[House Report 114-767]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-767
======================================================================
PROHIBITING FUTURE RANSOM PAYMENTS TO IRAN ACT
_______
September 20, 2016.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Royce, from the Committee on Foreign Affairs, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 5931]
[Including cost estimate of the Congressional Budget Office]
The Committee on Foreign Affairs, to whom was referred the
bill (H.R. 5931) to provide for the prohibition on cash
payments to the Government of Iran, and for other purposes,
having considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
TABLE OF CONTENTS
Page
The Amendment.................................................... 2
Summary and Purpose.............................................. 4
Background and Need for Legislation.............................. 5
Hearings......................................................... 10
Committee Consideration.......................................... 12
Performance Goals and Objectives................................. 13
Committee Oversight Findings..................................... 13
New Budget Authority, Tax Expenditures, and Federal Mandates..... 14
Congressional Budget Office Cost Estimate........................ 14
Directed Rule Making............................................. 15
Non-Duplication of Federal Programs.............................. 15
Congressional Accountability Act................................. 15
New Advisory Committees.......................................... 15
Earmark Identification........................................... 15
Section-by-Section Analysis...................................... 15
Dissenting Views................................................. 17
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Prohibiting Future Ransom Payments to
Iran Act''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Since 1979, when it held more than 50 United States
citizens for 444 days, Iran has repeatedly held United States
citizens hostage.
(2) Presidential Policy Directive 30 issued by President
Barack Obama on June 24, 2015, states that ``It is United
States policy to deny hostage-takers the benefits of ransom,
prisoner releases, policy changes, or other acts of
concession.''.
(3) On January 17, 2016, the President announced that Iran
would release several United States citizens while the United
States would grant clemency to and release seven Iranian
nationals serving sentences or awaiting trial in the United
States for serious crimes.
(4) Senior officials of the Department of State have
acknowledged that these United States citizens were released as
part of a ``prisoner swap'' and Iranian negotiators reportedly
asked for a cash payment.
(5) On January 17, 2016, the President also announced that
``The United States and Iran are now settling a longstanding
Iranian government claim against the United States
Government.''.
(6) The overall amount of the settlement is approximately
$1,700,000,000.
(7) Subsequent reports revealed that $400,000,000 of this
$1,700,000,000 settlement was secretly flown to Iran, in cash,
simultaneously with the release of these United States
citizens.
(8) One of the United States citizens released that night,
Pastor Saeed Abedini, has stated that Iranian officials
explained a delay in their departure was due to the status of
another plane.
(9) Senior officials at the National Security Division of the
Department of Justice reportedly objected to the $400,000,000
cash payment, warning that Iran would see it as a ransom.
(10) On August 18, 2016, a Department of State spokesman
admitted that the $400,000,000 cash payment was ``leverage'' to
gain the release of Americans held hostage by Iran.
(11) Iranian State Television quoted General Mohammad Reza
Naghdi, commander of the Basij militia, as claiming ``Taking
this much money back was in return for the release of the
American spies.''.
(12) According to Presidential Policy Directive 30, the
United States policy against paying ransom and releasing
prisoners ``protects United States nationals and strengthens
national security by removing a key incentive for hostage-
takers to target United States nationals, thereby interrupting
the vicious cycle of hostage-takings, and by helping to deny
terrorists and other malicious actors the money, personnel, and
other resources they need to conduct attacks against the United
States, its nationals, and its interests.''.
(13) Since the United States released Iranians serving
sentences or awaiting trial in the United States for serious
crimes and provided Iran with $400,000,000 in cash, Iran has
taken several more United States citizens hostage.
(14) On August 22, 2016, the Department of State issued an
``Iran Travel Warning'' noting that ``Iranian authorities
continue to unjustly detain and imprison U.S. citizens,
particularly Iranian-Americans, including students,
journalists, business travelers, and academics, on charges
including espionage and posing a threat to national
security.''.
(15) The Government of the United States has designated Iran
as a state sponsor of terrorism since 1984 and a jurisdiction
of primary money laundering concern since 2011.
(16) The Department of State's most recent Country Reports on
Terrorism makes clear that ``Iran continued its terrorist-
related activity in 2015, including support for Hizballah,
Palestinian terrorist groups in Gaza, and various groups in
Iraq and throughout the Middle East.''.
(17) In announcing Iran's designation as a jurisdiction of
primary money laundering concern, the Department of the
Treasury made clear that ``any and every financial transaction
with Iran poses grave risk of supporting'' Iran's ongoing
illicit activities, including terrorism.
(18) On March 17, 2016, the Department of State acknowledged
in a letter to Congress that there remain some ``large claims''
pending before the Iran-United States Claims Tribunal, ``many
of which are against the United States''.
SEC. 3. STATEMENT OF POLICY.
It shall be the policy of the United States Government not to pay
ransom or release prisoners for the purpose of securing the release of
United States citizens taken hostage abroad.
SEC. 4. PROHIBITION ON CASH PAYMENTS TO THE GOVERNMENT OF IRAN.
(a) Prohibition.--Notwithstanding any other provision of law,
beginning on the date of the enactment of this Act, the United States
Government may not provide, directly or indirectly, promissory notes
(including currency) issued by the United States Government or
promissory notes (including currency) issued by a foreign government,
to the Government of Iran.
(b) Licensing Requirement.--
(1) In general.--Beginning on the date of the enactment of
this Act, the conduct of a transaction or payment in connection
with an agreement to settle a claim or claims brought before
the Iran-United States Claims Tribunal may be made only--
(A) on a case-by-case basis and pursuant to a
specific license by the Office of Foreign Assets
Control of the Department of the Treasury; and
(B) in a manner that is not in contravention of the
prohibition in subsection (a).
(2) Publication in federal register.--The President shall
publish in the Federal Register a list of transactions and
payments, including the amount and method of each such
transaction and payment, by the United States Government to the
Government of Iran in connection with the agreement described
in paragraph (1).
