Why Rex Tillerson Has to Untangle Himself From His Business and Investments

— -- Rex Tillerson -- the ExxonMobil chairman and CEO tapped to be the next secretary of state -- must by law put his financial assets into a blind trust or equivalent, legal experts told ABC News.

Unlike his future boss Donald Trump, if confirmed Tillerson will be subject to a federal conflicts of interest law (18 U.S. Code § 208), which prohibits most federal officials from participating in government matters in which they or their family have a financial interest. The president and vice president are exempt from this rule.

“Application of the ethics statute is crystal clear here. He has to put his assets into a blind trust run by an independent trustee, and he can’t know what stocks he owns,” said David B. Rivkin Jr., who served in the Justice Department and White House Counsel’s Office under former President George H.W. Bush.

Rivkin is one of the few ethics lawyers who told ABC News that in his opinion ethically, and not just legally, Trump does not need to divest his business holdings or put them in a blind trust as long as he adopts a “reasonable system” to avoid conflicts.

Richard Painter, the chief White House ethics lawyer for former President George W. Bush, said that Tillerson must go further than simply moving his assets into a blind trust -- he must divest them. “Absolutely, he must give up all stock and stock options in Exxon and distance himself from oil company executives,” Painter told ABC News.

“Resolving the stock conflict through a sale is easy, since the ExxonMobil stock is frequently traded,” noted Matthew Sanderson, a Republican lawyer with Caplin & Drysdale.

But even if Tillerson sells his oil stocks, he might still need to recuse himself from certain government functions because of his deep business ties, according to Painter. For example, conflicts of interest could come up during negotiations involving the Middle East and other places with large oil reserves, Russia, and climate change where “he has to be independent of the oil industry, which seems to want to delay a solution” to environmental concerns, said Painter.

“It may be that the appearance of conflict and the need for repeated recusals is so profound that the Senate concludes he cannot do the job,” Painter said Tuesday in a joint statement with Norman Eisen, the former top ethics lawyer for President Barack Obama.

Rivkin disagreed, telling ABC News that he does not anticipate exceptional ethical or legal problems with Tillerson’s nomination. “I have every expectation this will be handled properly,” Rivkin said, calling it “entirely normal” to take a position as CEO when you have a fiduciary duty to shareholders and pursue a different position as secretary of state. “You can’t blame him for it.”