Obama hid ef­forts to aid Iran’s wind­fall Team ap­proached U.S. banks for cash con­ver­sion af­ter sign­ing of nuclear deal

The Washington Times Weekly - - Politics - BY GUY TAY­LOR

The Obama ad­min­is­tra­tion — de­spite re­peat­edly as­sur­ing Con­gress that Iran would re­main barred from the U.S. fi­nan­cial sys­tem — se­cretly mo­bi­lized to give Tehran ac­cess to Amer­i­can banks to con­vert the wind­fall of cash it re­ceived from sanc­tions re­lief un­der the 2015 nuclear deal into dol­lars, an in­ves­tiga­tive re­port by the Se­nate has re­vealed.

A copy of the re­port, ob­tained by The Wash­ing­ton Times, out­lines how Oba­maera State and Trea­sury Depart­ment of­fi­cials dis­creetly is­sued a spe­cial li­cense for the con­ver­sion to a ma­jor Omani bank and un­suc­cess­fully pres­sured two U.S. banks to par­take in the trans­ac­tion, all while mis­lead­ing law­mak­ers about the ac­tiv­i­ties.

The doc­u­ment, com­piled by the Se­nate’s Re­pub­li­can-led chief in­ves­tiga­tive sub­com­mit­tee, be­gan cir­cu­lat­ing last Tues­day, just as the Trump ad­min­is­tra­tion is­sued its harsh­est warnings to date to for­eign gov­ern­ments and com­pa­nies to avoid do­ing busi­ness with Iran or find them­selves in the crosshairs of Wash­ing­ton’s reim­po­si­tion of sanc­tions as part of Mr. Trump’s with­drawal from the nuclear deal.

“Com­pa­nies do­ing busi­ness in Iran face sub­stan­tial risks, and those risks are even greater as we reim­pose nuclear-re­lated sanc­tions,” said Si­gal Man­delker, Trea­sury Depart­ment un­der­sec­re­tary for ter­ror­ism and fi­nan­cial in­tel­li­gence.

She also called on for­eign gov­ern­ments to har­den their fi­nan­cial sys­tems against “de­cep­tive” Ira­nian trans­ac­tions that ul­ti­mately chan­nel money to ter­ror­ists.

The Ira­nian gov­ern­ment “uses shell and front com­pa­nies to con­ceal its tracks” as part of an elab­o­rate scheme de­signed to pro­cure cash for the Quds Force of Iran’s mil­i­tant Is­lamic Rev­o­lu­tion­ary Guard Corps, which the U.S. des­ig­nates as a ter­ror­ist or­ga­ni­za­tion, Ms. Man­delker said.

She is­sued the warnings in a speech at the Foun­da­tion for De­fense of Democ­ra­cies think tank as Iran an­nounced that it was for­mally mov­ing ahead with prepa­ra­tions to in­crease its nuclear enrichment ca­pac­i­ties — the sharpest re­sponse to date by the Is­lamic repub­lic to Mr. Trump’s pull­out from the nuclear ac­cord.

Ira­nian of­fi­cials said the in­crease, while provoca­tive, does not vi­o­late its com­mit­ments un­der the nuclear ac­cord.

The pres­i­dent sent shock waves around the world with his May 8 de­ci­sion to with­draw from the Iran nuclear pact and be­gin reim­pos­ing U.S. sanc­tions, which the U.S., Europe, China and Rus­sia had col­lec­tively lifted in 2015 in ex­change for Iran’s prom­ise to curb its sus­pect nuclear pro­grams and al­low in­ter­na­tional in­spec­tions.

While Iran told the U.N. nuclear watch­dog agency that it plans only to in­crease enrichment within lim­its set by 2015 deal, the an­nounce­ment came with threats from a top Ira­nian of­fi­cial that the ac­tiv­i­ties could be quickly ex­panded. The warn­ing put fresh pres­sure on Euro­pean lead­ers to keep the nuclear ac­cord alive de­spite Mr. Trump’s with­drawal.

The head of Iran’s nuclear agency, Ali Ak­bar Salehi, said Tehran is pre­pared to dra­mat­i­cally in­crease its ca­pac­ity for enrichment but that the work so far is lim­ited to build­ing a fa­cil­ity for as­sem­bling the cen­trifuges. He made the com­ment a day af­ter Iran’s supreme leader, Ay­a­tol­lah Ali Khamenei, or­dered the in­crease in ca­pac­ity and vowed that Iran would pre­serve its nuclear pro­gram de­spite the U.S. with­drawal from the 2015 ac­cord.

Con­gress out of the loop

The Se­nate re­port fo­cuses new scru­tiny on the lengths Pres­i­dent Obama’s team was will­ing to go to en­sure the deal’s suc­cess as it was still be­ing ne­go­ti­ated.

The Se­nate Home­land Se­cu­rity Com­mit­tee’s per­ma­nent sub­com­mit­tee on in­ves­ti­ga­tions probe con­tends that the Obama ad­min­is­tra­tion went out of its way to keep U.S. law­mak­ers in the dark about cal­cu­lated and se­cre­tive ef­forts to give Tehran a back chan­nel to the in­ter­na­tional fi­nan­cial sys­tem and to U.S. banks, fa­cil­i­tat­ing a mas­sive U.S. cur­rency con­ver­sion worth bil­lions of dol­lars.

