House GOP: White House paid Iran ransom for prisoners

House GOP: White House paid Iran ransom for prisoners

House Republicans on Thursday pressed Obama administration officials on whether a settlement with Iran constituted ransom for freed American prisoners, comparing the payment to midnight drug-deal money drop.

Democrats dismissed the House Financial Services subcommittee hearing as a political ploy to discredit the president, not a genuine effort to learn more about the issue.


At focus was a $1.7 billion cash settlement of a 30-year-old case that preceded the freeing of several American prisoners in January. The U.S. made the payment shortly after Iran and the U.S. each freed prisoners who were citizens of the other country.

Administration officials insisted the payment coincided with several diplomatic efforts with Iran, while Republicans claimed their efforts shadily funded terrorism with untraceable money to free American prisoners.

“Cash is the currency of terrorism. We paid cash to the world's foremost state sponsor of terrorism. And the question is why was that done?” asked House Financial Services Committee Chairman Jeb Hensarling (R-Texas).

“The American people want to know if this administration paid ransom" inciting "terrorists to kill American citizens, to put a price on the head of every soldier, sailor, airman and Marine,” he added.

The settlement pertained to a case before the Iran-United States Claims Tribunal, a court run out of the Netherlands founded in 1979. The case addressed money the United States seized from Iran during the 1970s and placed in a trust fund for foreign military sales.

The United States agreed to settle that claim for $1.7 billion, which was paid to Iran in January through foreign cash after transfer to a European bank.

Administration officials insisted immediate payment was part of the settlement, and that the settlement could only happen via cash, because U.S. sanctions passed by Congress isolated Iran from the international financial system.

House Republicans have disputed those claims and insist that the administration only paid the money in cash at Iran’s request. They argued that Iran demanded immediate payment knowing cash was the only possible means, and one that could be used to fund terrorism with untraceable money.

“It would have taken longer, but the dispute that this payment was supposed to settle was over 30 years old,” said Rep. Ed Royce (R-Calif.), chairman of the House Foreign Relations Committee. “The only way I could see timing coming into play was if it was ransom.”

Christopher Backemeyer, State Department assistant secretary for Iranian affairs, said the settlement happened as the U.S. aimed to wrap up several diplomatic efforts with Iran, including the Iran nuclear deal and the prisoner swap.

Backemeyer said there was a “significant risk” those efforts could fall apart, and the prisoner swap experienced “fits and starts” that complicated the payment. Iran asked for immediate payment to address dire economic concerns brought on by financial sanctions, and the U.S. transferred the funds to a representative of Iran’s central bank.

He also said he couldn't guarantee Iran wouldn't use the money to fund terrorism.

Backemeyer and officials from the State, Treasury and Justice departments warned that answering certain questions risked undermining U.S. litigation with Iran. 

Lisa Grosh, assistant legal advisor to the State Department's Office of International Claims and Investment Disputes, said the settlement saved the U.S. from paying more to Iran later through a judgement against them.

Democrats backed up the officials, panning the hearing and insisting that closed briefings would be more productive.

“I am concerned that this may be a part of the strategy that is being employed by my colleagues on the opposite side of aisle to discredit the president of the United States,” said Rep. Maxine Waters (D-Calif.).

Rep. Michael Capuano (D-Mass.) said Republicans tried to make the administration look “like criminals dropping bags of cash in the middle of the night like drug dealers.”

“So we gave [Iran] back their money in a form of legal tender that is very public, and [Republicans] are criticizing it because we got back four Americans,” said Capuano. “Mother of God.”