Investigating the Obama administration’s $400 million payment to Iran

The Wall Street Journal revealed this week that in January, the Obama administration secretly airlifted $400 million in cash to Iran. The money was owed as part of a failed arms deal prior to the 1979 Islamic Revolution, but payment coincided with the release of four Americans held in Tehran. Hari Sreenivasan speaks with Jay Solomon, the Wall Street Journal reporter who broke the story.

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    The Iran nuclear deal has been a major issue in this year's presidential election. Detractors blame Hillary Clinton and the Obama administration for caving to Iranian demands, while receiving little in return. Now revelations about U.S. payments to the Iranian government add a new wrinkle to those critiques.

    Hari Sreenivasan has more.


    This week, The Wall Street Journal broke news that the Obama administration secretly airlifted $400 million in cash to Iran. The money was owed as part of a failed arms deal prior to the 1979 Islamic Revolution. But the payment coincided within the release of four Americans imprisoned in Tehran, raising questions about cash for prisoners.

    Donald Trump criticized the move today at his rally in Portland, Maine.

    DONALD TRUMP (R), Presidential Nominee: Four hundred million in cash. It's being flown in an airplane to Iran. I wonder where that money really goes, by the way. Right? I wonder where it really goes.

    Well, it went to either in their pockets, which I actually think more so, or toward terrorism, probably a combination of both.


    Late this afternoon, President Obama pushed back and defended the U.S. decision to send the cash to Iran. He spoke at the Pentagon.


    We announced these payments in January, many months ago. It wasn't a secret. We announced them to all of you.

    Iran had pressed a claim before an international tribunal about them recovering money of theirs that we had frozen that, as a consequence of its working its way through the international tribunal, it was the assessment of our lawyers that we were now at a point where there was significant litigation risk, and we could end up costing ourselves billions of dollars. It was their advice and suggestion that we settle.


    For more on this, I'm joined by the reporter who broke the story, The Wall Street Journal's Jay Solomon. He's also the author of the forthcoming book "The Iran Wars: Spy Games, Bank Battles and the Secret Deals That Reshaped the Middle East."

    Jay, thanks for joining us.

    It's not every day that the secretary of state and then the president come out and sort of challenge the newsiness of your story. At one point, the president called this part of manufactured outrage.

    I guess the central question here is, was this part of this pre-negotiated payment for the arms deal in the late '70s? What has your reporting shown that this might have been something closer to a ransom payment?

  • JAY SOLOMON, The Wall Street Journal:

    The difficult part of this story from the very beginning was, the administration did announce back in January this $1.7 billion payment.

    But as far as the specifics, the mechanics, they have refused to answer, like, when did the money arrive, how was it spent, was it sent in cash, until, through our reporting, we found out that actually this money was sent in pallets of cash on a plane secretly.

    And to this day, we're still trying to figure out the timing, when did this money arrive, and through this reporting, there is indications that it was secret, that basically these Americans weren't going to be released until that money arrived. So then it becomes a question really of timing.


    So, which leads you to believe that there was a quid pro quo, that the prisoners wouldn't be released until the cash was in hand?


    That is part of what we're seeing.

    It is hard, because various elements are true. The White House says this was a decades-old dispute over financing over this arms deal. That is true. There are a lot of different disputes that have been — that are continuing between Iran and the U.S. on the financial side.

    But the particulars of how this was paid and when the money got there is still — they refuse to answer those questions. And they could easily resolve this by just saying, yes, the money arrived then, it was paid in cash, and there was no problem.

    But if you watched the State Department transcript today, they were repeatedly asked and they would just not answer that question.


    The president seemed to say that it was cash partly because our sanctions against Iran were working so well and that we don't have a banking relationship with them. I think he said sort of, well, because we couldn't write them a check.


    I think that is — there is probably truth to that as well.

    I think there are a lot of possible truths to this. Was it had to go in cash because there was no other way to get there? I can believe that. Was it also the situation where the Iranian side wouldn't give up these Americans until they got that money? I could see that.

    The Iranians — some of the generals themselves had publicly said that this was — they would only release the spies, as they called them, once the money arrived.


    And there's also recent reporting in The Wall Street Journal this morning about the tension between the Department of Justice and the State Department in doing this at all.


    And the Department of Justice is interesting, because there seemed to be consensus within the government that this was — the amount of money was actually a good deal, that this was a 37-year dispute.

    The initial payment was — kind of the principal was $400 million, and just paying an additional $1.3 billion in interest wasn't a bad deal for the United States. But there was a concern about the optics and how the Iranian side would spin it, that they were going to basically take the timing of and the arrival of cash as a sign that this was ransom or quid pro quo and that they would use this possibly in future cases.

    And I think what a lot of people in the U.S. government are concerned of, in the last six months, there have been — last year, there have been three more Iranian-Americans taken prisoner. There are another three European and Canadian Iranian nationals who have been taken prisoner in the last, I think, three months.

    So it's a cycle. And when you look back on the history of the United States-Iranian relations going back to the revolution, you see this cycle, you know, that the American diplomats who were taken hostage, the resolution for that was partly the unfreezing of assets in the United States that were the shah's money.

    The three hikers who were taken prisoner in 2009, their release was also tied to both a prisoner exchange and cash being paid.. So it's not like this is a one-off. If you take a step back, it's a longer cycle.


    All right, Jay Solomon of The Wall Street Journal, thanks for joining us tonight.


    Thank you.

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