(c) Termination.--The prohibition in subsection (a) and the licensing
requirement in subsection (b) shall remain in effect until the date on
which the President certifies to the appropriate congressional
committees that--
(1) the President has rescinded a preliminary draft rule or
final rule (as in effect on the day before the date of the
enactment of this Act) that provides for the designation of
Iran as a jurisdiction of primary money laundering concern
pursuant to section 5318A of title 31, United States Code; and
(2) the Secretary of State has removed Iran from the list of
countries determined to have repeatedly provided support for
acts of international terrorism under section 6(j) of the
Export Administration Act of 1979 (as continued in effect
pursuant to the International Emergency Economic Powers Act),
section 40 of the Arms Export Control Act, section 620A of the
Foreign Assistance Act of 1961, or any other provision of law.
(d) Appropriate Congressional Committees Defined.--In this section,
the term ``appropriate congressional committees'' means--
(1) the Committee on Foreign Affairs and the Committee on
Financial Services of the House of Representatives; and
(2) the Committee on Foreign Relations and the Committee on
Banking, Housing, and Urban Affairs of the Senate.
SEC. 5. REPORT ON OUTSTANDING CLAIMS BEFORE THE IRAN-UNITED STATES
CLAIMS TRIBUNAL.
(a) Report.--The President shall submit to the appropriate
congressional committees a report that lists and evaluates each
outstanding claim before the Iran-United States Claims Tribunal.
(b) Matters To Be Included.--The report required under subsection (a)
shall include the following:
(1) The total value of each outstanding claim.
(2) The current status of each outstanding claim.
(3) The likelihood that each claim will be resolved in the
next 6 months.
(c) Submission to Congress.--The report required under subsection (a)
shall be submitted to the appropriate congressional committees not
later than 30 days after the date of the enactment of this Act and
every 180 days thereafter for a period not to exceed 3 years.
(d) Appropriate Congressional Committees Defined.--In this section,
the term ``appropriate congressional committees'' means--
(1) the Committee on Foreign Affairs of the House of
Representatives; and
(2) the Committee on Foreign Relations of the Senate.
SEC. 6. NOTIFICATION AND CERTIFICATION RELATING TO SETTLEMENTS OF
OUTSTANDING CLAIMS BEFORE THE IRAN-UNITED STATES
CLAIMS TRIBUNAL.
(a) Notification.--The President shall notify the appropriate
congressional committees not later than 30 days prior to conducting a
transaction or payment from the Government of the United States to the
Government of Iran in connection with an agreement to settle a claim or
claims brought before the Iran-United States Claims Tribunal.
(b) Matters To Be Included.--The notification required under
subsection (a) shall include the following:
(1) The total amount of the settlement, including the total
principal and interest, and an explanation of the calculation
of the interest.
(2) A legal analysis of why the settlement was made,
including a detailed description of all claims and counter-
claims covered by the settlement.
(3) A certification by the President that the settlement is
not a ransom for the release of individuals held hostage by
Iran.
(4) An identification of each entity of the Government of
Iran that will receive amounts from the settlement.
(5) A certification that the funds provided to Iran under the
settlement will not be used to provide support to foreign
terrorist organizations, the regime of Bashar al-Assad, or
other destabilizing activities.
(6) Whether an equal amount of Iranian funds are available
and accessible in the United States to satisfy judgments
against Iran by victims of Iranian-sponsored terrorism.
(7) A copy of the settlement agreement.
(8) A description of the disposition of any related claims
that have been subrogated to the United States Government.
(9) A certification that the settlement is in the best
interest of the United States.
(c) Appropriate Congressional Committees Defined.--In this section,
the term ``appropriate congressional committees'' means--
(1) the Committee on Foreign Affairs of the House of
Representatives; and
(2) the Committee on Foreign Relations of the Senate.
SEC. 7. EXCLUSION OF CERTAIN ACTIVITIES.
Nothing in this Act shall apply to any activities subject to the
reporting requirements of title V of the National Security Act of 1947.
SEC. 8. RULE OF CONSTRUCTION.
Nothing in this Act shall be construed to authorize any payment by
the Government of the United States to the Government of Iran.
SEC. 9. DEFINITIONS.
In this Act:
(1) Government of iran.--The term ``Government of Iran''
means--
(A) the state and the Government of Iran, as well as
any political subdivision, agency, or instrumentality
thereof;
(B) any entity owned or controlled directly or
indirectly by the foregoing;
(C) any person to the extent that such person is, or
has been, or to the extent that there is reasonable
cause to believe that such person is, or has been,
acting or purporting to act directly or indirectly on
behalf of any of the foregoing; and
(D) any person or entity identified by the Secretary
of the Treasury to be the Government of Iran under part
560 of title 31, Code of Federal Regulations.
(2) Iran-united states claims tribunal.--The term ``Iran-
United States Claims Tribunal'' means the tribunal established
pursuant to the Algiers Accords on January 19, 1981, to resolve
certain claims by nationals of one party against the other
party and certain claims between the parties.
Summary and Purpose
H.R. 5931, the Prohibiting Future Ransom Payments to Iran
Act, is a legislative response to the Obama Administration's
action of January 17, 2016. On that day, simultaneous with the
release of several Americans who had been detained in Iran,
President Obama announced that the United States would pay
Tehran $1.7 billion to settle a decades-old dispute over
aborted arms sales that pre-dated the Iranian revolution of
1979. This settlement payment occurred without any consultation
with the Committee on Foreign Affairs.
Of the upmost concern to the committee, it was subsequently
revealed that this $1.7 billion delivered to the terrorist
regime in Tehran was paid in cash. Indeed, according to the
Financial Action Task Force--the international body charged
with developing policies to combat money laundering and
terrorism financing--the ``physical transportation of
currency'' is ``one of the main methods used to move criminal
assets, launder money and finance terrorism.''
