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tv   Politics and Public Policy Today  CSPAN  September 8, 2016 11:00am-1:01pm EDT

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it is clear that perhaps the administration and certain democratic members of the house are the only people in america who believe that ransom was not paid. it is also clear that many believe this is a good u.s. policy. i believe it not to be a good u.s. policy. otherwise, four hostages may lead to 40 hostages that may lead to 400 hostages. and that is why i believe in the history of our republic, it has not been the policy of the united states of america to pay ransom for hostages. the question i have, though, is, again, it is most curious that this payment was made in cash. now, some believe this is not a particularly relevant issue. according to the financial action task force, quote, the
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physical cross border transportation of currency is one of the main methods used to move illicit funds, launder money, and finance terrorism, end quote. cash is the currency of terrorism. we paid cash to the world's foremost state sponsor of terrorism. and the question is, again, why was that done? was there a legal obligation? we heard some of these payments have been made in other methods that could be more transparent through the normal financial channels. and the tribunal itself states it has finalized more than 3,900 cases, so i think one of our witnesses, ms. grosh, did you not say that at least some of
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these were not made in cash? is that correct? >> congressman, yes, there have been more than 39 cases resolved at the tribunal. the bulk of those payments came from a security account that iran is obligated to insure all awards in favor of u.s. nationals and u.s. companies, and that is what resulted in $2.5 billion -- >> let me ask you this question. again, i'm having a little trouble figuring out why this was a cash payment. isn't it true that under the iranian transactions in sanctions regulations, there are exceptions to financial dealings that license payments between the american and iranian financial system in order to receive, pay, or settle claims pursuant to the united states claims tribunal, specifically 31-cfr, section 560510.
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>> as i mentioned in my opening statement. >> okay, so you didn't have to pay it in cash, but you did pay it in cash. it is again, still unclear, the question has been asked, but it hasn't been answered, specifically, did someone in the iranian government ask for the cash payment? can anybody on the panel answer the question besides a macro view that iranians wanted money? >> congressman, i'm trying to be specific. the term of the deal was that they got immediate payment. the reason for cash was not -- >> are you aware of anybody specifically in the iranian government asking for a cash payment? >> i'm not aware, nor am i aware of all the conversations that took place. >> who would be aware? who could this panel go to to get an answer to that simple question? >> we would be happy to follow up with you on further details
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in a closed session, and we would be happy to discuss that with you in that setting. >> are you aware that according to press reports, these funds have ended up in the hands of the iranian military, the iranian revolutionary guard? >> congressman, i have seen those press reports. as i mentioned, it is our assessment that the vast majority of funds that iran has had access to continue to be used for its economic needs. we have seen some press reports of an iranian budget line item. our translators and those in the intelligence community have -- >> line item is roughly 10% of the entire annual defense budget, the military budget, of iran. does this administration not believe that giving the leading state sponsor of terrorism $400 million in cash followed by $1.3 billion, does that not present any serious terrorist financing
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concerns to you at all? >> congressman, we have made clear from the very beginning that the deals we struck on this day do not resolve all of our concerns with iran, and those concerns remain significant. what we resolved was the most imminent and critical, which was the nuclear program. we were able to rezavl two additional pieces of business at the same time. we still oppose and object to ir iran's destabilize -- >> my time has expired. thank you. >> we continue that with vigorous cotools. >> the chair recognizes the gentleman from missouri, mr. cleaver, for five minutes. >> thank you, mr. chairman. in january, i will have been on this committee for 12 years. assuming i am re-elected. and so i'm always careful not just here, careful everywhere,
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because i do think words matter. which is why i would not allow my 3-year-old granddaughter to watch the news. and so i can't tell you how disturbed i am. i'm often disturbed, but i'm going to start saying things when this happens on both sides. but i think my colleague who is a good guy, i know him, whi hav been to his home and met his family, but when you drop a word like words like, you know, a drug drop, that creates some discomfo discomfort, and i know that the gentleman didn't mean what could
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be interpret ed to be really awf awful, and it would be my hope that, you know, that a misstatement or sometimes we all say things we would rather pull back. i'm assuming he would rather pull that back. because there are a lot of people, i mean, this could mushroom into something that i think would be embarrassing -- an embarrassment to the entire committee. we're talking about this three-hour strategizing meeting, fast forward to this hearing and we're saying, you know, it was like a drug drop. that's not good. that's a little scary. and my partisan shship doesn't
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or my idealogical leanings have to stop at some point. you know, i wouldn't say george bush, you know, had a drug drop or hopefully anybody. so you know, it's a political gathering and we're supposed to do some of this stuff. i can't do it because i just -- i think we're -- the whole country is looking at this political process and saying, you know, washington stinks. and we're creating a higher level of stinktivity, yeah, it's a word. i made it up. when we do this kind of thing. we're stinking up the political process. and i -- you know, i have some
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questions, but you know, after that, i just decided, i got good questions. as mr. trump would say, these are very good questions, big questions. but after that, i don't want to engage in this. so i would like to just yield back the rest of my time. >> would you yield to me, mr. cleaver? mr. cleaver, would you yield to me? >> yes, i would. >> thank you, mr. cleaver, and thank you for your thoughts on this. a couple points to be made. we hear people bemoaning the money that was accorded the iranians. but there have been settlements that inured to the benefit of americans totaling about $2.5 billion. so would we give back the $2.5 billion that have been accorded
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americans in settlements? not a lot of emphasis is being placed on the fact that people came home. thank you, mr. capuano. people came home. americans were freed, would you send them back? would you put them back into harm's way, incarcerated in iran? is that what -- is that what you're pushing today? this hearing is about headlines, not headway. headway could be made by doing as maxine waters indicated, classified briefings are available to all of us, and we could make headway. today it's about headlines. >> the gentleman yields back. the chair recognizes the gentleman from south carolina, mr. mulvaney. >> a couple random questions. something i think mr. hensarling started to ask. i don't know if he asked it this
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way. the cash payment is in violation of law, isn't it? cash payment violated 31-cfr 208. is that true? >> the payment was done consistent with all of the appropriate treasury regulations. >> i'm reading payment by electronic fund transfer, a waiver, which i don't think is revvent here because it deals with checks, and not withstanding any other provision of law, effective january 2, 1999, all federal payments made by any agency shall be made by electronic funds transfer. didn't this transfer of cash, at least the $400 million in cash, the hard currency, doesn't that violate 208.3. >> if i could walk through the flow of the transactions. we'll take the $400 million principle payment. >> do it quickly, please. i only have five minutes. >> generally speaking, that payment was transferred via wire transfer to the account of a foreign central bank. that foreign central bank
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converted it into foreign currency and disbursed it to the iran. that payment to the payee of the claim not necessarily to the ultimate payment of the claimant. >> shorter answer is since the wire transfer went to an escrow agent, they paid out the cash. you didn't violate 208.3. why do we pay interest? my understanding is that the trust fund does not bear interest. >> yes, that's correct. in a typical situation, customers pay their funds into the trust fund, and by law, that does not accrue interest. as i mentioned in the top of my remarks. the united states and iran entered into a memorandum of understanding that had express provisions for unexpended funds to be placed in an interest-bearing account. it's based on that language that iran has brought its claim for interest. >> did we put it in an
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interest-bearing account? >> the funds were not based on an interest-bearing account. >> so we had an agreement but we didn't do that? >> as a factual matter, that is correct. i could have a lot more to say about that, but some of these matters are still -- other issues related to that memorandum of understanding are currently being litigated between the parties. >> so i -- >> i would be happy to discuss that further in a closed sett g setting. >> the carter administration or the reagan administration had followed the mou, the interest would have been paid by the bank into which we put the escrow account, the escrow moneys? >> all of the administrations since the memorandum in 1979 acted consistently with respect to these funds. >> no, you just told me they didn't. the mou required us to put it in an interest-bearing account and in the next sentence you said we didn't do that. >> that's correct, but each of the administrations treated those funds consistently, not withstanding the language of the mou, there are legal arguments
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at stake that continue to be before the tribunal, and again, i would be happy to discuss that further in a closed setting. >> we may get that opportunity. last question to mr. capuano, i believe he stepped out. my understanding of the flow of the funds is the original $400 million was indeed a payment by the government of iran under the fms program. i get that, their money, for lack of a better word. there was a legal lien against that money, wasn't there? that the 2000 victims of trafficking violation protection act of 2000 specifically placed a lien against that exact amount of money. isn't that true? >> well, if you're talking about a judicial lien, that is not true. >> i'm talking about a public law, i don't have the u.s. code. i have 106, 386, and it says that judgments against iran for purposes of funding payments under section a, we're trying to make sure that victims of terrorism got paid, in case of
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judgments against iran, they should make such payments from liquidated from an amount not to total the amount. in the iran foreign military sales account. this money was liened by law in 2000. >> yes, i'm familiar with that, congressman. >> did we repeal this law or how did we get around this? >> what happened was the judgments were paid from appropriated funds to the extent of $400 million, which was the balance of the fms trust fund at that time. >> whoa, whoa, so the taxpayers paid $400 million in claims and we could have taken it out of this fund? >> that's correct. they appropriated funds to be paid to those victims to the level of what was in the balance of the trust fund. >> when did we do that? >> stlthrough the very act you' discussing. >> the very act ynl discussing doesn't say that. the very act says for purposes of funding payments, woo ego to the fms trust fund.
