The next chapter in the Obama administration’s cash for hostages scandal involves the disclosure that the $1.3 billion it says it sent to the ayatollahs for “interest” payments was flown to the terrorist capital in cash — drawn from a taxpayer funded account on the authorization of the attorney general of America, Loretta Lynch.
Ms. Lynch approved the $1.3 billion payout under a decades-old legal statute that apparently allows the Attorney General to authorize seemingly unlimited funds for the final settlement of claims against America in a foreign court or tribunal, provided she certifies “that it is in the interest of the United States.”
Republican leaders in Congress have taken a different view of this deal, denouncing the administration’s $1.7 billion settlement with Iran, of which the $1.3 billion is a part. It has already been reported that $400 million was flown to Iran and handed over in conjunction with the release of American hostages held in Iran.
GOP leaders on the hill are calling the administration’s initial delivery of $400 million in cash a “ransom” and introducing bills to try to recover the payments and block any more. The administration denies paying ransom, but that has failed to quell a growing sense in Congress, at least among Republicans, that the administration broke long-standing policy against ransom payments.
Attorney General Michael Mukasey, who served under President George W. Bush, tells the New York Sun that the statute employed by Ms. Lynch to authorize the $1.3 billion in taxpayer funds for Iran could not be used simply to make a ransom payment. But, he adds, it “does appear” to “permit the government to use settlement of a pending claim for making a payment that is also ransom.”
The statute, known as Title 28, section 2414 of the United States Code, was the legal loophole that allowed the Obama administration — without even notifying Congress — to tap into taxpayer funds for the $1.3 billion portion of the Iran settlement. The money was paid out by Treasury’s largely opaque Judgment Fund.
That account has been characterized by the government as a “permanent, indefinite appropriation” created by Congress in 1956 to relieve lawmakers of the chore of making individual appropriations for every final judgment or settlement rendered against the U.S. government. Payments from the Judgment Fund are dispersed without congressional review.
In a February 3 letter to State Secretary Kerry, Congressman Ed Royce, Chairman of the House Committee on Foreign Affairs, said that the first his committee had heard of the $1.7 billion settlement for Iran was a press release from the State Department on January 17, the day Messrs. Obama and Kerry announced the deal.
The settlement included sending Iran $400 million held in a U.S. military trust fund since the days of the Shah, for an arms deal that fell apart after Iran’s 1979 Islamic revolution. This portion was shipped secretly in cash on the day of the announcement. The State Department also agreed to pay Iran’s government $1.3 billion in interest. This was the portion Ms. Lynch authorized to be paid out of America’s public fisc.
In announcing the settlement, President Obama and his team said nothing about how the funds would be conveyed, and refused for months to answer questions about this from Congress and the press. The State, Treasury, and Justice departments all refused to answer questions for this article.
Early last month, the Wall Street Journal’s Jay Solomon and Carole E. Lee broke the story that on the same day Mr. Obama announced the settlement, his administration secretly arranged for the $400 million from the trust fund to be airlifted to Iran in cash. Following that scoop, the State Department finally confirmed that it had used the $400 million cash shipment as “leverage” to ensure Iran’s release, that same day, of American prisoners.
President Obama told reporters last month that the $400 million was sent in cash due to strict observance of American sanctions forbidding banking relationships with Iran. But until this week, administration officials refused to say how the additional $1.3 billion was conveyed.
Yesterday the administration finally admitted sending the $1.3 billion in cash as well, following a dispatch from the same Wall Street Journal team, reporting that the money was sent in two planeloads, on January 22 and February 5.
The administration’s secrecy about this cash-for-Iran saga has been so extreme that for more than seven months, officials refused to disclose the date on which the $1.3 billion was paid out by the Judgment Fund. That mystery was solved when this reporter, writing in the Sun, broke the story late last month that the money had been paid in 13 sums of $99,999,999.99, totaling just 13 cents short of $1.3 billion, along with a 14th payment of just over $10 million. All payments were on January 19, but two days after the settlement was announced.
One possible explanation for the breakdown of the $1.3 billion lump sum into multiple payments is that the U.S. dollars were transferred electronically by Treasury to the foreign central banks where they were exchanged for the foreign hard currency delivered to Iran. The Automated Clearing House format for electronic transfers allows for a maximum of 11 digits. As a lump sum, including two decimal points, the Iran payment would have needed 12 digits.
That leaves the question of why the administration has refused to provide any explanation for dicing up the payment. Whatever the reason, the effect was to help hide it for months. The entries in the Judgment Fund’s online database include no mention of Iran. All 14 payments were listed simply as certified by the Attorney General under Title 28, USC 2414, and paid out on behalf of the State Department under the heading of “Foreign Claims.”
That raises a further mystery. A search of the Judgment Fund’s online database of payments, which goes back to late 2002, shows that from 2002-2013, for at least 11 years, there was no use by any Attorney General of statute 2414 to authorize payments on behalf of the State Department of “Foreign Claims.” Not a single case.
Then, during Mr. Obama’s second term came a flurry of 37 payments under precisely this set of headings, all over a period of just under two years. These included 23 relatively small payments totaling just under $2.3 million, scattered across the years 2014 (11 payments) and 2015 (12 payments). This burst of activity culminated this January with the 14 whopping payments totaling $1.31 billion — which the administration has now confirmed were for Iran. There have been none since.
Whether any of the 23 payments in 2014 and 2015 were also related to Iran is hard to determine. The Judgment Fund’s annual “transparency” reports to Congress are opaque. Some entries omit any explanation of what the case was about, most give no clue as to where the money went. The most recent report was filed almost a year ago.
What’s striking, in any event, is that the interval for this series of 37 identically authorized and generically categorized payments happens to coincide almost perfectly with the timeline of the Iran nuclear deal, from the opening of talks in Vienna in February 2014, through to implementation in January 2016. Was this sheer coincidence? Was the administration quietly priming the pump for the big payout to Iran this January?
In a telephone press background briefing on January 17, the day the Iran settlement was announced, a senior administration official mentioned that “we settled a number of smaller claims over the last four or five months.” The administration has confirmed that two such settlements involved the return to Iran of fossils and architectural drawings. But, albeit on a smaller scale, are there yet more financial payments to discover?
Ms. Rosett, a Foreign Policy Fellow with the Independent Women’s Forum, is a contributing editor of The New York Sun.