H.R. 5931 adheres to longstanding U.S. policy against
paying ransom for hostages by prohibiting future cash payments
to Iran until it stops sponsoring terrorism and is no longer a
primary money laundering concern. It further enhances
transparency and oversight by requiring a 30-day Congressional
notification and review of any future settlements related to
the U.S.-Iran Claims Tribunal. If this legislation had been
law, the Obama Administration's dangerous actions of last
January could not have happened.
The committee believes that this piece of legislation
strikes the right balance between ending cash payments to a
state sponsor of terrorism on the one hand, while ensuring the
United can meet its international commitments on the other.
Background and Need for Legislation
Americans Held Hostage by Iran
In 1979, the radicals that still rule Iran took over the
country, stormed the U.S. Embassy, and held more than 50
Americans hostage for 444 days. Since that time Iran has
repeatedly taken Americans hostage, a policy that continues to
this day. Iranian laws are vaguely written and inconsistently
applied in support of these politically motivated detentions,
and those held are often denied access to legal counsel. Many
have been dual nationals of the U.S. and Iran. Iran refuses to
recognize their American citizenship, and denies them consular
services.
As the Obama Administration negotiated the ``Joint
Comprehensive Plan of Action'' to address Iran's nuclear
program, Tehran held several Americans hostage. They included
Pastor Saeed Abedini, former U.S. Marine Amir Hekmati, and
Washington Post correspondent Jason Rezaian. Despite Secretary
Kerry's claim that he and other senior officials ``repeatedly
raised'' the cases of ``detained or missing U.S. citizens
directly with Iranian officials,'' the Obama Administration
rejected calls from Congress to demand the release of these
Americans before the nuclear negotiations could continue. As
State Department Spokeswoman Marie Harf made clear, the Obama
Administration considered that the nuclear negotiations and the
Americans held hostage in Iran ``really are separate issues.''
The fate of another American, Robert Levinson, remains a
top concern of the committee. A sixty-seven year old former FBI
agent, Levinson went missing after a visit in 2007 to Iran's
Kish Island. According to his family, Levinson was researching
a cigarette smuggling case as a private investigator. Iran
denies knowing his status or location and refuses to assist
efforts to obtain his location. In December 2011, Levinson's
family released a one-year- old taped statement by him. On
March 9, 2015, the eighth anniversary of Levinson's
disappearance, the FBI increased its reward to up to $5 million
for ``information leading directly to his safe location,
recovery, and return.''
On June 2, 2015, the committee held a hearing on
``Americans Detained in Iran.'' All four witnesses were close
relatives of Americans who were being held in Iran. They
included Ali Rezaian, the brother of Washington Post
correspondent Jason Rezaian; Naghmeh Abedini, the wife of
Pastor Saeed Abedini; Sarah Hekmati, the sister of former U.S.
Marine Amir Hekmati; and Daniel Levinson, the son of former FBI
agent Robert Levinson.
After this hearing, the committee considered H. Res. 233,
introduced by Rep. Kildee, ``expressing the sense of the House
of Representatives that Iran should immediately release the
three United States citizens it holds, as well as provide all
known information on any United States citizens that have
disappeared within its borders.'' This resolution passed the
House on June 15, 2015.
Prisoner Exchange
On January 17, 2016, the day after the nuclear deal was
officially implemented, President Obama announced that Iran had
released four American hostages: Pastor Abedini, former U.S.
Marine Amir Hekmati, Washington Post correspondent Jason
Rezaian, and Nosratollah Khosravi-Roodsari--about whom little
is known.
The President also announced that, ``six Iranian-Americans
and one Iranian serving sentences or awaiting trial in the
United States are being granted clemency'' in what he described
as ``a reciprocal humanitarian gesture.'' A State Department
spokesman has since referred to the events as a ``prisoner
swap.'' Critics noted that by exchanging Americans held hostage
by Iran for convicted and accused criminals, the President
violated longstanding U.S. policy, as laid out in his own
Policy Directive, to deny hostage-takers the benefit of
``prisoner releases.''
While the President claimed that ``these individuals were
not charged with terrorism or any violent offenses,'' all had
been accused or convicted of serious crimes from sanctions
evasion to acquiring equipment for Iran's illegal weapons
programs. In addition, The Wall Street Journal reported that
``The U.S. also agreed to drop the names of 14 Iranian
nationals it has been seeking from the watch list of Interpol,
the international police agency.''
$1.7 Billion Settlement at the Iran-U.S. Claims Tribunal
In the same January 17, 2016, speech in which he announced
implementation of the nuclear deal and the prisoner exchange,
President Obama also announced that the United States would pay
Iran $1.7 billion to settle a decades-old dispute over an
aborted arms sale that had been called off after the radicals
that still rule Iran seized power in 1979.
The Obama Administration contends that the Iran-U.S. Claims
Tribunal, based in The Hague, was poised to rule against the
United States in the longstanding contract dispute. This
Tribunal was created pursuant to the Algiers Accords, which the
United States and Iran reached in 1981. The Tribunal is
designed to resolve contractual disputes caused by the abrupt
break in relations between the two countries.
The Tribunal is divided into three chambers, each
consisting of an American judge, an Iranian judge, and a third-
country judge, who serves as the chamber's chair. Prior to the
deadline of January 1982, 3,844 private claims were filed, of
which 2,795 were ``small claims'' of less than $250,000. This
resulted in payments of $2.5 billion to American claimants--
mostly U.S. companies whose business in Iran was interrupted by
the revolution. Many of the claims were settled prior to
judgment, with the Tribunal approving the terms. Case B1, which
is by far the largest and most complex claim, involves a vast
number of disputes arising out of Iran's purchase of military
equipment prior to the revolution through the Defense
Department's Foreign Military Sales (FMS) program--of which
Iran was the largest customer at the time.
According to the Administration, Iran received the balance
of $400 million that it had deposited in the FMS Trust Fund, as
well as roughly $1.3 billion in interest. The Administration
maintains that if Iran's claim had gone to decision, the United
States would have faced significant exposure in the billions of
dollars. However, Administration officials refuse to publicly
explain how they determined that a decision by the Tribunal was
imminent, that the U.S. would lose that decision, or how the
$1.3 billion in interest was calculated--citing ongoing
litigation at the Tribunal.