“Se­nior U.S. gov­ern­ment of­fi­cials re­peat­edly tes­ti­fied to Con­gress that Ira­nian ac­cess to the U.S. fi­nan­cial sys­tem was not on the table or part of any deal,” ac­cord­ing to a draft copy of the doc­u­ment ob­tained by The Times. “De­spite these claims, the U.S. Depart­ment of the Trea­sury, at the di­rec­tion of the U.S. State Depart­ment, granted a spe­cific li­cense that au­tho­rized a con­ver­sion of Ira­nian as­sets worth bil­lions of U.S. dol­lars us­ing the U.S. fi­nan­cial sys­tem.

“Even af­ter the spe­cific li­cense was is­sued, U.S. gov­ern­ment of­fi­cials main­tained in con­gres­sional tes­ti­mony that Iran would not be granted ac­cess to the U.S. fi­nan­cial sys­tem,” the re­port said.

Un­der terms of the nuclear deal, Iran was given the right to re­claim bil­lions of dol­lars in state as­sets and bank ac­counts frozen by in­ter­na­tional sanc­tions, but it re­mained “il­le­gal for U.S. per­sons, en­ti­ties, and fi­nan­cial in­sti­tu­tions to do busi­ness with Iran or par­ties on be­half of Iran.”

The ban in­cluded any “in­ter­me­di­ary” trans­ac­tions by U.S. banks to con­vert cur­rency for Iran — a de­vel­op­ment that would have el­e­vated the value of the Ira­nian as­sets on the global mar­ket and al­lowed Tehran to more eas­ily move the money through the in­ter­na­tional bank­ing sys­tem.

On the day the nuclear deal was im­ple­mented in 2015, Tehran had some $5.7 bil­lion worth of as­sets at Bank Mus­cat in Mus­cat, Oman, ac­cord­ing to Se­nate in­ves­ti­ga­tors, who said Tehran moved quickly to re­quest ac­cess to the U.S. dol­lar.

On Tehran’s re­quest, Bank Mus­cat con­tacted the U.S. Trea­sury Depart­ment’s of­fice of for­eign as­sets con­trol.

Ac­cord­ing to the Se­nate re­port: “Mus­cat sought to con­vert $5.7 bil­lion in Omai ri­als into eu­ros. … [But] be­cause the rial is pegged to the U.S. dol­lar, the most ef­fi­cient con­ver­sion was with an in­ter­me­di­ary step through a U.S. bank us­ing U.S. dol­lars.”

Obama Trea­sury Sec­re­tary Jack Lew told the Se­nate For­eign Re­la­tions Com­mit­tee in July 2015 that Iran would “con­tinue to be de­nied ac­cess to the [U.S.] fi­nan­cial and com­mer­cial mar­ket” un­der the pro­posed ac­cord, but the Trea­sury of­fice went ahead with at­tempts to qui­etly al­low the cur­rency trans­ac­tion sought by Iran.

“On Fe­bru­ary 24, 2016, OFAC is­sued a spe­cific li­cense to Bank Mus­cat au­tho­riz­ing Ira­nian as­sets worth roughly $5.7 bil­lion to flow through the U.S. fi­nan­cial sys­tem,” ac­cord­ing to the Se­nate re­port, which claims the move was made “even though U.S. sanc­tions pro­hib­ited it.”

Even as of­fice of for­eign as­sets con­trol of­fi­cials di­rectly “en­cour­aged two U.S. cor­re­spon­dent banks to con­vert the funds,” the Trea­sury Depart­ment con­tin­ued to deny it was work­ing to fa­cil­i­tate the cur­rency trans­ac­tion, said the re­port, which cites a 2016 let­ter from the depart­ment to Sen. Marco Ru­bio, Florida Re­pub­li­can, and Sen. Mark Kirk, Illi­nois Re­pub­li­can, that con­tended the Obama “ad­min­is­tra­tion has not been and is not plan­ning to grant Iran ac­cess to the U.S. fi­nan­cial sys­tem.”

The catch, ac­cord­ing to Se­nate in­ves­ti­ga­tors, was that nei­ther of the U.S. banks ap­proached by the of­fice of for­eign as­sets con­trol would take on the Ira­nian cur­rency ex­change — in part be­cause of po­lit­i­cal con­cerns over the prospect of be­ing found out to have se­cretly cir­cum­vented the re­main­ing ban on U.S. trans­ac­tions with the Is­lamic repub­lic.

De­spite the Obama ad­min­is­tra­tion’s ef­forts, Iran was ul­ti­mately forced to con­vert its Bank Mus­cat as­sets to eu­ros in small in­cre­ments us­ing Euro­pean banks and without ac­cess­ing the U.S. fi­nan­cial sys­tem, the Se­nate in­ves­ti­ga­tors said.

Mr. Port­man said in a state­ment last Tues­day night that “the Obama ad­min­is­tra­tion mis­led the Amer­i­can peo­ple and Con­gress be­cause they were des­per­ate to get a deal with Iran.”

“De­spite claims both be­fore and af­ter the Iran deal was com­pleted that the U.S. fi­nan­cial sys­tem would re­main off lim­its, the Obama ad­min­is­tra­tion is­sued a spe­cific li­cense al­low­ing Iran to con­vert bil­lions of dol­lars in as­sets us­ing the U.S. fi­nan­cial sys­tem,” Mr. Port­man said. “The only rea­son this trans­ac­tion wasn’t ex­e­cuted was be­cause two U.S. banks re­fused, even though the ad­min­is­tra­tion asked them to help con­vert the money.”

Such sanc­tions, he added, “are a vi­tal for­eign pol­icy tool, and the U.S. gov­ern­ment should never work to ac­tively un­der­mine their en­force­ment or ef­fec­tive­ness.”


Pres­i­dent Obama wanted the Iran nuclear ac­cord so badly that he of­fered to give Iran ac­cess to Amer­i­can banks, an in­ves­ti­ga­tion found.

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