Obama Admin Engaged in Secret Talks to Pay Iran Nearly $2 Billion

Officials admit delays in informing Congress, say more payments to come

John Kerry
Secretary of State John Kerry / AP
March 23, 2016

The Obama administration has spent three years engaged in secret talks with Iran that resulted in the payment of nearly $2 billion in taxpayer funds to the Islamic Republic, with more payouts likely to come in the future, according to a recent letter issued by the State Department and obtained exclusively by the Washington Free Beacon.

The administration’s disclosure came in response to an inquiry launched in January by Rep. Mike Pompeo (R., Kan.), who was seeking further information about the Obama administration’s payment of $1.7 billion in taxpayer funds to Iran, which many viewed as a "ransom payment" for Iran’s release that month of several U.S. hostages.

The administration’s official response to Pompeo was sent earlier this week, just days after a Free Beacon report detailing a months-long State Department effort to stall the lawmaker’s inquiry.

"We apologize for the delay in responding," Julia Frifield, an assistant secretary for legislative affairs, states in the letter’s opening.

Obama administration officials first began talks to settle a number of outstanding legal claims leveled against the United States by Iran in 2014. The administration predicts that more taxpayer-funded payments are likely to be granted to the Islamic Republic in the future, according to the letter.

Frifield in her letter goes on to defend the $1.7 billion payment to Iran and discloses that the administration is open to providing Tehran with more money if it is willing to settle these decades-old legal disputes with the United States.

"We are confident that this was a good settlement for the American taxpayer," the State Department said.

Iran’s legal row with the United States surrounds the breakdown of a massive arms deal that was nixed in the aftermath of Iran’s 1979 Islamic revolution, which resulted in the capture of the U.S. embassy and American personnel stationed there.

Many of these claims remain unsettled and are still being litigated by the Iran-U.S. Claims Tribunal at the Hague.

The Obama administration has been working behind the scenes since at least 2014 to reach settlement agreements with Iran to avoid court decisions, according to the letter, which identifies at least two separate discussions held in June 2014 and January 2015.

The administration anticipates that more settlements will come, meaning that the United States will likely be forced to pay Iran via a taxpayer legal fund operated by the Treasury Department.

"The United States is continuing to vigorously litigate these claims at the Tribunal, but is also open to discussing further settlements of claims with Iran, as we have done throughout the life of the Tribunal, with the aim of resolving them in furtherance of U.S. interests," the letter states.

Iran’s "fact-intensive claims involve over 1,000 separate contracts between Iran and the United States," according to the letter, which explains that January’s $1.7 billion payment settled just one of many outstanding disputes.

The Obama administration fails to directly address Pompeo’s questions seeking to determine if the legal settlement was finalized as part of an incentive package meant to motivate Tehran to free imprisoned Americans.

"It would not be in the interest of the United States to discuss further details of the settlement of these claims in an unclassified letter due to the ongoing litigation at the Tribunal," the State Department writes. "However, we would be prepared to provide a closed briefing on such issues if it would be useful to there."

"When Iran releases American hostages, and then, on that same day, President Obama announces he is paying Iran $1.7 billion, Congress of course has to ask the hard questions," said one source familiar with the investigation. "And when the Obama administration admits that over $1 billion in taxpayer money is going to the Iranian regime, Congress is obligated to respond. The State Department has ducked and dodged--providing a history lesson on international tribunals, focused on actions decades ago, instead of addressing dangerous misdeeds that were potentially just committed. That is suspicious."

Under the specific terms of January’s settlement, Iran was to be paid a $400 million balance and an additional $1.3 billion in interest from a taxpayer fund maintained by the Treasury Department, a State Department official confirmed to the Free Beacon at the time.

That settlement—along with additional settlements—was reached outside of the recently implemented nuclear deal and is separate from the $150 billion in unfrozen cash assets the United States is obligated to give to Iran under that agreement, the official said.

The $1.7 billion payment was announced just prior to the release of five U.S. prisoners who had been held in Iran, sparking accusations that the deal is tantamount to a ransom payment