Lack of Transparency at the Iran-U.S. Claims Tribunal
The timing of this announcement, combined with the lack of
details, immediately led Members of the committee and other
observers to express concern that the settlement was reached to
provide a ransom to secure the release of American hostages. In
the wake of the prisoner exchange, such a payment would
represent a further violation of the longstanding U.S. ``no
concessions'' policy. In the weeks leading up to the
President's speech, the Administration had repeatedly briefed
the committee on the implementation of the nuclear deal and a
wide range of issues related to Iran, including the regime's
ongoing sponsorship of terrorism, dangerous ballistic missile
and illicit conventional weapons programs, and continued
efforts to prop up the murderous Assad regime in Syria.
However, despite having ample opportunity to do so, in both
unclassified and classified settings, the Obama Administration
never raised this potential financial settlement with the
committee.
On February 3, 2016, Chairman Royce wrote to Secretary
Kerry expressing concern that the dispute over the decades-old
arms sale was settled to provide Iran with a de facto ransom.
The letter included ten questions requesting detailed
information on the settlement and its connection to the
hostages.
When the State Department failed to provide a substantive
response, Chairman Royce wrote a second letter reiterating his
questions and specifically asking how the settlement was paid
to Iran.
The $400 Million Cash Payment
On August 3, 2016, The Wall Street Journal reported that
the $400 million held in the FMS Trust Fund was sent to Iran in
cash. As testimony from a senior Treasury Department official
later confirmed, the $400 million was transferred from the
United States to a European central bank, withdrawn in the
banknotes of a European currency, and turned over to an
official from the Central Bank of Iran at a European airport on
January 17. Closely coordinated, a Swiss military aircraft
arrived in Geneva with the American prisoners.
In the days following the announcement of the settlement
payment and the hostage release, the State Department denied
the connection between the two. Specifically, Department
Spokesman John Kirby maintained that ``the negotiations over
the settlement were completely separate from the discussions
about returning our American citizens home.''
The Administration also rejected any accusations that the
settlement amounted to a ransom payment. On February 3, 2016,
the committee wrote to the Department expressing concern that
the timing of the settlement could be viewed as such. The
Department responded on March 17, stating that the ``timing [of
the settlement] was particularly critical, as hearings on this
claim were then being considered for scheduling by the
Tribunal.'' This suggested the timing was unrelated to the
prisoner exchange. However, after reports of the $400 million
cash payment surfaced in early August, the State Department
reversed itself and confirmed that the payment was used as
``leverage'' to secure the American hostages.
Justice Department Warns about Ransom
According to press reports, Assistant Attorney General John
Carlin, head of the National Security Division of the Justice
Department was among several senior officials who believed that
the plan to deliver a cash payment to Iran would be viewed as a
ransom payment. Justice Department officials didn't object to
the size of the settlement, but rather to the fact that a cash
payment could send the wrong signal to Iran and the rest of the
world about a change in U.S. ransom policy.
The timing and manner of the payment raised alarms at the
Justice Department: ``People knew what it was going to look
like, and there was concern the Iranians probably did consider
it a ransom payment,'' said one of those familiar with the
discussions. A Justice Department spokesman said the agency
``fully supported the ultimate outcome of the Administration's
resolution of several issues with Iran,'' including the
settlement of the long-running case at a tribunal in The Hague,
``as well as the return of U.S. citizens detained in Iran.''
Though the Obama Administration has clearly stated ``We do
not pay ransom for hostages,'' the committee is deeply
concerned that the consequences will be the same if Iran and
other actors viewed the payment as such. Indeed, since these
cash payments were made, Iran has detained several more
Americans, as well as French, British, and Canadian citizens.
The committee is concerned that--bolstered by the Obama
Administration's payment -Tehran will demand cash for their
release.
$1.3 Billion More in Cash from the Judgment Fund
The $1.7 billion settlement included $1.3 billion in
interest on the underlying $400 million claim. This amount,
according to the Administration, was a ``compromise'' on the
interest initially sought by Iran, and that ``the United States
could well have faced significant exposure in the billions of
dollars.'' The State Department also informed the committee
that the settlement avoided ``the potential for a much larger
Tribunal award against us, saving the U.S. taxpayers a
significant amount of money.'' Past precedent indicates,
however, that our maximum exposure could have been much lower.
The $1.3 billion was paid from the U.S. Government's Judgement
Fund, a permanent appropriation available to pay final money
judgments and awards against the United States in which no
other appropriated funds are available.
According to testimony from a senior Treasury Department
official, the $1.3 billion was transferred to a second European
central bank and withdrawn in the banknotes of a second
European currency. Given the amount of physical cash involved,
the $1.3 billion was broken up into two payments which were
turned over to officials from the Central Bank of Iran at a
second European airport on two separate dates, January 22 and
February 5.
The Administration asserts that cash was necessary to
facilitate payment to Iran given continuing U.S. sanctions. Yet
earlier this year, the Obama Administration was able to
facilitate the purchase of Iran's heavy water for nearly $10
million through the formal financial system.
Likewise, during the interim agreement on Iran's nuclear
program, the Administration was able to facilitate $700 million
back to Tehran each month through international banking
relationships.
Further, explicit provisions in existing regulations allow
financial institutions to provide payments to Iran, through
conventional banking channels, when those payments are made
pursuant to a settlement agreement under the Iran-U.S. Claims
Tribunal. The exemptions in the ``Iran Transactions Sanctions
Regime'' for Tribunal settlements would shield any entity
involved in such a transaction from liability under U.S. law.
Use of Cash Raises Concerns
The committee is deeply concerned that the Obama
Administration conducted its $1.7 billion payment to Iran in
cash. The United States has designated Iran as a ``jurisdiction
of primary money laundering concern'' since 2011. In announcing
this designation the Treasury Department made clear that ``any
and every financial transaction with Iran poses grave risk of
supporting'' Iran's ongoing illicit activities. The State
Department's 2015 Country Reports on Terrorism cites Hezbollah,
Hamas, and other radical Shia groups in Iraq, Afghanistan, and
Pakistan as recipients of arms, financing, and training from
the Iranian Government.
