that the attack by Iran on Israeli territory leading to a counterattack by Israel on Iran damaging oil-producing and exporting facilities.

Kevin Book, managing director of ClearView Energy Partners, says the markets need to keep an eye on sanctions from both the US and UN potentially.

In a note to clients, ClearView highlighted that the House of Representatives added several Iran sanctions bills to its calendar for consideration this week, under suspension rules, including new sanctions on Iranian oil exports to China. Book said the House was considering 11 bills in all in response to Iran’s attack on Israel.

“We think most if not all bills could garner (notionally) veto-proof bipartisan support,” the note said. “Passage requires a two-thirds majority of all members present and voting.”

Israel has also asked the U.N. to reinstate multilateral sanctions lifted by the Iran nuclear deal, but for this to happen, France, Germany and the U.K., parties to the nuclear deal, would have to agree. “There are many risks unfolding. The forest is on fire,” Book said.

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Oil prices could spike 20%, possibly double if Middle East conflict disrupts Strait of Hormuz

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Treasury Department’s hunt for Russian oil sanction violators on the seas is intensifying

A Russian-chartered oil tanker in the sea off Morocco in an area identified by maritime technology company Windward as a hub for smuggling oil.

Europa Press | Getty Images

The U.S. Department of the Treasury’s Office of Foreign Assets Control announced three vessels and shipping companies being sanctioned for violating the Russian oil sanctions on Thursday, only a few days after Treasury began a separate, larger probe of approximately 30 ship management companies covering 100 vessels suspected of violating a price cap on Russian oil.

“Shipping companies and vessels participating in the Russian oil trade while using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement on Thursday. “We are committed to maintaining market stability in spite of Russia’s war against Ukraine, while cutting into the profits the Kremlin is using to fund its illegal war and remaining unyielding in our pursuit of those facilitating evasion of the price cap.”

But as the Treasury seeks to cut off the Kremlin’s access to oil profits, its hunt for crude tankers and shippers violating OFAC guidelines is revealing complexities in its own guidelines and a murky marine industry.

The shipping entities identified on Thursday were United Arab Emirates-based. The vessels were Kazan Shipping Incorporated’s Kazan, Progress Shipping Company Limited’s Ligovsky Prospect, and Gallion Navigation Incorporated’s NS Century. But while those ships are now UAE-based, Matthew Wright, lead analyst of freight at marine intelligence firm Kpler, tells CNBC the location of where the company is based may be different from the location of the beneficial owner. In this case, Wright says the beneficial owner is likely still Russian-based.

“Based on the history of these fleets, these vessels were all owned and operated by Sovcomflot,” Wright said. “Management of all the Sovcomflot ships was transferred to Sun Ship Management in March/April 2022 when their offices in Europe were closed. Those three companies are now managed by a new manager called Oil Tankers SCF Management but it’s just another name. Ownership hasn’t changed since 2006. They’re not part of either the dark or grey fleet really as I consider them still Russian-owned.” 

30 ship owners targeted in new Treasury probe

This is just one example of the murkiness within the Russian oil trade. The probe against 30 shipowners begun earlier this week reveals how identifying and finding proof of vessels traversing the oceans with sanctioned oil is not as straightforward as suggested by initial headlines covering the Treasury allegations. These companies received warning letters from the government about activity deemed suspicious and requests for documentation. There are grey areas in the U.S. government’s Russian oil guidelines, though the efforts can ultimately lead maritime investigators to the truth.

In the U.S. Treasury’s “Preliminary Guidance on Implementation of a Maritime Services Policy and Related Price Exception for Seaborne Russian Oil,” ship owners are under a Tier 2 category. According to the Treasury, this group within the maritime industry are “actors who are sometimes able to request and receive price information from their customers in the ordinary course of business.”

If a ship owner is unable to obtain such pricing information, according to the Treasury’s guidelines, the Tier 2 actors (ship owners) need to request “customer attestations” where their charter customers pledge in a document they will not purchase seaborn Russian oil above the price cap.

This document could provide a “safe harbor” for ship owners who are relying on that customer’s “attestation” to comply with sanctions. This safe harbor is also extended to the ship insurance companies.

