Report: Obama Admin Signed Secret Document to Lift U.N. Sanctions on Iranian Banks

John Kerry, Mohammad Javad Zarif
John Kerry and Javad Zarif / AP
September 30, 2016

The Obama administration signed a secret document to lift United Nations sanctions on two Iranian state banks that were previously blacklisted for their involvement in financing Iran’s ballistic-missile program the same day Tehran released four American prisoners, the Wall Street Journal reported Friday.

Based on the nuclear agreement between Iran and six world powers, the two banks were initially under sanctions until 2023, but the administration agreed to delist the entities on Jan. 17. Senior U.S. officials told the Journal that State Department official Brett McGurk and an Iranian government representative met in Geneva and signed three documents that day.

One document committed the U.S. to dropping criminal charges against 21 Iranian nationals, and Tehran to releasing the Americans imprisoned in Iran.

Another committed the U.S. to immediately transfer $400 million in cash to the Iranian regime and arrange the delivery within weeks of two subsequent cash payments totaling $1.3 billion to settle a decades-old legal dispute over a failed arms deal.

The U.S. agreed in a third document to support the immediate delisting of the two Iranian banks, according to senior U.S. officials. In the hours after the documents were signed at a Swiss hotel, the different elements of the agreement went forward: The Americans were released, Iran took possession of the $400 million in cash, and the U.N. Security Council removed sanctions on Bank Sepah and Bank Sepah International, these officials said.

In February, a documentary by Iranian media outlet Tasnim News Agency, which is affiliated with the Islamic Revolutionary Guard Corps, claimed that Iranian government officials demanded that Bank Sepah  be delisted from U.N. sanctions as part of the deal to release four Americans. Despite previous sanctions on the bank by the Treasury Department, the Obama administration agreed to lift the sanctions under the nuclear deal reached in July 2015.

After the nuclear accord was inked, senior officials said they continued to have dialogue with Iran about the two banks before the three documents were officially signed in January. Tehran argued that Bank Sepah and Bank Sepah International were critical to international trade and their economy, the Journal reported.

Bank Sepah is Iran’s oldest bank and one of its three largest in terms of assets. Bank Sepah International, based in London, was key to financing Iran’s international trade before sanctions were imposed.

The U.S. Treasury was vehemently opposed to the banks back in 2007 for their alleged role in financially backing Iran’s missile program.

At the time, the Treasury said that Bank Sepah and Bank Sepah International had provided financial support to Iranian-state owned companies and organizations developing Iran’s missile program. These included Iran’s Aerospace Industries Organization and the Shahid Hemmat Industries Group.

"Bank Sepah is the financial linchpin of Iran’s missile procurement network and has actively assisted Iran’s pursuit of missiles capable of carrying weapons of mass destruction," the Treasury said in a January 2007 statement.

Since the nuclear agreement was reached in July 2015, Iran has conducted up to 10 ballistic missile tests. The U.N. has been critical of these launches but has not imposed any new sanctions.

Senior Pentagon officials are upset about the prisoner deal, the Journal noted, despite U.S. officials saying the Obama administration closely vetted all entities and people associated with Bank Sepah before they agreed to the lifting of sanctions.

The dispute in Washington has only deepened in recent weeks, as senior Pentagon officials, including Secretary of Defense Ash Carter, told Congress in a hearing that they weren’t notified by the White House about the cash transfer. The chairman of the Joints Chief of Staff, Marine Gen. Joe Dunford, said at a hearing last week that he found it "troubling" that the U.S. provided Tehran with so much cash, which he argued could be used for "spreading malign influence."

The Obama administration has repeatedly denied accusations that it sent $1.7 billion to Tehran to secure the release of four American prisoners. Many lawmakers have called the money transfer a ransom payment. A majority of lawmakers supported legislation last week that would legally ban the Obama administration from sending more cash payments to Tehran.

The Washington Free Beacon previously reported on House Majority Leader Kevin McCarthy (R., Calif.) praising the legislation.

While the Obama administration has threatened to veto the bill, McCarthy said the majority of Congress disagrees with the administration’s decision to pay Iran $1.7 billion prior to the release earlier this year of several U.S. hostages.

"The Obama administration paid a cash ransom to Iran for American hostages," McCarthy told the Free Beacon. "No matter how the Obama administration chooses to redefine this payment, the message to Iran is crystal clear: You will be rewarded for taking hostages—not punished."