Organizations can use a variety of money laundering methods
to disguise funds that were gained though legal or illegal
means to facilitate illicit activities. Cash, however, makes
the funding of these illicit activities that much easier.
Because cash does not have an electronic signature, the number
of steps needed for the money to become completely untraceable
is drastically reduced. This is problematic for law enforcement
agencies and other organizations that attempt to monitor and
track the funding sources of illegal activities such as
terrorism. Indeed, the Financial Action Task Force--the
international body charged with developing policies to combat
money laundering and terrorism financing--warns that ``physical
transportation of currency'' is ``one of the main methods used
to move criminal assets, launder money and finance terrorism.''
Longstanding U.S policy against Paying Ransom and Releasing Prisoners
The United States has long maintained a ``no concessions''
policy when responding to American citizens taken hostage while
abroad. Unofficially this dates back to Thomas Jefferson's
belief that the tribute demands by the Barbary States would
never end, which led to the cessation of this payment policy
and the subsequent War with Tripoli. More formally, it wasn't
until the Nixon Administration when Palestinian terrorists
kidnapped two senior U.S. diplomats in Khartoum, Sudan that
this policy was solidified. President Nixon in response stated,
``We will do everything we can to get them released but we will
not pay blackmail.''
President Obama himself embraced this policy in June 2015,
when the White House released Presidential Policy Directive 30.
PPD-30 ``reaffirms our longstanding commitment to make no
concessions to individuals or groups holding U.S. nationals
hostage. This policy protects U.S. nationals and strengthens
national security by removing a key incentive for hostage-
takers to target U.S. nationals and by helping to deny
terrorists and other malicious actors the resources they need
to conduct attacks against the United States, its nationals,
its allies, and its interests.''
By Law, Money Was Supposed to Leverage Reimbursement for U.S. Terror
Victims
In past decades, Americans directly harmed by Iranian
terrorism had sued Iran in U.S. courts and won, but hadn't seen
a penny because Iran avoided paying those judgments.
In response, in 2000, Congress passed a law (Sec. 2002 of
Public Law 106-386) that authorized funding to pay those
judgments, in an amount equal to the assets then frozen in
Iran's Foreign Military Sales (FMS) account held by the U.S.--
around 400 million dollars--the very amounts recently handed
over to Iran.
When the American victims accepted those payments, their
claims were subrogated to the United States, meaning that their
claims against Iran became the United States Government's
claims against Iran. Although the immediate funding came from
American taxpayers, Congress required the President to go after
Iran for reimbursement of those hundreds of millions of
taxpayer dollars, using the FMS balance as leverage.
Section 2002(c) of Public Law106-386 clearly states that
``no funds shall be paid to Iran, or released to Iran . . .
from the Foreign Military Sales Fund, until such subrogated
claims have been dealt with to the satisfaction of the United
States.'' However the Administration appears to have wiped away
the claims against Iran for those funds as part of this
settlement, letting Iran off the hook for those hundreds of
millions of dollars.
Hearings
During the 114th Congress, the committee has continued its
active oversight regarding Iran, including numerous hearings
related to Iran's support for terrorism, regional
destabilization, proliferation and missile activities, and
detention of American citizens, including but not limited to:
May 12, 2016--Full Committee: ``Terrorism, Missiles,
and Corruption: The Risks of Economic Engagement with
Iran.'' Hon. Juan C. Zarate, Chairman, Financial
Integrity Network; Mr. Mark Dubowitz, Executive
Director, Foundation for the Defense of Democracies;
Ms. Elizabeth Rosenberg, Senior Fellow and Director,
Energy, Economics, and Security Program, Center for a
New American Security.
February 11, 2016--Full Committee: ``Iran Nuclear
Deal Oversight: Implementation and Its Consequences.''
Hon. Stephen D. Mull, Lead Coordinator for Iran Nuclear
Implementation, U.S. Department of State; Mr. John
Smith, Acting Director, Office of Foreign Assets
Control, U.S. Department of the Treasury.
December 2, 2015--Full Committee: ``Iran's Islamic
Revolutionary Guard Corps: Fueling Middle East
Turmoil.'' Mr. Ali Alfoneh, Senior Fellow, Foundation
Defense of Democracies; Mr. Scott Modell, Managing
Director, The Rapidan Group; Mr. Daniel Benjamin,
Norman E. McCulloch Jr. Director, The John Sloan Dickey
Center for International Understanding, Dartmouth
College (former Ambassador-at-Large and Coordinator for
Counterterrorism, U.S. Department of State).
July 28, 2015--Full Committee: ``Iran Nuclear
Agreement: The Administration's Case.'' The Honorable
John F. Kerry, Secretary of State, U.S. Department of
State; The Honorable Jacob Lew, Secretary of the
Treasury, U.S. Department of the Treasury; The
Honorable Ernest Moniz, Secretary of Energy, U.S.
Department of Energy.
June 2, 2015--Full Committee: ``Americans Detained in
Iran.'' Mr. Ali Rezaian (brother of Jason Rezaian);
Mrs. Naghmeh Abedini (wife of Saeed Abedini); Ms. Sarah
Hekmati (sister of Amir Hekmati); Mr. Daniel Levinson
(son of Robert Levinson).
June 9, 2016--Joint Hearing: Subcommittee on
Terrorism, Nonproliferation, and Trade and the
Committee on Armed Services' Subcommittee on Emerging
Threats and Capabilities: ``Stopping the Money Flow:
The War on Terror Finance.'' Hon. Daniel Glaser,
Assistant Secretary for Terrorist Financing, U.S.
Department of the Treasury; Mr. Andrew Keller, Deputy
Assistant Secretary for Counter Threat Finance and
Sanctions, Bureau of Economic and Business Affairs,
U.S. Department of State; Ms. Theresa Whelan, Acting
Assistant Secretary for Special Operations/Low
Intensity Conflict, U.S. Department of Defense; Mr.