“Ship owners rely on the charterer to provide ample proof that the Russian oil on board the vessel has been sold below the price cap,” said Andy Lipow, president of Lipow Oil Associates. “The sanctions can easily be circumvented if a dishonest charterer presents documents that falsify the true cost of the oil.”

Lipow said one clue to suspicious paperwork is a price of oil that is well below the market, selling Russian crude oil in Asia today at $50 per barrel when Brent is trading at $80.

“That is a red flag,” Lipow said.  

Based on the safe harbor, if the ship owner or management company can be absolved of wrongdoing, the documents can still lead Treasury to the charterer.

The U.S. Treasury told CNBC it does not comment on current investigations.

Tracking Russian oil

A breakout of the Russian oil trade by Kpler shows around 30% of Russian exports from Western ports are still using commercial shipping with beneficial ownership within the European Union.

Wright said this “dark fleet” is comprised of vessels typically 20 years and older which have loaded or predominantly loaded Venezuelan or Iranian cargoes in the last few years.

“There is often some evidence that they have been disguising their activities by turning off their AIS, but not in all cases,” said Wright, referring to the automatic identification system used by marine vessels to track location. “Ownership is often opaque and the operator does not engage in standard commercial shipping outside of operating these vessels.”

There are also “grey fleet” vessels sold since the Russian invasion of Ukraine with the aim of transporting Russian exports and avoiding sanctions. These vessels, according to Wright, have had EU ownership.

“Most vessels have been sold by owners based in Europe to owners who were not previously active in the tanker market,” he said. “The owners are based mainly in Hong Kong, China, India, and the UAE.”

The price cap rules state that exports of Russian crude or refined products on EU-owned, insured, or serviced tonnage must be below the relevant price cap.

Since July, Wright says most exports from Russia are assumed to be above the caps, yet a large number of ships from within the EU continue to trade. This is because of the way Russian crude is traded.

“It is very likely vessels loading Russian cargoes that are EU-owned will have documentation showing a crude trade below the price cap, even if the cargo was actually traded above the price cap,” Wright said. “This is because a charterer or middleman will have traded it at a price that can be shown to the owner as part of a wider trade with the final buyer. The (vessel) owner is unlikely to have any evidence to the contrary.”

Vessel owners do not produce these documents, he said, but are provided with these documents by the charterer.

“The vessel owners are merely the custodians of information provided to them,” Wright said.

Beks Shipmanagement & Trading confirmed to CNBC it is among the companies that received warning letters from the Treasury this week and is sending documents to the government. The company had been identified in earlier press reports, though Treasury declined to specify companies to receive letters.

In an email to CNBC, the company rejected the Treasury’s allegations. “Despite the fact that the U.S. Treasury Department requested voyage details from 30 different ship management including 100 vessels, it is an obvious bad faith and reputation damaging purpose that only our management company was mentioned in the news recently circulated in the media,” a Beks spokesperson wrote.

The company, based in Turkey, announced in October the deployment of SpaceX’s Starlink satellite connectivity system across its fleet of 40 bulkers and tankers for enhanced vessel tracking.

“Our vessels are traded worldwide with their tracking system always switched to the on position. We employ our vessels by abiding (by) all international laws and regulations without breaching any sanction regime,” the company wrote in the email.

Beks said it has been conducting due diligence procedures on all of its voyages as well as carrying out the necessary sanction checks with its London-based lawyers.

According to Kpler, Beks Shipmanagement’s fleet had numerous tanker port calls to Russia since the start of sanctions on February 24, 2022. One example is the oil products tanker Bek Aqua.

Kpler was able to track the travel of the tanker using the tanker’s satellite beacons through the AIS short-range coastal tracking system currently used on ships.

The tanker Beks Aqua arrived at the Russian Port of Nakhodka on Oct 26 and was loaded with either diesel or Naptha on November 1. The vessel then arrived at the Port of Singapore on November 10 and departed empty on November 14.

But following the satellite data doesn’t allow for understanding of contract prices.