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in subsection 2b. >> if you look at that act, it also provides that the united states should be fully subrogated to the extent of the payments. that means the united states made -- >> i'm aware of what subrogation means. >> they were subrogated to the claims. the claims then become the u.s. government claims. >> so they're not, to mr mr. capuano's piece, at the end of that, they're not iran's funds anymore. they are the united states government's funds, aren't they? >> no, the funds have remained in the trust fund as iranian moneys in the trust fund. the united states congress appropriated $400 million to be paid to these individuals -- >> instead of taking the money out of the fms trust fund, but by doing so, we thus own the $400 million? >> no, that's incorrect. i'm sorry. >> the gentleman's time has expired. the chair now recognizes the gentleman from maryland, mr. delaney, for five minutes. >> thank you, mr. chairman.
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is the $400 million actually sit in an account, subrogated at a separate financial institution or just held by the united states government? >> the $400 million is in what is called the fms trust fund that sits in the treasury. all fms customers pay funds into there and they're separated into accounts for each customer. >> is it fungible cash or is it separated into a separate react? when you say it's held in the treasury, is it fungible with all of the cash in the kroounls and crust tracked as a separate account or is there anywhere the equivalent of a bank account that a large financial institution where there's a statement that says there's $400 million in cash sitting there. >> i believe my colleague at the treasury could speak to this more, but my understanding is it is an account within the u.s. treasury. >> okay. so it seems like what effectively happened in the
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middle of 2015 is three things came together simultaneously. the iran nucleargreeme agreemen prisoner exchange swap and the settlement of this claim. is that the right way of thinking about it? the three separate transactions or agreements were reach by three separate teams? >> congressman, that's correct. we sought to finalize all of those issues on or around the same time to take advantage of the diplomatic momentum we had. >> as it relates to the claim, is it fair to say that a legal obligation of the united states was created in mid-2015 to pay $1.7 billion? >> i wouldn't put it exactly that way. these are matters that were under litigation for many years, and members of the legal advisers office at the state department had been litigating these fms claims for long time. >> forget about all the history. in the middle of 2015, you said this was settled. >> it wasn't settled. what we were facing was we were approaching a hearing date. >> right. >> and iran wanted to move to,
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it's like going to trial. they wanted to have this decision not only go to hearing and heard by the tribunal, but decided in a preliminary matter. >> what interest rate were they claiming was owed? >> iran was claiming very high interest rate. >> what rate? >> this is an area that i would prefer not to get into in this -- >> it looks like we settled at higher than a 4% interest rate? is that right? >> i don't know exactly what that translates into. there was certainly a methodology behind it and i woulded be happy to go into that in a closed setting. >> do you know what the interest rate across the period of time was? >> in the 1970s and the 1980s, the interest rates were 18%, 19%, 20%. >> they were high. lookinga at the chart, it looks like the average rate was about 8%, and you settled for about 4%, and the power of compounding is such that at 8%, it would have been $8 billion or $9 billion, and at 4 bers, it was
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$$1.3. so that's the bargain you thought you negotiated, is that correct? >> we agreed to the disposition and a compromise on interest. >> that's right. was it actually a legal obligation, would you say? you say you agreed and you settled, but was there any kind of formal agreement that was reached where somewhere in the books of the united states of america, we entered a $1.7 billion liability? >> i'm not sure i understand the question, but we certainly -- >> so if someone would have asked the government in the fall of 2015, how much do we owe iran? would they have said $1.7 billion or $400 million? >> this was referred to by one of your colleagues. this is a matter of litigation risk and issues we look at like any litigating parties when you're actively litigating claims. we could discuss some of that in a closed setting. >> i guess the question, was this settled in mid-2015 or still open ended? >> in mid-2015, we were
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discussing this with iran and we -- there was some urgency because we felt this was going to go to hearing and then a decision by the tribunal. >> were you still discussing it in september of 2015? >> yes. >> and december of 2015? >> yes. iran filed its hearing proposal in november of 2015. >> what day do we think we actually agreed to the $1.7 billion? like that number? >> are you speaking to the united states or to iran? >> when do we feel like we had an agreement with them as to $1.7 billion. >> again, i think it would be better to discuss those setting. >> that date is relevant as to whether it was an obligation or something else. i assume what you're saying here today is that that agreement for $1.7 billion was reached before the payment was made. >> that is correct. >> how much in advance of the payment would you say?
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>> again, on issues of timing, we certainly had agreed with iran some time before the payment was made. i wasn't involved in all the details. >> does some time mean more than 30 days, 60 days, 90 days? >> less than 30 days. >> okay. thank you. >> the gentleman's time has expired. the chair recognizes the gentle lady from missouri, ms. wagner for five minutes. >> thank you to our panel for appearing to answer questions from us, but more importantly, to answer questions for the american people. and shed some light, some tranlsparency on what actually happened with this money transfer to iran. unmarked cash in foreign currencies strapped on wooden pallets and loaded onto a cargo airplane to be sent to a recognized state sponsor of terror. seems more like a scene out of a made-for-tv movie than actual
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real-life u.s. policy, and as an army mom whose son is an active duty infantry officer and is a former united states ambassador, i just have to say i am very concerned with the appearance of our government paying ransoms for captured prisoners, and further and future endanger ein our other soldiers and diplomats abroad. i would like to reference a quote from white house press secretary josh earnest, from earlier august. as to why the u.s. made this settlement payment so quickly, to which he said, the iranians, and i quote, were eager to try to address the legitimate concerns of the iranian people about the state of the iranian economy. is it the opinion of the state department or the treasury department that this money transfer would be used for the
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iranian economy? mr. backemeyer? >> congresswoman, first let me say thank you for the service of your son and your service. we spend our days at the state department, i know as well as the treasury and justice department, doing our best to advance the u.s. interests and doing our best to protect our men and women overseas, and we're grateful for their service. with respect to your -- with respect to your question, this was a situation, as i said, where the timing was related to the various pieces of business we were trying to get done -- >> did you believe it was going to help the iranian economy? either state or treasury? >> as i said, it is our assessment that the vast majority of the funds they -- >> what assurances were you given, sir? >> even if i had gotten assurances from the iranians you would not believe those, nor would i. >> let me move on. i'm reclaiming my time. i have a lot of questions and
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oshort amount of time. we have since seen that iran's latest year budget provides for an additional, guess what, $1.7 billion, the same amount transferred by this administration to the military establishment to spend as it wishes in iran. ms. grosh, why did the white house think this money would be used for the economy when iran ended up using it for their military? >> congresswoman, i'm sorry. that's way out of my league, and y i'm not in a position to decide that. my expertise involved litigation of these claims at the tribunal and determining -- >> let me ask a relevant question. how do we know this $1.7 billion increase did not come as a direct result of the cash transfer from the u.s.? >> the press report you're referring to is one we reviewed and had our translators review and we believe it is inaccurate. >> national security adviser susan rice admitted some of the
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$150 billion iran will receive in sanctions relief from the iran nuclear agreement would, quote, support international terrorism. mr. backemeyer, what assurances do we have that this settlement money will not end up funding terror proxoes, units like hezbollah, considering they receive support from the revolutionary guard corps. >> we have serious concerned with iran's behavior, their support for terrorism, their support for proxy groups. we have a variety of tools to counter those activities. >> paying iran in all cash make it more riskier the money could end up in supporting terrorism? >> i can't speak to the risk on that, but what i can say is this settlement was made based onilities own merits. >> if this settlement funding does in fact end up sponsoring terrorism, what action could we take to pungz them for their behavior? >> we have a variety of tools to enforce our sanctions against
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iran. these include authority that go against the quds force and those that are involved in terrorism, that involves activities that are operational -- >> i'm running out of time. what incentive did the u.s. receive in return for structuring the payment so favorably in cash to iran? >> i'm not aware. i know this settlement was in the interest of the united states. >> mr. ahern, did iran insist that the settlement be paid in cash? >> i wasn't part of the negotiations. i can't speak to that. my understanding was settling this -- >> when was it agreed upon that it would be in cash -- >> it saves the united states government from paying billions more to iran. >> my time has expired. i have many more questions and i will submit them for the record. >> the time has expired. the chair now recognizes the gentle lady from ohio, ms. beatty, for five minutes. >> a big thank you to our
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witnesses who are here today. mr. chairman, i just have a few brief statements, and more so for clarification for me and for all of those who are watching this. so let me start by thanking you for advising us that to get the real answers that we need, if we wanted to move forward, then our leadership and others including myself, had i known about it, would be doing this in a classified briefing. that's number one. we are often chastised on this side of the aisle if we're a little late for complying with some rules, so i'm going to assume since it's my understanding that the title of today's hearing is picked by the majority and the title is "fueling terror, the dangers of ransom payments to iran." so if they really thought that this was a problem, seemed like you would want to be more armed
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by being in a classified setting where you could get real information. if you don't want real information and you just want to showboat, then you do or you get what we're seeing here today. there's been a lot of opening statements in your opening statements, well, let's go back to the opening statement that our chairman made of the financial services -- the chairman mentioned. when he said it was the iranian officials who said this was really a ransom. now, our president, i'm not saying my president. let's get something clear. the president of the united states is our president. so our president is telling us that it was not. he was trying to save lives and bring them back home. so let's figure out who the real enemy is here. if i'm sitting here listening to
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this as many americans are, it almost seems like my colleagues are pitting our president against the individuals that they are now chastising us for bringing our individuals home. so we have been intense in here. we have been somewhat humorous in here. so let me be very abstract in here. since this has been a lot about money, let's just say i wanted to say since they're expecting you after you have actually said in one of your statements that you thought the money went for economic needs, but yet you keep being badgered over the cash and badgered over where the dollars are going, and more specifically, that they're going to fund terrorism. so what if i would say to my colleagues, there's something called the rnc. and moneys that they give go into the rnc.