William Woody, Chief of Law Enforcement, U.S. Fish and
Wildlife Service.
March 22, 2016--Subcommittee on the Middle East and
North Africa: ``Hezbollah's Growing Threat Against U.S.
National Security Interests in the Middle East.''
Matthew Levitt, Ph.D., Director, Stein Program on
Counterterrorism and Intelligence, Washington Institute
for Near East Policy; Mr. Tony Badran, Research Fellow,
Foundation for Defense of Democracies; Daniel L. Byman,
Ph.D., Professor, Security Studies Program, Edmund A.
Walsh School of Foreign Service, Georgetown University.
September 17, 2015--Subcommittee on the Middle East
and North Africa: ``Major Beneficiaries of the Iran
Deal: IRGC and Hezbollah.'' Emanuele Ottolenghi, Ph.D.,
Senior Fellow, Foundation for Defense of Democracies;
Matthew Levitt, Ph.D., Fromer-Wexler Fellow, Director,
Stein Program on Counterterrorism and Intelligence,
Washington Institute for Near East Policy; Suzanne
Maloney, Ph.D., Interim Deputy Director, Center for
Middle East Policy, The Brookings Institution.
July 28, 2015--Joint Hearing: Subcommittee on Asia
and the Pacific, Subcommittee on Terrorism,
Nonproliferation, and Trade, and Subcommittee on the
Middle East and North Africa: ``The Iran-North Korea
Strategic Alliance.'' Mr. Ilan Berman, Vice President,
American Foreign Policy Council; Ms. Claudia Rosett,
Journalist-in-Residence, Foundation for Defense of
Democracies; Larry Niksch, Ph.D., Senior Associate,
Center for Strategic and International Studies; Jim
Walsh, Ph.D., Research Associate, Security Studies
Program, Massachusetts Institute of Technology.
June 10, 2015--Joint Hearing: Committee on Foreign
Affairs, Subcommittee on the Middle East and North
Africa and Committee on Armed Services, Subcommittee on
Strategic Forces: ``Iran's Enduring Ballistic Missile
Threat.'' Lieutenant General Michael T. Flynn, USA,
Retired (former Director, Defense Intelligence Agency);
The Honorable Robert Joseph, Ph.D., Senior Scholar,
National Institute for Public Policy (former Under
Secretary of State for Arms Control and International
Security); David A. Cooper, Ph.D., James V. Forrestal
Professor and Chair of the Department of National
Security Affairs, U.S. Naval War College; Anthony H.
Cordesman, Ph.D., Arleigh A. Burke Chair in Strategy,
Center for Strategic and International Studies.
March 18, 2015--Joint Hearing: Subcommittee on the
Middle East and North Africa and Subcommittee on the
Western Hemisphere: ``Iran and Hezbollah in the Western
Hemisphere.'' Mr. Joseph Humire, Author; Mr. Dardo
Lopez-Dolz (former Vice Minister of Interior of Peru);
Mr. Scott Modell, Senior Advisor, The Rapidan Group;
and Mr. Michael Shifter, President, Inter-American
Dialogue.
February 11, 2015--Subcommittee on Terrorism,
Nonproliferation, and Trade: ``State Sponsor of Terror:
The Global Threat of Iran.'' Frederick W. Kagan, Ph.D.,
Christopher DeMuth Chair and Director, Critical Threats
Project, American Enterprise Institute; Mr. Ilan I.
Berman, Vice President, American Foreign Policy
Council; Mr. Tony Badran, Research Fellow, Foundation
for Defense of Democracies; and Daniel L. Byman, Ph.D.,
Professor, Security Studies Program, Edmund A. Walsh
School of Foreign Service, Georgetown University.
Committee Consideration
On September 14, 2016, the Committee on Foreign Affairs
marked up H.R. 5931 in open session, pursuant to notice.
1) LRep. Engel offered an amendment, Engel 291 (in the
nature of a substitute), which was not agreed to, by a
roll call vote of 16 ayes and 21 noes.
L Voting YES: Engel, Sherman, Meeks, Sires,
Connolly, Higgins, Keating, Grayson, Bera, Lowenthal,
Meng, Frankel, Gabbard, Castro, Kelly, Boyle.
L Voting NO: Royce, Smith (NJ), Ros-Lehtinen,
Chabot, Wilson, McCaul, Salmon, Issa, Marino, Duncan,
Brooks, Cook, Weber, Perry, DeSantis, Meadows, Yoho,
Ribble, Trott, Zeldin, Donovan.
2) LRep. Zeldin offered an amendment, Zeldin 46
(augmenting reporting requirements for future U.S.
settlements with Iran), which was agreed to by voice
vote.
H.R. 5931, as amended, was agreed to by a roll call vote of
21 ayes and 16 noes.
Voting YES: Royce, Smith (NJ), Ros-Lehtinen, Chabot,
Wilson, McCaul, Salmon, Issa, Marino, Duncan, Brooks,
Cook, Weber, Perry, DeSantis, Meadows, Yoho, Ribble,
Trott, Zeldin, Donovan.
Voting NO: Engel, Sherman, Meeks, Sires, Connolly,
Higgins, Keating, Grayson, Bera, Lowenthal, Meng,
Frankel, Gabbard, Castro, Kelly, Boyle.
H.R. 5931, as amended, was ordered favorably reported to
the House, by voice vote.
