Senate insiders say that senior Treasury Department officials have been lying for years about their backroom efforts to oppose and dismantle Iran sanctions legislation that ultimately forced Tehran to the bargaining table over its illicit nuclear program.
Top officials in the Treasury and State Departments are said to have staunchly opposed the 2011 passage of the sanctions legislation authored by Sens. Bob Menendez (D., N.J.) and Mark Kirk (R., Ill.), and even worked to dismantle key pieces of the bill after it was passed by the Senate in a 100-0 vote, according to senior Senate insiders who worked on the legislation.
Treasury’s role in the backroom negotiations over the bill were thrust into the spotlight earlier this month when Treasury Under Secretary David Cohen entered a heated exchange with Kirk over the administration’s opposition to sanctions.
Kirk, as well as Senate insiders who spoke to the Washington Free Beacon, said that Cohen was not truthful in his testimony and is attempting to rewrite history in a bid to whitewash the Obama administration’s long opposition to tough Iran sanctions.
"I would say, David, you didn’t highlight something in your testimony," Kirk said in the April 2 hearing. "You also said that the sanctions that Congress unanimously supported were key to bringing the Iranians to the table. What you didn’t say was that you vigorously opposed the passage of the Menendez-Kirk sanctions."
Kirk was referring to a December 2011 letter from Treasury outlining its opposition to a clause in the bill that would have choked off Iran’s oil exports.
"What that letter said is that the amendment as it currently existed at the time was one we had concerns about and how it would be implemented," Cohen recalled at last week’s hearing. "What transpired after that hearing that day is we worked with you, senator, with Sen. Menendez, and others to modify the provision that was ultimately enacted."
Treasury was purportedly seeking to include a "reduction exception" clause in the bill that would grant countries a waiver from complying with the ban on buying Iranian oil.
Cohen went on to claim that the final version of the sanctions bill "changed significantly" and "addressed many of the concerns that animated that letter and was ultimately crafted in a way that has proven to be extraordinarily successful in driving down Iran’s ability to sell oil."
The bill emerged from the conference committee—a process by which legislation is altered after its passage—"largely intact," according to a December 2011 report in Foreign Policy.
Senate insiders further revealed that Treasury’s December 2011 letter was sent on the day of the sanctions vote, days after the legislation was filed. The reduction exception was already included in that version of the bill, contradicting Cohen’s claims that the bill was substantively altered following the letter.
"The Treasury Department is flat out lying—the facts do not match their claims," said a senior Senate aide who participated in the process, but was not authorized to speak on record. "The compromise Menendez-Kirk amendment already had the significant reduction exception."
"That amendment, which ultimately became law, was filed days before Treasury's letter," said the source, who went on to reveal how top Obama administration officials attempted to demolish the sanctions bill.
"The deputy secretaries of State and Treasury along with [White House Chief of Staff] Denis McDonough held a closed-door meeting with the senators to beg them to withdraw the amendment, claiming that the significant reduction exception wasn't workable," the source recalled.
"John Kerry was in the room for the entire meeting," added the source. Deputy Secretary of State "Bill Burns claimed the Menendez-Kirk amendment would destroy the international coalition against Iran; Treasury claimed oil prices would spike; McDonough pleaded for more time."
Even "after the 100-0 [Senate] vote [on the bill], we fought them tooth and nail to keep the amendment intact and we defeated their attempts to revise it in the conference committee," the source said.
"David Cohen and all the rest were on the wrong side of history in 2011—they know it and they are trying to save their reputations for future biographies. Why must they continue lying when the truth is documented in fact?" the source asked.
A Treasury Department official defended Cohen’s recounting of events and said that the department paved the way for tough sanctions on Iran throughout 2011.
As Treasury was working to "restrict the activity of Iran’s Central Bank" and cut off its ability to sell oil, "Sens. Kirk and Menendez were sponsoring legislation to impose sanctions on foreign banks that transacted with the Central Bank of Iran," a Treasury Department official told the Free Beacon.
The source went on to defend Cohen’s claims despite evidence indicating that he distorted the facts.
"The legislation, as originally drafted, would have made sanctionable all transactions with the Central Bank of Iran, including all payments for Iranian oil," the official said.
"On Dec. 1, 2011, Secretary [Tim] Geithner sent a letter raising concerns that the legislation, as drafted, could be counterproductive," the official said, backing Cohen’s recollection of events.
"After a hearing that day, Under Secretary Cohen and others at the Treasury Department worked with Sens. Menendez and Kirk and their staffs to modify the legislation to include a provision that required countries importing Iranian oil to significantly reduce their purchases or face severe banking sanctions," the official recounted.
The Free Beacon could find no evidence that the legislation voted on Dec. 1, 2011 had been altered since originally being filed by the senators.
"As ultimately enacted, the legislation included this provision, and it has proven enormously successful in reducing Iran’s oil exports by over 50 percent since January 2012, when the legislation signed by President Obama went into effect," the source said.