“While we can track the vessel’s journey from Russia to Singapore, unless we have the sales contract, we do not know the price the oil product was purchased for,” Lipow said. “The only fact we have is companies like Beks Shipping are employed to move Russian oil. It is possible that someone filed false paperwork with the shipowner. This is why tracking the Russian oil sanctions is not straightforward,” he said.

Beks Shipmanagement said the requested voyage details will be provided to the U.S. Treasury with full transparency.

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Trump attacks judge in NY fraud case who fined him $15,000

Former U.S. President Donald Trump attends the Trump Organization civil fraud trial, in New York State Supreme Court in the Manhattan borough of New York City, U.S., October 25, 2023. 

Jeenah Moon | Reuters

Former President Donald Trump on Thursday railed against the judge who will deliver verdicts in his $250 million New York fraud trial, one day after storming out of the courtroom in the middle of witness testimony.

Trump’s fusillade on Truth Social followed a dramatic trial day in which Manhattan Supreme Court Judge Arthur Engoron put Trump on the witness stand, fined him $10,000 for violating his gag order and shot down a request for a sweeping verdict in his favor.

The latest attacks show Trump, a prolific social media user who is running for president again in the 2024 election, turning to the court of public opinion to fight his mounting legal challenges.

But his efforts are constrained by gag orders in two separate cases, including special counsel Jack Smith’s federal case charging Trump with conspiring to subvert his loss to President Joe Biden in the 2020 presidential election.

In that case, Trump is prohibited from publicly targeting Smith or potential witnesses, both of whom he has frequently referenced online and on the campaign trail. When those restrictions were temporarily paused last week, Trump fired off attacks against both the special counsel and his former White House chief of staff, Mark Meadows, a witness in Smith’s case.

In the New York civil fraud case, meanwhile, Engoron has already ruled twice that Trump violated his narrow gag order, which merely bars him from attacking the judge’s staff.

Former U.S. President Donald Trump is questioned by Judge Arthur F. Engoron before being fined $10,000 for violating a gag order for a second time, during the Trump Organization civil fraud trial in New York State Supreme Court in the Manhattan borough of New York City, U.S., October 25, 2023 in this courtroom sketch. 

Jane Rosenberg | Reuters

Upon finding that Trump’s testimony rang “hollow and untrue,” Engoron has now fined him a total of $15,000. The judge has warned Trump that additional violations will yield much more severe sanctions — including possible imprisonment.

With his targets narrowing, Trump’s attacks appear to be intensifying.

In at least four lengthy social media posts on Thursday, Trump ripped Engoron as a “tyrannical and unhinged” and “fully biased Trump Hater” who “should be ashamed of himself” for his handling of the case.

“HE HAS GONE CRAZY IN HIS HATRED OF ‘TRUMP,'” wrote the former president, who also railed against New York Attorney General Letitia James, his ex-attorney Michael Cohen and a New York Times reporter.

Trump’s 2024 presidential campaign, meanwhile, sought to capitalize on the case by criticizing it in multiple fundraising pleas as a “sham trial” led by a “Democrat judge” who “continues to harass” Trump.

Engoron has already found Trump and other defendants liable for fraudulently inflating the values of real estate properties and key assets on years of financial statements. James, who brought the case, accuses Trump, his two adult sons, the Trump Organization and top executives of falsifying those asset values for a host of financial perks, including tax benefits and more favorable loan terms.

The trial, which is scheduled to last until late December, will resolve six other claims in James’ lawsuit. Engoron himself will deliver verdicts in the trial, which is being conducted without a jury — a fact Trump frequently protests on social media and at the courthouse.

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“He is a judge that found me GUILTY before the trial even started,” Trump said of Engoron in his social media screed Thursday.

The posts also called Engoron a “Radical Left Judge” and claimed that he is ignoring a prior appeals court ruling “overturning” his decisions. A New York appeals court panel last month had cleared the trial to begin, denying Trump’s request to delay it.

Engoron had imposed a narrow gag order on Trump on the second day of the trial, after Trump sent a Truth Social post attacking the judge’s law clerk, Allison Greenfield, who sits next to him in court.