Performance Goals and Objectives
The performance goals and objectives of H.R. 5931 are:
LTo prohibit the payment of ransom to Iran to
secure the release of hostages;
LTo prohibit the United States Government from
making payments to Iran in cash or other hard to trace, cash-
like forms of exchange, such as bearer bonds, so long as Iran
remains designated as a state sponsor of terrorism or primary
money laundering concern;
LTo ensure that Congress has greater insight and
transparency regarding outstanding claims and likely
settlements before the Iran-United States Claims Tribunal;
LTo ensure that Congress receives substantial
advance notice of: future settlement payments to Iran; claims,
counter-claims, and subrogated claims affected by such
settlements; and recipients of settlement payments; and
LTo ensure that future settlement payments to Iran
are in the best interests of the United States.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of rules of
the House of Representatives, the committee reports that
findings and recommendations of the committee, based on
oversight activities under clause 2(b)(1) of House Rule X, are
incorporated in the descriptive portions of this report,
particularly in the ``Background and Purpose'' and ``Section-
by-Section Analysis'' sections.
New Budget Authority, Tax Expenditures, and Federal Mandates
In compliance with clause 3(c)(2) of House Rule XIII and
the Unfunded Mandates Reform Act (P.L. 104-4), the committee
adopts as its own the estimate of new budget authority,
entitlement authority, tax expenditure or revenues, and Federal
mandates contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 16, 2016.
Hon. Edward R. Royce, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5931, the
Prohibiting Future Ransom Payments to Iran Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sunita
D'Monte, who can be reached at 226-2840.
Sincerely,
Keith Hall.
Enclosure
cc:
Honorable Eliot L. Engel
Ranking Member
H.R. 5931--Prohibiting Future Ransom Payments to Iran Act.
As reported by the House Committee on Foreign Affairs on
September 14, 2016.
H.R. 5931 would prohibit the Government of the United
States from making payments to the Government of Iran through
promissory notes (including currency) issued by the United
States or any foreign government. In addition, the bill would
require that payments to settle any claim being considered by
the special tribunal to resolve disputes between Iran and the
United States be made pursuant to a license from the Department
of the Treasury and after providing certain notifications to
the Congress. Finally, the legislation would require the
President to report to the Congress on outstanding claims
before the tribunal.
Based on an analysis of information from the Department of
State, CBO expects that there will be no payments made to Iran
in the near future resulting from cases being considered by the
tribunal. However, it is possible that payments related to such
cases might be made later in the 2017-2026 period; those
payments would be treated as direct spending. Enacting the bill
would impose limitations on the ability of the Federal
Government to make such payments to Iran and thus could reduce
direct spending; therefore, pay-as-you-go procedures apply.
However, CBO has no basis for estimating the timing or amounts
of those effects, if any. Enacting the bill would not affect
revenues.
In addition, CBO estimates that implementing the reporting
and notification requirements under H.R. 5931 would cost less
than $500,000 over the 2017-2021 period; such spending would be
subject to the availability of appropriated funds.
CBO estimates that enacting H.R. 5931 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2027.
H.R. 5931 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Sunita D'Monte.
The estimate was approved by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
Directed Rule Making
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(i) of H. Res. 5 during the 114th Congress, the
committee notes that H.R. 5931 contains no directed rule-making
provisions.
Non-Duplication of Federal Programs
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(g)(2) of H. Res. 5 during the 114th Congress, the
committee states that no provision of this bill establishes or
reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Congressional Accountability Act
H.R. 5931 does not apply to terms and conditions of
employment or to access to public services or accommodations
within the legislative branch.
New Advisory Committees
H.R. 5931 does not establish or authorize any new advisory
committees.
Earmark Identification
H.R. 5931 contains no congressional earmarks, limited tax
benefits, or limited tariff benefits as described in clauses
9(e), 9(f), and 9(g) of House Rule XXI.
Section-by-Section Analysis
Section 1. Short Title. The ``Prohibiting Future Ransom
Payments to Iran Act.''
Section 2. Findings. Cites concerns that the Obama
Administration violated longstanding U.S. policy by releasing
prisoners and paying ransom for the return of Americans held
hostage by Iran, a designated state sponsor of terrorism and
primary money laundering concern.
Section 3. Statement of Policy. States that it remains U.S.
policy not to pay ransom or release prisoners in order to
obtain the release of U.S. citizens taken hostage abroad.
Section 4. Prohibition on Cash Payments to the Government
of Iran. Prohibits the U.S. Government from making any direct
or indirect payments to Iran in U.S. or foreign currency, as
well as cash-like forms of exchange, such as bearer bonds.
Provides for greater transparency by requiring that any
payment to fulfill claims brought before the Iran-U.S. Claims
Tribunal be made in accordance with the prohibition on cash
payments, and be made pursuant to a specific license by the
Department of Treasury, with the payment amount and method
published in the Federal Register.
Maintains these restrictions until Iran is no longer
designated as a state sponsor of terrorism or primary money
laundering concern.
Section 5. Report on Outstanding Claims before the Iran-
United States Claims Tribunal. Requires the Administration to
regularly report to Congress on the status of any claims
pending before the Iran-U.S. Claims Tribunal, including the
likelihood that the claims will be resolved.
Section 6. Notification and Certification Relating to
Settlements of Outstanding Claims before the Iran-United States
Claims Tribunal. Requires the President to notify Congress at
least 30 days before making a payment to Iran to settle a claim
brought before the tribunal.
The notification must include: (1) the total amount of the
payment and how any interest on the payment was calculated, (2)
a legal analysis of why the settlement was agreed to, and
description of all the claims and counter-claims it covers, (3)
a certification that the payment is not a ransom to secure the
release of hostages held by Iran, (4) an identification of the
Iranian Government entity that will receive the payment, (5) a
certification that the payment will not support foreign
terrorist organizations or the regime of Bashar al-Assad in
Syria, (6) whether an equal amount of Iranian funds are
available in the U.S. to satisfy judgments against Iran by
victims of Iranian-sponsored terrorism, (7) a copy of the
settlement agreement, (8) a description of the disposition of
any related claims that had been subrogated to the U.S.
Government, and (9) a certification that the settlement is in
the best interests of the United States.
Section 7. Exclusion of Certain Activities. Ensures that
this Act does not negatively impact the work of U.S.
intelligence agencies.
Section 8. Rules of Construction. Clarifies that nothing in
this Act should be construed to authorize any payment by the
Government of the United States to the Government of Iran.
