Administration Skirted U.S. Sanctions to Grant Iran Billions in Cash
By Adam Kredo
June 6, 2018
Obama administration skirted key U.S. sanctions to grant Iran access to billions
in hard currency despite public assurances the administration was engaged in no
such action, according to a new congressional investigation.
published Wednesday by the Senate Permanent Subcommittee on Investigations,
further discloses secret efforts by top Obama administration officials to assure
European countries they would receive a pass from U.S. sanctions if they engaged
in business with Iran.
findings confirm earlier reports by
the Washington Free Beacon surrounding efforts by the Obama
administration to go above and beyond the terms of the landmark nuclear deal to
appease Iran and grant it billions in hard currency, as well as access to the
U.S financial system, despite multiple assurances to Congress this was not the
investigators have now confirmed that the Obama administration ordered the
Treasury Department to issue a secret license granting Iran access to the U.S.
financial system and American dollar, a process that played out at the same time
these senior administration officials were testifying to Congress that they were
not engaged in such activities.
investigation confirms allegations by many in Congress that the Obama
administration was engaged in covert diplomacy with senior Iranian officials
beyond the nuclear agreement to help Tehran obtain billions in hard currency,
cash that was later used by the Islamic Republic to fund its ballistic missile
program and fighting forces operating in Syria and across the region.
Obama administration misled the American people and Congress because they were
desperate to get a deal with Iran," said Sen. Rob Portman (R., Ohio),
chairman of the Permanent Subcommittee on Investigations. "Despite claims
both before and after the Iran deal was completed that the U.S. financial system
would remain off limits, the Obama administration issued a specific license
allowing Iran to convert billions of dollars in assets using the U.S. financial
days after the Obama administration announced the implementation of the nuclear
agreement, U.S. officials were contacted by Bank Muscat in Oman, which was
seeking to convert nearly six billion dollars on Iran's behalf.
Muscat petitioned the Obama administration to allow it to access the U.S. dollar
in order to conduct the transition, which was to be carried out from Omani rials,
into U.S. dollars, and then into Euros. That money would then be transferred
into the Central Bank of Iran, or CBI, which was long designated for sanctions
by the United States as a result of its efforts to fund Iran's terror operations
and nuclear program.
inability to convert the funds held at Bank Muscat through the U.S. financial
system frustrated key Iranian officials," according to the congressional
investigation. "On January 24, 2016, a lead Iranian negotiator, wrote to
his U.S. State Department counterpart, complaining that Iran could not convert
its assets as it requested."
such transactions remained prohibited under the nuclear agreement, also known as
the JCPOA, senior Obama administration officials in the State and Treasury
Departments scrambled to find back-door methods to appease Iran.
one email obtained by congressional investigators, a Treasury Department
official says that the United States committed much more to Iran than was
publicly disclosed at the time by the Obama administration.
It looks like we committed to a whole lot beyond just allowing the immobilized
funds to settle out," the official wrote.
the administration was not obligated to conduct any such transactions on Iran's
behalf, Obama administration officials decided to pressure the Treasury
Department to issue a secret license permitting Iran to access the $5.7 billion
from Oman's Bank Muscat using the U.S. financial system, according to the
Department officials began working on a specific license authorizing Bank
Muscat's transaction," the report finds. "A specific license allows
specified transactions to occur that would otherwise violate U.S.
license did not have to be publicly disclosed and it was ultimately issued
during a time when top Obama administration officials were testifying to
Congress that they had no intention of permitting Iran access to the U.S.
February 24, 2016, the Treasury Department issued a specific license to Bank
Muscat to authorize the conversion of Iran's rials to euros through ‘any
United States depository institution … involved as a correspondent bank …
where such foreign exchange conversion provides an indirect benefit to persons
subject to the jurisdiction of the Government of Iran,'" investigators
found. "Iran was then free to use a U.S. bank to act as the intermediary
(called a ‘correspondent ban') to convert its assets at Bank Muscat (Omani
rials) through the correspondent bank account in the United States (U.S.
dollars) to a designated bank in Europe (euros)."
U.S. Office of Foreign Assets Control, or OFAC, subsequently lobbied two U.S.
banks to convert the funds on Iran's behalf.
officials at OFAC contacted both of the banks to encourage them to convert the
funds," according to the report. "Convincing a U.S. bank to convert
the funds was crucial."
administration officials then conducted a series of back-channel conversations
aimed at getting top officials to pressure these banks to carry out the illicit
transactions on Iran's behalf.
further encourage the banks, one U.S. government official wrote, ‘I agree it
would be a good idea to have [Secretary] Lew engage [the U.S. bank],"
according to emails obtained by investigators. "If they refuse we can
suggest [Secretary] Kerry will call, which will drive them nuts."
of the U.S. banks eventually declined to carry out the transaction due to
concerns over U.S. sanctions laws.
the effort did not end there. Officials in the Treasury and State Departments
held private conversations to find other avenues to help Iran receive the
and State Department officials sought other ways to move the funds. Discussions
involved coordinating with the Federal Reserve Bank of New York, the Bank for
International Settlements, and the Central Bank of Germany," according to
efforts also were unsuccessful and the administration never ultimately found a
way to enable Iran access to the $5.7 billion, which was later converted by Bank
Muscat and Iran outside the U.S. financial system.
officials expressed outrage at the United States over the failed bid, which
prompted another series of discussions with these Iranian official about ways
the Obama administration was going beyond the terms of the nuclear agreement to
help Iran obtain hard currency.
United States "exceeded our JCPOA commitments by OFAC's issuing a license
to enable Bank Muscat to work with any U.S. financial institution to facilitate
the conversation of assets in the banks from rials to other non-dollar
currencies," one State Department official wrote to the Iranians in 2016.
shadow diplomacy played out far from the public spotlight and occurred while
Obama administration officials were publicly telling Congress a different story.
familiar with the issue told the Free Beacon similar measures must
have been taken to facilitate other transactions that the Obama admin hid from
reporters, including the taxpayer purchase of Iranian nuclear material that
Tehran produced in violation of the deal.
the Treasury and State Department worked behind the scenes to help Iran access
the dollar, the message to Congress remained the same: The JCPOA did not allow
Iran to access the U.S. financial system," the report notes.
report further discloses efforts by top Obama administration officials to lobby
European countries to reengage in business with Iran, despite U.S. sanctions
In one secret meeting, U.S. officials "signaled that it would not aggressively enforce violations of the new sanctions regime," investigators found. "For example, during a [pro-Iran] roadshow in London in March 2015 with representatives from 10 major global financial institutions, the head of the U.S. Treasury Department's Office of Foreign Asset Compliance [OFAC] assured attendees that '95 percent of the time OFAC sees an apparent violation it results in a simple warning letter or no enforcement action,'" according to minutes of these meetings. "He explained OFAC would only take action in egregious situations."