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so would they remember or know that their moneys to the rnc that went to the presidential candidate, donald trump, who i believe insighcites terrorism, d they be then able to say back to me why they did? let's assume most of them didn't give to him. interesting, isn't it? but we know their dollars will go into fund a presidential candidate who excites terrorism. a presidential candidate who is not about saving lives, who makes fun of those who are disabled, who degrades women, and yet, they stand here wanting to question our president for going back and giving the money that belonged to them already. it was their money. he gave them back -- now, i also think you would use words like, it was incredibly brilliant that our president cared so much
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about those individuals who were being held there that he wanted to do one thing. if he's guilty of something, it was to make sure that the timing of the transaction -- it was already done that he was giving the money. that wasn't a secret. we knee he was giving it. we even know how they lined up the foreign currency to be put on the pallets to give to them. so that's not a secret. if you're trying to do something that is not legal or fair, you don't publicize and describe it and say it. so it was timing that he wanted to do to make sure that people were returned safely. so i want to thank you for trying to be helpful. i want to thank you for your answers, but i think you said it best when you said you're not there knowing how the dollars -- how the dollars are transferred or what we did, but you do believe they went for economic
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needs. thank you, and i yield back. >> the gentle lady yields back. the chair recognizes the gentleman from california and the chair of the foreign affairs committee, mr. royce, for five minutes. >> thank you, mr. chairman. the reason we're concerned with cash going to iran, especially $1.7 billion in cash, is because iran is in the process with the iranian revolutionary guards corps of funding terrorism in the region. and specifically, what they're trying to do is get their hands on hard currency. so when they're trying to develop, for example, for hezbollah, the capability to use gps in order to be able to equip the missiles and rockets and inventory with this special capability to be able to hit the tallest buildings in tel aviv or be able to get around the iron dome, this -- these two things,
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the transfer of the missiles from iran to hezbollah, they already have transferred 100,000 of these rockets and missiles, and second, it meets the capability of being able to switch this over to this gps capability. for that kind of terrorism, they need hard currency. that's why we're interested in the $1.7 billion cash payment. because by insisting that it was the only way to get the money to iran, we are strict in maintaining banking sanctions. this is hugely misleading. let me explain why. the sanctions system was designed with tribunal payments in mind. the iran transactions sanctions regime contains a number of exem exemptions from the rule, and in this case, they are explicitly authorized and would shield any entity involved in such a transaction from liability under u.s. law if this had been done the proper way without use of
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cash. no. it was the iranians who wanted the cash. they wanted the cash because they're trying to fund terror. that's what the irgc does. it's the number one state sponsor of terrorism in the world today. so the administration chose not to license a transaction within the international financial system. they chose to deliver $1.7 billion in untraceable assets, which was the demand on the part of iran. and if everything was on the up and up and there is no connection to hostages, why not go through the process laid out in law? this is a state sponsor of terrorism. so you're right that banks don't want to do business with a country that is backing the slaughter of hundreds of thousands of innocents. and those in syria, and developing missiles, ballistic missiles, by the way, aimed at us because they're intercontinental ballistic
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missiles, but the truth of the matter is if you wanted to pay through a bank, you could have. the primary example here is north korea and banko delta asia. no one was more toxic than north korea, not even iran today, but when the last administration wanted to get north korea, wanted to give the funds back to north korea, it found a way using the new york fed and the russian central bank. it found a way through legitimate financial channels which you certainly could have done. likewise, you found a way during the interim agreement to facilitate $700 million back to iran each month through international banking relationships. yes, it would have taken longer, but the dispute, this payment was supposed to settle, was over 35 years old. what's a couple more months? the only way that i see timing coming into play, if this was a ransom for the release of americans. and if this didn't drive the
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capture of three more americans and remember, that's what the department of justice said at the time, don't do this. it will be perceived as ransom and we'll have more americans captured. the heavy water payment, another $10 million. now, that's not compared to the $1.7 billion, but was this paid in cash, too? i would certainly like to know, because the danger i see here is cash is going to become the new normal for the iranians. and lastly, i would just bring up, pursuant to the victims of trafficking and violence protection act in 2000, $400 million in taxpayer dollars was supposed to go to u.s. citizens to settle judgments against iran for terrorist attacks. it looks to me like part of this understanding is letting iran off the hook for those terrorism claims that was part of that settlement. is that correct? >> with respect to the victims of terrorism claims, as i
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answered one of your colleagues' questions, those judgments were paid in 2000 with the victims of trafficking act congress appropriated $400 million to pay them, so their judgments were paid. >> but what about the interest on that that should have come out of this account? >> those claims were then subrogated to the united states so they became u.s. government claims and they were factored into the overall settlement. >> in terms of my question on the situation of how this was handled with north korea, why was it not handled the same way with respect to iran? >> i'm not familiar with north korea, but what i can tell you is this. we share your concerns with respect to iran's troubling activities. we have a variety of tools we use to counter those activities including robust sanctions, including sanctions that continue with respect to hezbollah and legislation that was passed in this body. we continue to use those and intend to aggressively enforce those as we go forward. with respect to the mechanism of
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the payment, all i can say is iran -- regardless of the legal prohibitions, iran did not have the international relationships, did not have the accounts, because of the sanctions that were so strongly imposed by this congress. there were -- accounts were not allowed during the sanction period. as a result, iran did not have those relationships. it was difficult to do anything else in an immediate way, and the immediate payment of these funds is what allowed us to get favorable terms in the interest of the united states. >> the immediate payment is what managed to coincide with -- >> the time has expired. the chair now recognizes the gentleman from washington, mr. heck, for five minutes. >> thank you, mr. chair. this question is for either ms. backemeyer or ms. grosh. my understanding is the most recent settlement at the tribunal was in 1991, when washington and tehran agreed to
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a $278 million payment as compensation for military equipment that the shah paid for but was undelivered at the time of the revolution. the final negotiations on that settlement coincided with the release, as you'll recall, of two western hostages, including one american, by iranian-backed shiite militants in lebanon. according to a "new york times" article dated november 28th, 1991, bush administration officials at the time denied that the deal was linked in any way to the fate of the hostages in lebanon. the state department's legal adviser then as now under president bush said in the times that respect to the arms deal, quote, it's pure coincidence that it's coming together at the same time, the hostages are being released. in your view, is there any reason to doubt the bush administration's claim that the hostages release had anything to do with the arms deal settlement which they claim had been under discussion for a long time?
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>> congressman, i am familiar with those -- i recall those reports at the time. i wasn't involved in that particular settlement, but our practices that -- in looking at all of these cases, we assess litigation risk and decide these settlements on their own merit. >> i'll take that as there is no reason to doubt the bush administration's claim. i'll ask if you recall any public outcry at the time over that. fact was, there was none from congress. i'll save you the time. i would also ask you if you recall any hearings being held by any relevant committee of jurisdiction regarding that issue as we are today. i'll save you the time, there were none. and i will also remind you that in the wake of the original iranian hostage crisis back in 1981, we in fact signed a deal to transfer nearly $8 billion, a transfer which was authorized by
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incoming president reagan, and once again, there were no congressional hearings on the legality of that. nor an indication from the members of the then-majority party, as now, that it constituted a ransom. so one of my favorite expressions is, consistency is the hobgoblin of small minds. congratulations. evidently, there are no small minds today, because there certainly isn't a lot of consistency. you know, ordinarily, we have hearings often on subjects which i don't agree with, or with such incendiary titles as is today's hearing. but i almost always find a way to thank the chair because i think it at least unlocked the door or opens the door for a constructive dialogue and questions and answers that can help illuminate. that's not the case today.
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there's no legitimate reason to be holding this discussion other than to dissemble the facts and engage in propaganda. none whatsoever. indeed, the only thing i want to say, and not further legitimize this hearing, is that for the four of you and your colleagues, however directly or indirectly you were involved in the return of those four americans, you have our thanks. i yield back the balance of my time, mr. chair. >> the gentleman yields back. the chair now recognizes the gentleman from colorado, mr. tipton, for five minutes. >> thank you, mr. chairman. ms. grosh, what is policy of the united states when it comes to ransom for putting out payment for hostages? >> congressman, my understanding is stated by the president that it is the u.s. government's policy not to pay ransom.