Section 9. Definitions. Defines ``Government of Iran'' and
``Iran-United States Claims Tribunal.''
Dissenting Views
H.R. 5931, the Prohibiting Future Ransom Payments to Iran
Act, continues the Majority's false narrative that the United
States Government paid a ransom for four American prisoners who
were held in Iran. Moreover, several of the ``findings'' are
inaccurate and the key provision is inappropriate.
For those of us who are deeply concerned about Iran, there
is a need to clarify and strengthen the Congressional oversight
role regarding United States policy toward Iran. Unfortunately,
this partisan bill, about which Democrats were never consulted
during the drafting, does not meet that need.
In December 2015, the United States Government settled a
longstanding claim with the Government of Iran regarding
weapons sales to Iran which were never delivered due to the
1979 Iranian revolution. The principal of the claim was $400
million, and in the recent settlement the parties agreed that
the United States would also pay $1.3 billion in accrued
interest (for a total of $1.7 billion).The settlement was
announced on January 17, 2016.
The 1981 Algiers Accords, which freed 52 American hostages
trapped in Iran for 444 days, created the U.S.-Iran Claims
Tribunal to resolve outstanding claims between the two
countries. There are still over one thousand Iranian claims
that have yet to be resolved at the Tribunal. All U.S. citizen
claims against Iran that were registered under the Algiers
Accords have been resolved, resulting in approximately $2.5
billion in payments to Americans.
Payment of the $1.7 billion to Iran under the settlement
coincided with Implementation Day (January 16, 2016), the day
that the International Atomic Energy Agency (IAEA) concluded
that Iran had implemented the JCPOA nuclear deal and the United
States and others would lift nuclear-related sanctions on Iran.
The payment also coincided with the release of four Iranian-
American prisoners.
The Administration has categorically denied that this
payment was a ransom (which would, almost by definition, be a
payment of U.S. money, not Iranian money in exchange for the 4
American detainees). The Administration acknowledges that it
used the payment that the U.S. owed Iran as leverage to ensure
that the prisoner release went smoothly.
Last month, a Wall Street Journal article revealed that the
payment was made in cash. Although the Administration had,
indeed, briefed Congressional leaders about the $1.7 billion
settlement, the modality of the payment--in cash--was not made
clear at the time that the payment was made in January. A cash
transaction was not required in this settlement; however the
settlement reportedly required immediate payment, which would
have been exceedingly difficult to execute by wire transfer,
considering the slow pace of Iranian access to banks, even to
its own assets.
Further, the Administration argues that Iran is having
difficulty using its financial assets due to fear within the
banking sector of running afoul of U.S. sanctions. Members of
Congress on both sides of the aisle are concerned about cash
transactions with Iran because Iran is a state sponsor of
terrorism and a jurisdiction of primary money laundering
concern. However, it is important to note that after Iran takes
possession of the money--whether provided in cash, check or
wire transfer--it is impossible to know where and how the money
is allocated, so it could be argued that the type of
transaction is immaterial.
Additionally, the bill does not accomplish what it sets out
to do. It does not restrict cash payments to Iran. Section 4 of
the bill prohibits the United States from providing directly or
indirectly ``promissory notes'' including currency issued by
the U.S. Government or a foreign government to the Government
of Iran. The term ``promissory note'' is not defined in this
legislation. It could be defined as a written agreement between
two parties that relates to the payment of an obligation. A
promissory note contains the names of parties, an amount due,
an interest rate to be applied and a payment schedule.
Although the United States did not give Iran a promissory
note in this instance, nevertheless the definition of
``promissory note'' in this legislation could be interpreted
broadly as including cash, wire transfer or check, or it could
be interpreted so narrowly as to not even include cash--the
purported purpose of the bill. If applied broadly, the
prohibition would bar virtually any payment from the United
States to the Government of Iran, thus putting the United
States in violation of the Algiers Accords.
The bill would effectively remove the President's ability
to settle Hague Tribunal claims with Iran for the foreseeable
and indefinite future by requiring certification and
notifications that the President cannot realistically make.
Under the bill, payments pursuant to a settlement would only be
allowed if the President certified that that, among other
things, the settlement is not a ransom for individuals held
hostage by Iran and that the funds provided by the settlement
would not be used to fund terrorism or support the Assad
regime. The President would also be required to identify
whether an equal amount of Iranian funds would be available and
accessible in the United States to satisfy judgments against
Iran by victims of Iranian-sponsored terrorism. Not only does
this saddle settlements or judgments reached under the Algiers
Accords with a heavy new burden, preventing settlements with
Iran is, in many cases, to Iran's benefit, since settling
prevents cases from going to judgment, where the U.S. taxpayer
could face even greater liability.
We remain deeply concerned about Iran's behavior. According
to the State Department, Iran remains the leading State Sponsor
of Terrorism. President Obama said in August 2015, ``We have no
illusions about the Iranian Government, or the significance of
the Revolutionary Guard and the Quds Force. Iran supports
terrorist organizations like Hezbollah. It supports proxy
groups that threaten our interests and the interests of our
allies--including proxy groups who killed our troops in Iraq.
They try to destabilize our Gulf partners.'' Our focus must
remain at preventing and confronting Iran's malign activities.
However, this bill is not a serious effort at affecting U.S.
policy toward Iran. Without any input from the minority, we are
left to conclude that this is a partisan stunt.
Therefore, we are opposing this bill with the hopes that
the Majority will return Iran policy and foreign policy back to
its bipartisan roots. Our country is stronger when we work
together to affect change in these urgent national security
issues.
Eliot L. Engel.
Brad Sherman.
Gregory W. Meeks.
Albio Sires.
Gerald E. Connolly.
Theodore E. Deutch.
Brian Higgins.
Karen Bass.
William Keating.
David Cicilline.
Alan Grayson.
Ami Bera.
Alan S. Lowenthal.
Grace Meng.
Lois Frankel.
Tulsi Gabbard.
Joaquin Castro.
Robin L. Kelly.
Brendan F. Boyle.
[all]