By John Ubaldi
Contributor, In Homeland Security
The Iran nuclear deal has always been controversial. But a new report prepared by Republicans on the Senate Permanent Subcommittee on Investigations adds fuel to the fire.
The report alleges that the Obama administration secretly gave Tehran access to the U.S. financial system. As a result, Iran was allowed to convert billions in assets into euros as part of the Iran nuclear deal.
The report comes after President Trump announced that the United States would be pulling out of the deal. Trump also said that the U.S. would again impose sanctions on Tehran.
Financial System Access Permitted Iran to Recapture Frozen Financial Assets
Once the nuclear deal with Iran was signed in 2015, Iran was promised access to long-frozen Iranian assets abroad, including $5.7 billion at the Bank of Muscat in Oman. But even after the agreement was signed, it remained illegal for U.S. citizens, entities and financial institutions to do any business with Iran or with parties on behalf of the Iranian government.
This ban also included “U-Turn” transactions. These transactions would take place by or on behalf of an Iranian bank for which a U.S. bank needs to act as an intermediary. The intent is to convert a foreign currency into U.S. dollars and then exchange the dollars for another foreign currency.
Treasury Department Give Tehran License to US Financial System
The Treasury Department issued specific licenses to the Bank of Muscat. However, U-Turn transactions hit a major snag when two unnamed U.S. banks were unwilling to act as intermediaries and convert Omani riyals into dollars for later conversion into euros.
Both banks declined the transactions, despite pressure from U.S. officials. The banks’ refusal was “primarily due to the unwillingness to take on the legal and compliance risk posed by the complex conversion,” as well as reputational risks, the GOP report said.
One issue of concern was that officials from the Office of Foreign Assets Control (OFAC). encouraged the banks to make the transactions. OFAC regulates U.S. banks’ compliance with U.S. sanctions law.
Congress Kept in the Dark
Members of Congress were concerned about Iranian access to the U.S. financial system. They received repeated assurances from State and Treasury Department officials, who testified before the various congressional committees that there was no unauthorized Iranian access to the system.
Then-Treasury Secretary Jack Lew told the Senate Foreign Relations Committee that under the Joint Comprehensive Plan of Action (JCPOA), Iran “will continue to be denied access to the [U.S.’s] financial and commercial market.”
Later that same month, the Treasury Department’s Acting Undersecretary for Terrorism and Financial Intelligence, Adam Szubin, told the Senate Banking Committee that “Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks.”
Obama Misleads Congress
The signal given by the Obama administration was that under no circumstance would Iran be permitted any access to the U.S. financial system under the JCPOA.
However, the Senate Republicans’ report found that on February 24, 2016, contrary to what Congress had been told by Treasury Secretary Lew and others, the Treasury Department had “granted a specific license that authorized a conversion of Iranian assets worth billions of U.S. dollars using the U.S. financial system.”
The Permanent Subcommittee on Investigations report also alleges that in its eagerness to secure the nuclear deal, the Obama administration purposely never informed Congress that it sought access for Tehran to circumvent sanctions that remained in place following the 2016 agreement.
“The Obama administration misled the American people and Congress because they were desperate to get a deal with Iran,” said Sen. Rob Portman, the Ohio Republican who chairs the subcommittee. Portman opposed the Joint Comprehensive Plan of Action.
Obama administration officials rejected the Senate Republicans’ report out of hand, calling it mere politics. They also noted that the report did not include interviews with former Obama administration officials and no Democrats were involved in compiling the report.
Ever since the Obama administration signed the Iran nuclear agreement, the deal has been controversial. Even after Trump announced last month that the U.S. was pulling out of the agreement, it continues to leave a bad taste in the mouths of our European allies, who remain committed to the agreement.
Other Secret Controversial Aspects of the Iran Agreement
This isn’t the first time that alleged improprieties by the Obama administration with regard to Iran have come to light. When he outlined the Iran nuclear agreement to Congress, Obama failed to disclose the existence of secret side deals on inspections.
The secret agreements only became public by chance when then-Rep. Mike Pompeo, R-Kan., and Sen. Tom Cotton, R-Ark., became aware of them during a meeting with International Atomic Energy Agency officials in Vienna.
Also, the Obama administration secretly sent a plane to Iran with $400 million in Swiss francs, euros and other currencies. That financial shipment occurred on the same day Tehran released four American hostages.
The seriousness of these allegations needs further investigation. The public needs full accountability and transparency on every aspect of the Iran nuclear deal by all agencies involved, including the Obama administration.
We are living in a hyper-partisan atmosphere in which truth often takes a back seat to falsities and innuendos. We get serious only when it’s the misdeeds or egregious acts of the opposing political party. Unfortunately, the U.S. receives a black eye each time that happens, leaving our democracy a little diminished.