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>> we don't pay ransom. mr. backemeyer, you made the comment that there was a desire to be able to conclude all of our lines of effort when payments were made of ultimately $1.7 billion cash sitting on pallets going in the middle of the night to iran. were the hostages part of that line of efforts that you were talking about? >> congressman, as i described, there were multiple lines of effort. the implementation of the nuclear deal -- >> was there a tie between the hostage a cash and the hostage release? >> there was not a tie. >> how does it go back to your comment about the lines being tied up to achieve the end. >> i don't believe i said the lines tied together. what i was trying to convey is we thought we had a unique opportunity in diplomatic momentum where we could achieve multiple objectives.
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including bringing home american citizens who had been unjustly detained -- >> so there was a tie -- >> and settling a long standing outstanding claim. this was not a question of whether to pay $1.7 billion or zero. it was a question of whether to pay $1.7 million or more. >> i would like to be able to get into the terrorism end of this in terms of the agreements that were put forward. ms. knroegrosh, during the negotiations for the settlement purposes of the agreement with iran in payments, did anyone in the administration ever bring up the issue could these funds be used for terrorism? was that raised as a concern? >> again, my expertise in all of this is very narrow. it really is to litigating claims assessing litigation risk, and in any of these settlements whether it's this one or the ones we entered into prior to givebackemeyer, could
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answer that? would any concerned raised by the administration? >> we have multiple concerns with the iranian government. >> what overrode those concerns? >> as i noted, we have tried to take step-by-step on multiple lines of effort, areas where we think we can advance u.s. interests. we do so in a concerted and thoughtful way. we have done that with respect to the most immediate threat, the iranian nuclear program, with respect to one of our top priorities, bringing home our american citizens and with respect to the claim, we did so in a way that saved american taxpayer dollars. >> you're talking about saving taxpayer dollars. if we look at national security adviser susan rice, she admitted that some of the iranian money could be used for terrorism. is that a concern that you took into consideration? >> we are constantly concerned with what iran might do with respect to its support for terrorism and we have a variety of tools to counter that, robust sanctions passed in this very
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pass, that includes designations of ententatties like the quds force, others that support terrorism. >> maybe you could give me clarity on this. the $1.7 billion settlement where you sent over cash in the middle of the night on pallets to iran that went into their possession, you said the majority of this has gone to infrastructure programs. so we're left assuming they're filling potholes over there. since you're able to track that money, what happened to the rest of it? did a little bit go to terrorism funding? you were able to track the infrastructure program? >> what i'm speaking to is our assessment of the vast nujoert of funds iran has gotten access to with respect to the multiple lines of effort we have. i cannot get into specific details where any of those are going as i can speak in a general matter, but we have serious concerns about what iran does do with its money. >> i'm talking about the general
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matter, it's going to infr infrastructu infrastructure. where did the other money go to? >> i don't believe i said inf infrastructure. >> i think you said. infrastructure programs. >> if i did -- i recall saying it was going to domestic economic needs. i have made the point again and again that we have concerns about where iran does send its money and its support. we have a variety of tools in place in order to try to counter that. that's an ongoing effort of our government. >> did they give you any guarantees the money wouldn't be used for terrorism? >> i'm not aware of any guarantees. but the way we approached this is from what the u.s. government can do with respect to our intelligence capabilities with respect to our operational capabilities and diplomatic capabilities to track and deterthose sports of activities. we have vigorouses efforts to deter and divert shipments to
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hezbollah. we have sanctions which is intended to degrade the intentions for those actors and as we have,ads you know, other lines of effort where we're trying to resolve other issues of concern and other threats to the united states. >> the gentleman's sometime has expired. we recognize mr. kildee for five minutes. >> thank you, mr. chairman, and to you and the ranking member, thank you for agreeing to my participation. i'm not on the subcommittee, but i'm here because there's probably not a subject since i have been in congress for the last four years that i have spent more time on than the issue of the u.s. relationship with iran, specifically because one of those americans that people continue to refer to is a young man who lives about a mile from me now. a young man named amir from flint, michigan, my hometown, who gratefully, thankfully, as a result of the great work of the agencies represented here, our secretary of state, president of the united states, is now a free
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man. at home, pursuing the rest of his life. the reason i make that point is that there were very many members of congress, including some members congress, including some members who have expressed their outrage today in this hearing based on their assumption that there was some connection between these three distinct negotiations that took place, that one was a quid pro quo for the other. there were many members of the house of representatives who took time at the point that the jcpoa was enacted agreed to, that the release of these americans should have been a part of that transaction, and that it wasn't. so i have a bit of concern with what i see as some duplicity here, that on one hand when it fits the political narrative, the administration is criticized for not making these separate
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negotiations all combined into one, and when it fits the political narrative a month or two before a presidential election, suddenly we're criticizing the fact that they assume that they were. well, they can't have it both ways. so -- these negotiations does not make iran a good player on the global stage. there are still a lot of unresolved issues. certainly some regarding their terrorist activities or their support of terrorist activities fits that category. the fact that we still haven't had nv had information about the status of robert levinson is a great concern. many of us continue to press iran for information regarding his status. v but to hear the same voices
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say these should have been part of the separate negotiations with be now say they were a part, coming out of the same voices, makes it obvious that's what's going on here is simply politic politics, sadly, especially when we consider the gravity of not just the relationship between u.s. and iran and iran and the rest of the world, particularly in that region, but to bring in the release -- the happy release of these americans in to that conversation i think is unfortunate. so let me just ask. at what point since 1979 did the united states have any direct negotiations with iran? was there any point in time before president obama and president rowhani spoke by telephone during the general assembly? was there any direct negotiations, face to face negotiations, officially between the united states and iran
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between the revolution and that moment in 2013? >> congressman, i wouldn't want to speak to the entire history but let me summarize and perhaps answer your question. diplomatic contact was basically cut off for that entire period. >> i guess the better way to put it, was there ever an opportunity to resolve these long standing disputes through direct negotiation, whether it is the release of the americans or this dispute that resulted in the payment that's the subject of this hearing? was there a moment that occurred prior to the jcpoa negotiations that took place that allowed for another track of negotiations to occur simultaneously? >> well, with respect to the hague tribunals, my colleague has noted, we have had ongoing conversations in that tribunal to settle claims. with respect to the consular issues you raise that we agree a so important, the first tangible
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opportunity to raise those was in the context of the jcpoa. we took every opportunity to raise those particular cases and it was that channel that allowed us to continue discussions on their ultimate release. >> thank you for that. my point is that it should come as no surprise to anybody observing the relationship between the united states and iran that for the first time in a very long time the ability to have bilateral discussion suddenly occurred outside the context of tribunal action. this was bilateral discussion that was able to take place as a result of the jcpoa negotiation. i know that that opened the door for discussions regarding the disposition of the americans, and i know that it opened the door for discussion regarding the resolution of these long standing disputes. so the fact that these all took place in a period of time which was coincidental is as a result not of just sudden coincidence, but as a result of a change in the nature of relationship between the two governments.
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with that, i know i have exceeded my time. >> gentleman's time has expired. gentleman from maine is recognized. >> thank you very much, mr. chair. i believe you stated in your opening statement you've been at the state department dealing with these claims, settlement process, for about 30 years? >> yes, that's correct. >> okay. about 30 years. thank you. you've been involved in a number of different transactions. how many of them have been settled in cash? >> to be clear, i'm not involved in the exact financial transactions but -- >> the settlements that you have been involved with, is it common for these settlements to be disposed of in cash. >> again, i think as i raised congressman with one of your colleagues, there have been various pretty large settlements over time, some small. each -- >> you can't answer the question
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how common it is to use cash. let's just move on. i've got to be very honest with you i'm very concerned about all of this and i think all kinds of americans across our great land are concerned about this. i certainly know the people that i represent up in maine are very concerned about this. let's step back for a minute. we have a government that is -- has vowed to wipe our major ally in the middle east -- really the only one that we trust within think, israel, off the face of the earth. they vowed to kill as many americans as they can and they have blood on their hands right now. you've been working on a claim settlement here that dates back 37 years. and you testified, miss grosh, earlier today that because of the sanctions in place back in january, that there was an inability to transfer $1.7 billion from america to iran because the banking system problems because of sanctions which we now know is not true.
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so, all of a sudden we have a wire transfer going from this country to a bank account in europe somewhere, switzerland, i presume, where it is then converted into cash. $400 million of principal payments, $1.3 billion in cash. that is transferred to a pallet or a series of pallets and put on a cargo plane in europe before it's flown to tehran. so my question to you is since we don't want any of this cash to land in the hands of terrorists who are trying to kill americans in the middle east, who at the other end of that transaction, miss grosh -- you worked on this transaction for a long time. who in europe when that cash was put on wooden pallets before it was sent over to tehran, what top ranking american official was there to see that cash? who? >> i'm really not in a position to answer that because i was involved in the settlement.