About two weeks later, the judge found that Trump violated that gag order by failing to remove the post from his campaign website. Engoron fined Trump $5,000 in that instance and warned him that future violations would yield more severe sanctions, potentially including imprisonment.

During a break in the trial Wednesday, Trump complained to reporters outside the courtroom, “This judge is a very partisan judge with a person who’s very partisan sitting alongside him, perhaps even more partisan than he is.”

Former U.S. President Donald Trump attends the Trump Organization civil fraud trial, in New York State Supreme Court in the Manhattan borough of New York City, October 25, 2023.

Jeenah Moon | Reuters

After hearing about those remarks, Engoron briefly called Trump to the witness stand to explain himself.

Trump said that he was referring to Michael Cohen, Trump’s former personal lawyer, who had been testifying throughout the trial day. But Engoron found that answer unconvincing, and he fined Trump $10,000.

“Don’t do it again or it will be worse,” Engoron warned in court.

In his written order Thursday morning, Engoron ruled that Trump intentionally violated the gag order. He noted that Cohen was sitting in the witness box, not alongside him, and said that Trump’s past attacks on Cohen have been less ambiguous.

“Using imprecise language as an excuse to create plausible ambiguity about whether defendant violated this Court’s unequivocal gag order is not a defense; the subject of Donald Trump’s public statement to the press was unmistakably clear,” the judge wrote.

The clash over the gag order was not the only contentious moment in the trial on Wednesday.

Defense lawyer Cliff Robert had asked for a directed verdict after Cohen, Trump’s once-loyal aide who is now a key witness against him, testified that he did not recall if Trump had asked him to inflate the values of his assets. Engoron denied the request, prompting Trump to get up and leave.

Cohen later clarified that while Trump speaks in indirect ways like a “mob boss,” he did communicate the outcome he wanted, according to NBC News.

Engoron rejected another request for a directed verdict later in the day, telling Robert, “there’s enough evidence in this case to fill the courtroom.”

On social media, Trump complained, “The unhinged Judge, a highly political and fully biased Trump Hater, refused to dismiss this HOAX of a case, and has lost all CREDIBILITY.”

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State leaders targeting climate investing have quiet stakes in the fossil fuel industry

In October, Scott Fitzpatrick, then-treasurer of Missouri, announced his state would pull $500 million out of pension funds managed by BlackRock.

He said he would move Missouri’s money away from the asset manager because it was “prioritizing” environmental, social and governance investing over shareholder returns. Fitzpatrick, a Republican who won election as the state’s auditor in November, used his office as treasurer to target BlackRock after years of criticizing Wall Street for a perceived turn toward investing focused on climate and social issues.

As he homed in on BlackRock, Fitzpatrick quietly held a financial stake in a massive fossil fuel company that could suffer from the broader adoption of alternative energy. Fitzpatrick and his wife owned a more than $10,000 stake in Chevron during both of 2022 and 2021, according to his latest financial disclosures filed with the state.

Fitzpatrick is among a group of powerful Republican state leaders who have waged similar fights against environmentally conscious investing as they held personal investments in, or saw political support from, the fossil fuel industry.

A handful of state financial officers who have similarly attacked ESG practices owned stock or bonds in oil, gas or other fossil fuel companies in recent years, according to the latest state financial disclosure reports reviewed by CNBC. Some of the state officials have received campaign donations from fossil fuel companies or their executives.

Climate activists with Stop the Money Pipeline hold a rally in New York City to urge companies to end their support for the proposed Line 3 pipeline project and stop funding fossil fuels and forest destruction, April 17, 2021.

Erik McGregor | LightRocket | Getty Images

State leaders face possible conflicts of interest when they have a chance to see financial gains from the fossil fuel industry as they use their offices to defend the sector — or in some cases move their state’s dollars away from clean-energy investments, government ethics experts told CNBC. As the officials ramp up their criticism of Wall Street investment practices, a lack of state laws requiring regular stock disclosures makes it difficult for the public to monitor what personal stake their representatives could have in the actions they take in office.