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i believe some of my colleagues here today discussed those -- >> who was a top ranking american official who was on the ground in europe when that cash was put on a pallet before it was flown over to tehran? who was it? >> i'm also not -- >> so you don't know. do you know? you work for treasury. >> as i stated. >> okay. you weren't involved. do you have a name for me? >> congressman, let me address your particular question. >> do you have a name for me who was the top ranking u.s. official who was on the ground when the cash was put on the pallet? >> congressman, i would be happy to brief you in closed setting. >> miss grosh, let's go back to you since you're not going to answer me. do we know when the cash was transported from this airport in europe to tehran? who was the top ranking iranian official who was in receipt of that cash? >> ci was not there when it was negotiated -- >> does anybody know?
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we're going to have the same stall. >> the cash was eventually dispersdi disbursed to the central bank of iran. >> someone in the military? someone who represented economic development? >> he was an official of the central bank of iran. >> do you have a name for me? >> i don't recall his name. >> you do have name. you just don't recall it. >> there were a variety of people. >> there is a person. you just told me you don't recall who it is. that means there is someone and there is a name. >> there were a variety of officials involved in this transaction. i'd have to take that question back. >> so if our office got in touch with yours, you could tell me who those individual or individuals were. >> i will take that inquiry back, sir. >> i didn't hear you, my ears are bad. >> i will take your inquiry back. >> i don't want the inquiry back. i want the answer. i want to know who was in receipt of that cash when those pallets of cash land in tehran. here's why. here's the problem.
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we don't have any idea where this cash went. we don't know who received it. we don't know what it was used for and it is untraceable and it is with the a country that is the state sponsor of terror. 1 of the 3 state sponsors of terrorism in this world. don't you think that's a problem? we don't even know who received the cash. >> a couple of points, sir. one to carry on the comments of my colleague, i would commend to you the testimony of acting under secretary zubin who has testified about the funds freed up and has testified about the deep economic hole this iran was in to the tune of half a trillion dollars. i would commend that testimony. >> cash is the currency of terrorism. >> gentleman's time has expired. >> kwh o . >> our office will be in touch with yours -- >> gentleman's time has expired. gentleman's time has expired.
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chair recognizes the gentleman from minnesota. >> thank you, mr. chair, around ranking member. mr. chair, i just want to say that i think we always have to understand that all of the things we talk about in this committee take place within a certain context. i'd like just to remind folks january 15, 2013 -- actually, that's the date that this document i'm reading from was cited. actually it was on the night of barack obama's inauguration. group of top gop luminaries gathered together in a washington steakhouse and pledged together that they would make president obama a one-term president, oppose every single thing he did. i'm telling you that since that time we have seen committee after committee issue after issue, relentlessly trying to make anything -- anything -- into a scandal or something like that. and i only want to say to my friends who are part of this -- you literally are shaking the american people's faith in the institutions of this nation by pursuing that strategy. you said obama was going to be
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one-term president? well, you lost. and you know what? i wish that people would just come to their senses and do what was right for the american people. i'm going to keep on hoping that we do that. now let me just say this also. i've read reports in the press that the treasury department worked with foreign partners have to affeeffectuate the tran of funds. this money, were these funds that were always iranian funds that we froze? that's a question to anybody on the panel. >> the 400 -- congressman, the $400 million that was paid immediately, those were iranian funds in the mms trust fund that's held in the treasury. >> what made them ryan wrirania? >> these were played into the
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trust fund -- >> what year? >> from throughout 1970s and up through 1979 when we had the memorandum of understanding. >> back in the '70s they paid us some money for some items, and we froze that money after the seizure of our embassy. >> there was a blocking prior to the -- sorry -- following the taking of the embassy, the 1981 algiers accords had been initiated in response to the hostage taking. the trust fund had always been there. there was a memorandum of understanding and iran pointed to that as a basis for its claim that those funds were to be returned to iran. >> okay. so reports indicate that you worked with both the dutch as well as the swiss central bank. can you confirm that? >> sir, we did work with a variety of partners. >> fair enough. now it was reported in the press that at least one member of
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congress said that the u.s. flew pallets of u.s. dollars to tehran. would you say that that statement would be accurate? had. >> pallets of u.s. dollars. is that what happened? >> that is inaccurate, sir. >> inaccurate. >> inaccurate. >> so you said inaccurate. >> that's correct. as i mentioned in my opening statement, in both transactions the funds were converted to a foreign currency. they were then withdrawn as foreign currency bank notes. >> but you should understand that the whole country is watching this, this is sort of like a theatrical performance and i don't want to be inarticulate about this, the claim that there was some pallet of u.s. dollars flown from america to tehran is a false statement. would you -- you said -- you used the term inaccurate. right? >> that's correct. u.s. dollars were not dispersbu to iran. >> that's right. can you mention what foreign financial institutions were involved? weren't these major institutions? i mean there is some implication that there is some shady obscure
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stuff going on. were these major reputable institutions we are talking about who helped tra fifacilita transfer? >> our partners in both transactions were national central banks. in the first transaction it was the swiss national bank. the second transaction it was the national bank of the netherlands, the dutch national bank. look, in my 38 seconds remaining, i just want to pursue this. i have seen some of my colleagues demanding names of individuals who somehow played some role no facilitating the whole transaction. as just a member of congress who has rules around classified information and who has a general commitment to protect and safeguard the lives, interests and the means and methods of u.s. engagement, particularly with foreign power, i mean how would you regard that? is that appropriate to disclose the names of individuals, and would it jeopardize u.s.
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national interest to do so in a public open hearing like this? >> congressman, it is certainly our preference to discuss those details in a closed setting. >> for the interest of the united states government. >> exactly. >> and people. >> exactly. >> all right. i yield back. >> chair now recognizes the gentleman from arkansas, mr. hill, for five minutes. >> thank you, mr. chairman. thank the panel for being here. we are not here to talk about obamacare. we are not here to talk about donald trump. we're here in an open hearing to try to give some clarity to this transaction that has been inadequately disclosed by the administration. the fact that we are doing part of this not in a classified setting is for the benefit of the american people so that they have more clarity about this transaction and all the details around it. i thank the chairman for scheduling it. i'm confused because my friend from south carolina began talking about president clinton's signing of the victims
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act back in 2000. that's sort of related also to my friend's comments from minnesota. i'm used to gap accounting and not government double speak and double counting. but i'm trying to understand that if, as you said, miss grosh that the $400 million was appropriated by dng, did we release iran from their $400 million obligation because we keep talking about it as if we froze this account in 1979, then pursuant to theal gea algiers a that money was still sitting there and we paid interest on it. we paid out $400 million of appropriated money. so is the 400 million then remaining in the fms account, not the united states' money? in other words, was iran released from that obligation? >> congressman, if i could try to clarify that, under the
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victims of trafficking act, congress appropriated $400 million. this would be in subsection b of that act that was referred to earlier. funds not otherwise made available in an amount not to exceed the total amount in the foreign military sales account at the date of enactment which was $400 million. then in a subsequent provision of that act, the united states government, because those were appropriated funds, the united states government was then subro gated to those claims, meaning they became the claims of the u.s. government. the u.s. government was in a position to pursue those claims against iran. so in the overall settlement, we factored in those claims in reaching the settlement that we did in january. >> well, that seems -- you've both used that term, factored in to the overall settlement, but it just seems in conflict with that law to me in my reading of it. it says no funds shall be paid to iran or released to iran from property blocked under the international emergency economic powers act or from the foreign military sales fund until s
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subrogated claims have been dealt with so the satisfaction of the united states. in my view, the satisfaction of the united states includes the people of the united states and the people's representatives here in congress. so whose signature? whose wet signature authorized this settlement? did secretary lew approve this settlement and make the recommendation to president obama? >> i'm really not in a position to know at what level -- >> can you shed light on that? i know the state department led the negotiations, but who approved this transaction in its structure? did secretary lew approve it? >> this settlement was the subject of a number of interagency discussions, as you can imagine. secretary lew, acting under secretary zuben were part of those discussions. i don't know the answer to your question beyond that. >> secretary lew of course was director of omb in 2000 so he
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expect he knows the details of this public law in this particular paragraph since he was in the office of budget management. i take it we released the set e settlement and in fact the taxpayers ought to get $400 million plus accrued interest, yet we have paid it out as part of this overall settlement and that's double counting to me. i just am not clear on your point. >> maybe i could give you an example. at the top of my remarks, i mentioned that in 1990 we entered into a settlement with iran. it settled both u.s. government claims and u.s. national claims for $105 million. in my experience in claims practice, it is not unusual to settle multiple claims together at the same time, and if those are the claims of the u.s. government, we take all those in to account just as we could counterclaims. and so in the negotiation of this claim settlement with iran,
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we had discussions about those claims and they were settled along with the trust fund issues. >> i thank you for that answer. but, mr. chairman, i remain confused that this is somehow double counting. i urge our committee staff in discussions to get to the bottom of that. last question i have for the treasury official. were there any irgc members on the iran air flight that picked up this money and took it back to tehran? had. >> as i said, the money was dispersed to a representative of the central bank of iran. as i understand it, there were no specially designated nationals involved. >> thank you. >> the gentleman's time has expired. the chair now recognizes the ranking member of this subcommittee, the gentleman from texas, mr. green, for five minutes. >> thank you, mr. chairman. witnesses, i thank you and i compliment you for being truthful and forthright. this hearing today has taken us back 35 years, there about.
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maybe a little bit more. to the algiers accords. and i think it was appropriate that we do this. but i also think it appropriate for us to go back to the inauguration of president obama. because it was around that time that persons met and concluded, in fact pledged, that they would do everything that they could to stop the president. that's what politico reported. stop the president. but i have in my hands what i'd like to place in the record an article styled "the republicans plan for a new president." and this article addresses the notion that on the night of obama's inauguration, a group of top gop luminaries, as was indicated by another member,
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quietly gathered in a washington steakhouse. they were there to lick their wounds. but ultimately, they created this plan on how to deal with the incoming administration. this is a furtherance of the plan. and for those who are curious as to persons in attendance, without going through all of the luminaries, i think it appropriate to say that the current speaker of the house was in the house. i think it fair to say, as reports in this article -- and by the way, there are other reports. cnn has reported on this. it's been reported widely. but it's fair to say that the current majority leader had a leadership role. he was there, too.
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so with this kind of pledge made to each other, it just seems appropriate that the style of this hearing would be -- we kept our word. and we're keeping our word. and anything that this president brings up, we will oppose it. and that has been the record. the record is replete with specific examples of how they have opposed everything this president has brought forth. but i'll be very candid with you. i did not believe that it would get to this point. there are families. i have two who have relatives who are being held hostage. can you imagine what these families have to conclude when they hear people saying that somehow giving -- returning
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money to people that belong to them and seeing our people come home, that there is something inappropriate about this? these families are suffering! i meet with them regularly. i know their pain! they want their loved ones to come home. we ought to be proud of the fact that we didn't give a ransom and we did bring them home. this was the money that belonged to the iranians. there was a prisoner swap. we have americans who were brought home! my god, can we not credit the president with something? he's made a difference in the lives of these people. but this is not about this specific transaction. it's really about a deal that was cut on the night of the
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inauguration, thereabout, to do everything to disenfranchise this president. who would have thought that members of congress would say that the president wasn't born in the united states of america? the president of the united states of america, not born, not an american. it has continued, it has been consistent, and they have been persistent. but we have to stand by truth. remember, william cullen bryant, truth crushed to earth shall live again. remember carlisle, no lie can live forever. remember martin king, the arc of the moral universe is long but it bends toward justice. history will not be kind to these who would do what they are doing to this president, pursuant to a deal that was made. you're keeping your word. i yield back.
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>> the gentleman yields back. chair now recognizes the gentleman from north carolina for five machininutes. >> chauthank you, mr. chairman, calling this hearing. mr. ahern, are you old enough to know the tv show "dragnet"? >> i am, sir. >> sergeant friday? >> he's one of my characters, sir. >> then you recall, "just the facts, ma'am. just the facts"? >> yes, sir. >> he was renowned nor that lfoe and i think that's all i would request today. i would ask a series of questions and i would like your response, just the facts, if i could. mr. ahern, who exactly was in charge in gathering the $400 million in currency? what level of staff is tasked to gather the 4$400 million in cas, place it on a plane and snd it to a foreign government? how was the money packaged? was the american military used
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to fly the money to iran? how did iran receive the cash? please take a moment and articulate the exact process of the money exchanged from the moment the state department went to the bank and withdrew the cash the moment iran received the money. >> sir, as i said, there were two payments. they flowed in generally the same manner but i'll break them down into two payments and walk through the flow how they each work. with respect to the $400 million principal that was held in the fms account, those funds were transferred to the -- an account of the swiss national bank. >> who gathered -- who's in charge of gathering that money? i'm sorry, sir? >> who was in charge of gathering the $400 million. >> this was a wire transfer to that account. once in that account, the foreign national bank converted those funds -- >> who initiated the wire transfer? >> that was initiated -- as i said in my opening statement, the defense finance and accounting sir. >> i'm sorry i missed that. just convey that.
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>> sir, that was a department of defense controlled account. so the defense finance and accounting service defas initiated that wire payment. the funds were then transferred to the foreign central bank which converted them into swiss francs. those francs were then withdrawn as bank notes. they were transported from one location in switzerland to geneva. there they were disbursed to a member of the central bank of iran. with respect to the second payment, the $1.3 billion, that represented the compromise of interest pursuant to the settlement agreement. that money was transferred from the judgment fund which is the fund that congress has authorized for the payment of judgments and settlements when there is no other appropriated fund. it was transferred to the account of another central bank, again the central bank of the netherlands. it was converted in to euros at
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that stage. it was withdrawn, as bank notes, pr su pursuant to an arrangements between the united states, home government of that central bank and iran. that bank disbursed those funds to representatives of the bank of iran. >> was there receipts for all of these fund transfers? was a receipt given? >> for which leg, sir? >> well, when the funds were received, when money's transferred, there is acknowledgement and there is a receipt. was there a receipt given for the transfers? do we have access to those receipts? >> i'm not familiar with the answer to that question, sir. i'd have to take that back. >> i would like to know what type of receipt was received, in what manner, from iran to the united states for the $400 million. mr. ahern, considering the funds that were received, what
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confidence do you have that this money was not diverted immediately toward terrorist interests and organizations? >> again, to carry on some of the comments that my colleagues have made in the past, and also i would commend to you the testimony of our acting assistant secretary zuben recently with respect to the funds released pursuant to the jcpoa. he has testified in detail about the deep hole that the iranian economy was in to the tune of half a trillion dollars. so while we can't track any particular bank note, we do know that iran had a very significant domestic need for funds. i can also say that the treasury department is committed to identifying and countering terrorist financing. its facilitators, its networks. we have an entire office -- the
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office of counterterrorism all under one roof. that office's primary mission, in fact the reason it was established, was to counter terrorist financing and we continue to be focused on countering terrorist financing and its networks. >> these negotiations are scripted and very well thought through and in an effort to make sure that there's no mistakes intentionally, how could this be done without recognizing that $400 million would be transferred simultaneous that the hostages were being released? was there not a full recognition that that would be taking place, and at least the perception of that reality? >> congressman, if i may interject to answer your question. as i've mentioned, it was a fact that we tried to resolve multiple lines of business all -- on or around the same time. that included the iranian kn
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nuclear deal. it was confirmed by the iaea rye an met its commitments under that deal. we were trying to resolve the prisoner release and the return of our american citizens back to the united states. as i mentioned previously, there was a reciprocal humanitarian gesture with respect to iranian nationals that were in the united states. and we were trying to resolve this particular issue with respect to the settlement of the claims. because we thought that this judgment was in the interest of the united states and we did so all at the same time because there was a momentum that did not exist for the past three decades and we were fearful that if we let one or two of these lines of effort drag out and we did not conclude them all at the same time, that we would jeopardize our -- >> my time has ended. i will just say that i was there to receive pastor abedini in germany and he heard the conversation between -- did one of the guards that they were waiting for are a plane to come in with the cash. he's made already a public statement on that. thank you very much. >> the gentleman's time has expired. i would note that we are going to move to a second round of
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questioning of the panel. i will yield to the ranking member for a brief moment to voice an objection. >> thank you, mr. chairman. i do object. i will be more explicit with my objection with the five minutes that i will consume in the second round. but i do object and would ask that we not have another round of this. >> do we note it is the prerogative of the chair to go to a second round. so the chair now recognizes himself for five minutes. i want to go to a few points of clarification. again, who authorized the payment? that question has been asked numerous times. mr. ahern i think you indicated at least mr. lew was involved in knowledge of this agreement. correct? >> sir, think it is not surprising with a transaction -- >> agreed. >> -- of this nature it would involve discussions -- >> was mr. kerry apprised of in? >> secretary kerry has been deeply involved in all of our discussions with iran. this has been subject to a vigorous debate within our agency.