Brandon Alexander, the chief of staff to the Missouri auditor’s office, told CNBC in an emailed statement that Fitzpatrick’s publicly traded securities are either in a trust or qualified retirement accounts that are managed by a financial advisor.

“Other than employer sponsored retirement accounts (the entirety of which are invested in target date funds over which he has no control), all of Auditor Fitzpatrick’s publicly traded securities, are held in a trust or in qualified retirement accounts which are actively managed by a financial advisor to whom he gives no direction,” Alexander said. “He has never ‘had private briefings tied back to the fossil fuel industry’ nor does he personally direct or execute trades himself. Auditor Fitzpatrick stands by his criticism of the ESG movement, especially as it relates to the application of ESG standards in the management of public funds.”

Unlike members of Congress, state financial officers in many cases only have to disclose their stock ownership once a year. In some states, they do not have to divulge their investments at all. In contrast with federal lawmakers, they also do not have to file regular records disclosing their new trades.

None of the officials mentioned in this story engaged in illegal conduct. But the fact that they have investments that could be helped by their high-profile campaigns against ESG investing may create trust issues with the people they represent, says ethics experts.

“This is a problem that we have elected officials at the federal and state level that are simply not willing to avoid personal financial conflicts of interest,” Richard Painter, who was the chief White House ethics lawyer in the George W. Bush administration, told CNBC in an interview. “You could have someone own stock in a company and pursue policy that could benefit that company. What’s good for Exxon Mobil’s stock is not necessarily good for America.”

Painter said that owning such stock is not illegal for state based leaders. Congressional lawmakers are also allowed to own stock but the 2012 STOCK Act disallows members of Congress to use non-public information to gain a profit and prohibits insider trading.

Another government ethics expert also cited an appearance of conflict as an issue for public officials.

“If an official has a financial interest in a company or an industry, it is reasonable to question whether that interest impacts how they approach their government work,” Donald Sherman, a senior vice president and chief counsel for watchdog group Citizens for Responsibility and Ethics in Washington, told CNBC in an interview.

The fight against ESG investment standards has become a core issue for some Republicans at the federal and state level. Many of those officials have used their positions to target companies they believe are too politically active or, in some cases, are hurting certain industries, such as fossil fuels.

In the case of state financial officers, they have the power to shift public assets or pension funds away from certain firms and to other institutions.

Vocal ESG critics have fossil fuel ties

Georgia’s state treasurer, Steve McCoy, was appointed by Republican Gov. Brian Kemp in 2020. He was among state financial officers, including Fitzpatrick in Missouri, who last year co-signed a letter to President Joe Biden opposing policies that promote ESG. The Biden administration has promoted environmentally conscious investing, and the president used his first veto on a measure that would have shot down a Labor Department rule that promoted ESG policies.

The letter said the state officials “believe the White House should be spearheading a call to invest in American energy instead of pursuing ESG initiatives that divide American energy businesses and discourage investment in these reliable energy industries.” The group went on to say that “freedom is the key to addressing climate change. The depth and breadth of American innovation is unparalleled globally, including the development of green technologies. However, oil, gas, coal, and nuclear are currently the most reliable and plentiful baseload power sources for America and much of the rest of the world.”

McCoy is one of the state financial officers who held an investment in fossil fuels. He had a stake in the industry as recently as 2020 — though changes in disclosure rules mean he has not had to disclose his assets more recently.

McCoy disclosed in 2020 that he owns bonds in fracking company Halliburton and a stake in the U.S. Oil Fund, an ETF that tracks the benchmark price of U.S. crude oil. The disclosure says that these stakes are either “more than 5 percent of the total interests in such business or investment, or [have] a net fair market value of more than $5,000.”

The 2020 disclosure was the last time McCoy filed a document showing his investments. Some states, including Georgia, do not require officials who hold key state positions to file full disclosure forms, and require those leaders to publish only a one-page affidavit, according to Haley Barrett, a spokeswoman for Georgia’s Government Transparency and Campaign Finance Commission.

Two of McCoy’s affidavits filed with the state say virtually nothing about his business dealings and stock holdings. McCoy’s most recent affidavit, from 2022, shows his titles as treasurer and as a member of a variety of boards, including the state Depository Board.