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and the cabinet of the united states. >> i'm going through some quick-clean-up. president was aware of this deal. absolutely? >> president was aware. >> highest levels. okay. when these deals in the tribunal are resolved there is a sett settlement agreement that's put out. a settlement agreement with regard to this deal has not been released. is a settlement agreement forthcome zfort forthcoming? >> i bereave i could answer that question. typically what happens at the tribunal if there is a settlement -- this would have applied to u.s. national settlements as well as government settlements -- they are affirmed as an award on agreed terms and they would be attached -- >> the settlement agreement forthcoming? >> the parties in this situation, because there are pending claims at the tribunal, the parties asked the tribunal not to record it as an -- >> there has been pending clamgs claims at the tribunal for 37 years and a settlement agreement has been released. i would expect so the american
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mr people can see what the deal truly was a settlement agreement should be forthcoming and it is of concern to this committee it has not been released. >> there are claims continuing. in fact, today my office is filing a submission in the fms claims with the iran/u.s. claims tribunal. there is a lot of concerns those claims are ongoing and we do not want to undermine any u.s. positions. >> iran knows of this deal. it is just we, the american people, want to know about it as well. i'm sure if you hair it with us you don't undermine your negotiating position with iran because they are a part of it. with regard to the $400 million, i think you all indicated there was a claim by the victims of iranian terror lien on that $400 million. you all agreed to that. has that lien been released now that that $400 million has been paid? >> the statute really doesn't provide for a lien. i'm not sure what you are really talking about. >> there is a claim to the money
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mr. mulvaney read that to you. you agreed that there was a claim or a lien, however you want to phrase it, per statute. >> subrogated to the united states government. that's correct. >> now that that $400 million has been released to iran, lo is going to pay the claims to the victims of iranian terror? >> the victims of iranian terrorism who had those judgments were already paid in 2000. >> there is no outstanding claims? >> there are outstanding claims. >> who is going to pay those outstanding claims? >> those individuals have pursued litigation in u.s. courts. they've received judgments and as far as i'm aware, they're pursuing attachments to -- >> so is the u.s. government going to be responsible for those claims? >> they are the claims of the u.s. nationals and they do not become the claims of the u.s. government unless they're subrogated or unless the u.s. government formally exercises diplomatic protection. >> as part of the iran nuclear deal assets were unfrozen, or
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thawed, if you will. as part of that deal, were any of those assets transferred or converted into cash and also transferred back to iran? >> congressman, the sanctions relief in the jcpoa, joint comprehensive plan of action, was quite different. you are correct that the sanctions were lifted that had previously restricted those funds. and those sanctions were lifted. iran then was -- it was up to iran to access those funds. >> were they able to access those funds in cash? >> at that point once those sanctions restrictions were lifted, it would be up between them and whatever bank they had their funds in. >> are you aware, did they get large transfers of hard currency back to iran that you're aware of? >> i'm not aware of how iran is ultimately -- or how any funds were ultimately disbursed to iran. >> were in he disbursed to iran? we got the $1.7 billion in cash. did they get any other cash payments by way of us unfreezing
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their assets? >> congressman, it is worth -- >> yes or no. limited time. yes or no. did they goet more cash. >> these were iranian funds -- >> i know that. was it fair to say they got more shipments of cash in with hard ku currency because we unfroze their assets? >> no. i don't know how iran would have had disposition over their assets overseas. >> this deal that you say was so great was a determination from the tribunal imminent? so i was a prior prosecutor. before the jury comes back, the jury's about to come in or the judge is about to rule. the parties settle. was the judge about to rule? was there an imminent settlement of this deal that was pending that made you have to act and settle for $1.7 billion? >> as i mentioned in my opening, iran was pressing very hard to go to hearings. >> that's not my question.
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i didn't act if they were pressing you. i asked if a settlement or determination by the tribunal was imminent. not whether they were pressing you. they've probably been pressing for 37 years. >> at that point in time it was our judgment that there was a possibility of a judgment coming very soon. >> so the hearings had been had. all the evidence was with the tribunal and they're about to make a decision? is that your testimony? >> my testimony is that iran was pressing for a preliminary determination about this issue regarding the disposition of the trust fund and interest. it was our determination that it was much better to have a decision made to resolve this for a much smaller amount than what we thought the tribunal could have renneredered. >> so there was no imminent determination on the horizon. my time has expired. i will now recognize the ranking member, mr. green, for five minutes. >> mr. chairman, thank you. i'm a former judge.
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and i can say to you from experience that when the litigants sense what the ruling of the court will be, it becomes imminent at that point. you don't have to say it for it to become imminent. but when they sense that there is a ruling that may be adverse to their best interest, it is not unusual for those who are litigating to act. mr. chairman, i want you to know that we are displeased with the heari hearing. and i want to thank all of my colleagues who have appeared and who are prepared to return. but this really has become now about more that be oversight. it is about micromanaging the presidency. more specifically, micromanaging
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president barack obama. the president should have the latitude to negotiate international affairs. it's inherent in the power of the executive branch. we want to micromanage this president. a deal was made. and to the extent that the deal can be consummated, we would go this far. i think that it would be a disservice for us on this side to legitimatize a continuation of this fiasco. there are some things that you just don't do. you don't participate in your own demise. you don't allow people to create a pattard to which you can be hoist. there are some things you just don't do. to continue with this is a disservice to the committee
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itself. because this has become about nothing more than confusion and an attempt to honor a commitment that was made when the president was inaugurated. so i thank you for allowing me to, pursuant to the rules, of course, make this comment, and i'm going to ask that all of the members on our side make better use of your time. this has gone too far already and we are not going to take it any further. with that, not only do i yield back my time, but i will make my departure. >> thank you, mr. ranking member. chair now recognizes the gentleman from arkansas, mr. hill, for five minutes. >> thank you, mr. chairman. on the issue of the ransom topic, i know that the department of state and the u.s. government has been expressed displeasure in the past when germany paid 5 million euros in
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mali. and when france paid 25 million euros in mali to al qaeda. and it was something we tried to enforce through all of our diplomatic channels and our leadership channels as the united states. public reports say that al qaeda's between 2008 and 2014 gotten about 125 million euros in paid ransom for tourists or captives that have been returned to their countries. my concern is no matter what it is called, you've got an appearance problem. and i think that is something that was poor judgment in the process of the negotiating effort. secondly, to chairman royce's point, this issue of cash is really disturbing to me. think it is to anyone who's been a former treasury official, as i have on my resume.
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you just don't provide cash to the number one state sponsor of terrorism. as chairman royce pointed out, the tribunal regulations permit it. and clearly this was an iranian request an we acceded to it. and it was, in my view, not the right decision in the best interest of the american people. because we know what is done with cash in the hands of the number one state sponsor of terrorism. you also have testified today -- i think you commented on the state of the iranian economy. and whether you are the desk officer at the state, with an $800 million approximately
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purchase pride parody gdp taking the mid point of the public number of what was freed up of 100 billion m$100 billion, that. if they want to help the iranian people, maybe they can cut down on a $20 billion defense budget. and not be looking to that as a reason in negotiations to be kind hearted and settling for a higher interest payment than you think perhaps they should have received. so i really think if we want the iranians to have a better economy and take care of their "domestic infrastructure needs," they ought to rearrange how they spend their money and not spend so much money threatening their neighbors, threatening the you ooh state united states, threatening people of israel. with that i yield back. >> the gentleman yields back. i would just like to note as we are going to wrap up this portion of the hearing, i thank the panel for their service to our country.
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i know how hard all of you work. i know you've gotten tough questions today. but do know that the congress and this committee respects your work, though we might have some disagreement with what's taken place in regard to this deal. i would just note that you may get follow-up questions from committee members. i would ask you to answer in a reasonable amount of time. i would also note specifically to state and to treasury, we have sent over written requests for documentation. it has been over a month. there has been zero production from either state or treasury documents that we are entitled to. i would ask you to take that message back to your superiors and please provide those documents that are duly owed to the congress. with that, again, thank you. our committee is now going to stand in recess for five minutes as we switch out panels.
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c-span3 with live coverage of a hearing on payment to iran. the house financial services subcommittee on oversight and investigations in about a five-minute break now as the
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panels change. we spent this hearing to continue and our live coverage will, as well. the house, meanwhile, has started its legislative day. live coverage on our companion network c-span. the house working on financial bills today and are set to vote on friday on a bill that would allow the families of 9/11 victims to sue saudi arabia in u.s. courts. the legislation which the senate approved unanimously back in may is expected to pass the house and head to president obama's desk. he has said, though, that he will veto that measure. coming up this afternoon, the nation's intelligence chiefs will be talking about national security. cia director john brennan, fbi director james comey, and admiral mike rogers, director of the national security agency, as well as others, will participate in a forum. that begins at 1:00 p.m. eastern time if this hearing has wrapped
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up. we plan to bring that to you here on c-span3. otherwise, you can watch it on our website, c-span.org and we will air it later on the c-span networks. again here we're waiting for hearing to resume on the cash transfer to iran. the financial services subcommittee of the house. our live coverage on c-span3.
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i want to welcome our second
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panel and first off apologize to the panel if the first panel took so long. but i thought it was worthy of a lengthy discussion. i hope you all do as well. let me, by way of introduction, introduce our panel. mr. dubowitz, mr. rubin, resident scholar at the american enterprise institute, mr. lorber, senior associate at the financial integrity network, and mr. maloney is deputy director of foreign policy and senior fellow for middle east policy energy security and climate initiatives at the brookings institute. each of the four of you will be recognized for five minutes to give us an oral presentation of your testimony. without objection, the witnes s witnesses' written testimony will be made a part of our record. once the witnesses have finished their testimony, each member of the subcommittee will have an
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opportunity to ask each of you questions for a period of five minutes. again, you probably all know this but on the table you have three lights. green is go, yellow is you have a minute left, red is your time is up. please make sure you put your microphone on when you speak. i would just note that the democrats know we're doing this second panel. we may get some more of them back in the room as we proceed but they know we're going to proceed without any of them here. with that, mr. dubowitz, you are recognized for five minutes. >> thank you. on behalf of ftd and center on sanctions finance, it is an honor to testify today. we have he a talked about iran's activities and we pose a severe threat to national security. these activities include support for terror groups, shiite militias, proxy forces in rogue states. as has been discussed today, to
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expand these illicit activities a regime needs cash. cross-border cash transfers are one of the main methods to launder funds and finance terrorism. on the question only of whether the $1.7 million was a ransom, i want to broaden the inquiry. the key question today, did iran in fact get tens of billions of dollars of cash? maybe up to $33.6 billion. let's start with this. president obama has said, "the reason that we had to give them cash is precisely because we are so strict in maintaining sanctions. we could not wire the money." as we've discussed, legally the president is wrong. existing regulations permit transactions. the president may also use his special authority to authorize banks to facilitate these
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transactions. the tribunal has settled 4,000 claims. i find it hard to believe they were all done in cash. it certainly is possible that banks were unwilling to not wire the funds no matter what guarantees they got because they have a healthy fear of sanctions after so many years. but if so it raises a troubling question. how did iran receive the billions of dollars in sanctions relief under the jpoa and jcpoa. we know iran was granted $700 million a month or $11.9 billion from its restricted overseas oil escrow accounts. if no mechanism existed to transfer their tribunal funds through a formal financial system, what mechanism was used to transfer the $11.9 billion? an official has submitted to the wall street "some of that money" was sent in cash and "we had to find all these strange ways of delivering the monthly allotment. what exactly were these strange ways? did they include cash or gold? other precious metals?
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it doesn't end there. in july u.s. officials estimated that iran had repatriated "less than $20 billion" from briefly frozen overseas assets. were those funds also repatriated in cash and gold? was this in addition to the $11.9 billion or inclusive? if the white house could only send cash to iran from the start of the j pchjpoa period, it wou amount to $33.6 billion. did any of this money go through the formal finance system? this would be a pretty astounding revelation. if iran was able to receive some or all of the sankzs ctions rel through the form and financial system, why was $7 billion paid in cash? the bank of japan reportedly wired $550 million to an iranian central bank account in
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switzerland as part of an interim agreement. there is no reason the administration couldn't have wired the $1.7 billion immediately to that same account rather than sending cash. perhaps iran simply wanted cash. as one senior official said to the "wall street journal," sometimes the iranians want cash because it is so hard for them to access things in the international finance system. is this an admission that cash was an iranian demand and not a logistical impossibility? the $400 million cash delivered in january was part of a tightly scripted change timed to the release of the american hostages. if washington needed iran to receive the funds immediately to keep to the script, was cash the only way or could this he have wire transferred that money immediately to the same central bank of iran account at the swiss central bank? the administration called it leverage but iranian official call it a ransom. it is really that iranian opinion that i think matters. this might explain one of the reasons why more arrestsed of
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americans. did the administration authorize the cross border transfer of as much as $36 billion in cash and perhaps gold $36 billion in cra perhaps gold or some portion thereof. if so, the white house provided them with unprecedented and untraceable funds to fuel terror and other nefarious activities. if the administration never before authorized the transfer of cash and gold to iran, did they send this $1.7 billion as a unique cash delivery to satisfy iranian demands and did they do this because it was the only way to get our hostages back? it just seems to me that the administration can't have it both ways. i look forward to your questions. >> mr. ruben. >> thank you for the opportunity to testify today about the obama administration's willingness to provide iran with $400 million
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in cash on the same day iran released all but one of the american hostages held. the united states delivered an additional $1.3 billion. whether the payment was proper, ransom, how iran used the money and whether the fact it might fuel greater terrorism. i have gone into detail in written testimony utilizing iranian sources with regard to how iranian figures perceived the payment, how they might launder it, what their strategy is and how the guard corps corrupts the economy. when secretary of state john kerry said it was iranian money, there's no reason it needed to be paid now. both democratic and republican have delayed payment to avoid funding iranian terrorism. if the united states freezes counselling to al qaeda or
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hamas, releasing it and saying it's their money anyway would not be a tenable explanation. the closest was the 1848 treaty ending the mexican american war. there is no critical economic need in iran for which they have used the cash. the white house and state department might perform intellectual somersaults, but despite initial denials, the state department now acknowledged the linkage between the cash paid and the release of the hostages. we have had repeated diplomatic dialogue over the years. so to say this is just a confluence of events is absolute nonsense. under secretary of state william burns for example met directly with the iranians in 2016. ryan crocker in 2007. that was at its core about diplomatic dialogue.
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regardless, washington spin is irrelevant. iranians perceive the payment to be a ransom and said so. it was in the return for release of american spies, as a guard corps general said. not only has it been perceived as a ransom provided incentive to seize more hostages, but because the money was delivered in cash, the payment bolstered the strength of the guard corps and augmented its ability to finance and conduct terrorism. reliance on the iranian defense budget or their line items, it shouldn't be done. they're fictional. iran's budget is opaque. after the verdict back in 1999 or 2000 where the judges assigned damages based on the line item for existence, it disappeared in subsequent budgets. that didn't mean that the
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iranians stopped conducting terrorism. the iranian response has been more terrorism and hostage taking. that was the case with the reagan era for hostages scheme. they have seized more than a half dozen western hostages in the months since. rather, the problem is that the irgc continues to dominate the iranian dmi. allowing them to have custody of the money is to allow the group to launder cash for its own purposes. even iran's justice minister just a month ago said that 50 million bank accounts in iran are opaque or their ownership unclear. 50 million bank accounts the justice minister in iran says are basically bogus. i also highlight how the irgc often uses the tehran stock exchange to launder money and play a shell game with companies to evade proliferation and terrorism sanctions. this is another danger of making
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the payment in cash. it's especially problematic as it hampers the ability of the treasury department to trace it. remember, the iranian plot to murder the saudi ambassador in washington, d.c. was exposed because the united states was monitoring specific bank accounts. also remember that a suicide bomb belt can cost as little as $1500. the issue is broader. what happens in tehran doesn't stay in tehran. exposing u.s. rhetoric about refusal to pay ransom as empty as put a target on every american's back and convince terrorist leaders and rogue regimes that kidnapping and ransoming pays. >> thank you. chairman duffy, vice chairman fitzpatrick and distinguished members of the committee, i'm honored to appear before you today to discuss the dangers of ransom payments to iran.
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i would like to focus on the le gallonty of the $400 million cash payment as well as the subsequent $1.3 billion cash payment and how most importantly we could have structured these payments to limit iran's ability to support terrorism. with the recent one-year anniversary of the jcpoa, it is important as ever to ensure that iran is limited in its ability to support terrorist functions. make no mistake, though iran signed and implemented the jcpoa, it has not changed the criminal activity that has led financial institutions across the world to refuse to do business there. iran's unwillingness to change its destabilizie ining conduct e of the reasons the payment raises serious concerns that this money will be or already has been used to support the
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irgc, iranian military and the proxy terrorist forces throughout the region. this payment does appear permitted under u.s. law. pursuant to 31 cfr 560.52, necessary to payments related to settlement agreements in a legal proceeding between the united states and iran. the provision permits u.s. government officials and foreign financial institutions to transfer these funds to iran after a settlement agreement at the united states-iran claims tribunal. that means you could use the formal financial system to transfer these payments. you do not have to go through cash. despite the likely le gallgalit the transfer, however, that it was not used to support iran's terrorist activities is both troubling and a missed
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opportunity. it is troubling because in providing funds to iran without controls on how it would use that money, we allowed the country to disburse these funds to the iranian military and other nefarious actors. the very nature of the payment reportedly led irgc official to conclude it amounted to a ransom. iran's perception of that payment matters. a principal purpose of the united states no ransom policy is to deter hostage takers from compromising the safety of american citizens abroad. if terrorist groups and rogue countries do not think the u.s. will pay for hostages, those bad actors will be less likely to take them. iran believed this to be ransom and consequently may be more inclined to seize americans in the future. it is a missed opportunity because the united states could have set up payments stemming from the settlement agreement in a way that conditioned providing
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the funds on ensuring they would not be able to support terrorism or given to the iranian military or sanction parties. by releasing these funds in such a way, the administration could have outmaneuvered the islamic republic. congress should take specific steps to ensure that any funds given to iran are subject to certain conditions. congress could pass legislation that modifies and requires that any funds to be sent to iran pursuant to a settlement agreement be placed in a escrow account and released only on certain conditions. and must be released in tranches with a certification provided that the prior released amount has not gone to designated parties or to entities engaged in a number of activities. second, congress could take steps including passing legislation to ensure that any
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payments made to iran would present reduced risks of diversion by setting up a white list where they could process legally permissible transactions to iranian banks with no connections to the irc or the government of iran. it would set up a channel for processing transactions in a way that would limit iran's ability to challenge the funds to the irgc and designated parties. as iran continues to support terrorism, the united states should ensure that we play no role in inadvertently funding such activities. these proposals i believe are a step in that direction. thank you for your time. >> thank you mr. maloney, you are now recognized for five minutes. >> ranking member greene and distinguished subcommittee members, thank you for the opportunity to appear before you today. when five americans returned home in january after months or ine

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