McCoy also had to sign a statement to confirm that he has taken “I have taken no official action as a public officer in the previous calendar year which had a material effect on my private, financial or business interests.” That affidavit and a 2021 version of the document does not say whether McCoy currently owns any stocks in the fossil fuel industry.

When asked about what the state ethics commission does to verify if those signed statements are accurate, Barrett said in an email that “once these documents have been filed with our office and reviewed, there is an opportunity to determine if there are any discrepancies in the filings. Investigations can be initiated internally through our office or by a third party complaint.”

McCoy and his office did not return requests for comment.

McCoy is far from the only ESG critic who has a financial or political interest in fossil fuel companies.

Texas’ state comptroller, Glenn Hegar, argued in letters to money managers last year that he believes firms such as BlackRock, HSBC and UBS are boycotting the energy industry, saying in a statement at the time that he believes “environmental crusaders” have created a “false narrative” that the economy can transition away from fossil fuels. Hegar co-signed an open letter in 2021 with other state financial officers that was addressed to the U.S. banking industry and defended the fossil fuel industry.

“We will each take concrete steps within our respective authority to select financial institutions that support a free market and are not engaged in harmful fossil fuel industry boycotts for our states’ financial services contracts,” the letter reads.

He also co-signed the 2022 letter to Biden from a slate of other state financial officers defending the fossil fuel industry.

Hegar has since escalated his campaign against the institutions. Hegar sent letters to fellow state money managers arguing that they have not done enough to cut ties with BlackRock and other firms that he said boycotted the oil and gas industry, Bloomberg reported in February.

In the lead-up to his anti-ESG push, Hegar owned stock in the oil and gas industry. In 2021, the Texas comptroller and his spouse owned between 100 and 499 shares of Devon Energy and up to 99 shares of ConocoPhillips, according to his latest financial disclosure.

His financial records from all of the previous years since he became state comptroller in 2015 do not show any stock in these two companies or in the fossil fuel industry at large.

Hegar’s political ambitions have also seen a boost from the oil and gas industry — a dominating force in Texas. During his 2022 reelection, Hegar received donations from a range of PACs and executives from the oil and gas business.

His campaign received $10,000 last year from Ben “Bud” Brigham, the chairman of oil and gas development company Brigham Exploration, according to state campaign finance records. The PACs of Chevron, ConocoPhillips, Devon Energy, Calpine Corp. and Valero Energy were among Hegar’s fossil fuel donors during his run for reelection last year, according to state records.

Hegar and his office did not return requests for comment.

Jimmy Patronis, Florida’s chief financial officer, has been railing against ESG investment standards since around the time he was reelected to the position in November. Patronis was also among the co-signers of the 2022 letter to Biden defending the fossil fuel industry.

By December, Patronis announced that the Florida Treasury would start divesting $2 billion of assets managed by BlackRock. In an interview on CNBC’s “Squawk Box” in February, Patronis explained the decision.

“The bottom line: I’m seeing dollars are being siphoned off. I’m seeing individuals, like [BlackRock CEO Larry] Fink and others that are using the state of Florida’s money for a social agenda,” he said.

He added: “I just care about returns. And I’m not seeing that.”

Heading into 2022, he also had a financial interest in the fossil fuel industry.

Patronis owned 100 shares combined of Exxon Mobil and Chevron — the two largest gas companies in the world — at the end of 2021, according to his most recent publicly available disclosure.

His personal interest in fossil fuel companies has grown in recent years. In 2018, he disclosed only about 10 shares of Exxon and did not list any Chevron stock.

The document was the first time since 2018 that Patronis listed investments in the sector.

Frank Collins III, the state’s deputy chief financial officer, told CNBC in a statement that Patronis believes ESG efforts are part of a campaign to decimate the oil and gas industry. He said Patronis does not personally make trading or investment decisions for the state’s retirement systems.

“The CFO wants great returns for those in Florida’s retirement funds, nothing else. While the ESG movement has been on a campaign to erase America’s oil and gas industry from the map, those industries were making returns for investors,” Collins said.

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