[Congressional Record Volume 164, Number 93 (Wednesday, June 6, 2018)]
[Senate]
[Pages S3266-S3268]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                 JCPOA

  Mr. PORTMAN. Mr. President, today I want to talk about some new 
information regarding the Iran nuclear deal

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negotiated by the Obama administration. This agreement is known 
sometimes as the JCPOA, or the Joint Comprehensive Plan of Action. This 
is an agreement that was reached by the Obama administration. It was 
voted on after the fact by this body. Actually, a majority of Members 
of the House and Senate chose to oppose the agreement, but not enough 
to be able to stop it. So it went into effect, and, as my colleagues 
know, it has gotten some play recently as the administration has pulled 
out the involvement of the United States in that agreement.
  What I want to talk about this evening is new information that has 
come from the Permanent Subcommittee on Investigations, which I chair. 
We began an investigation into one aspect of this agreement nearly 2 
years ago, and it was based on information that we received that 
despite the Obama administration's claims to the contrary, there may 
have been some undisclosed arrangement with Iran to grant them access 
to the U.S. financial system.
  Recall that the basic deal with Iran went like this: In exchange for 
Iran agreeing to certain limitations regarding its nuclear arsenal, 
including limiting the new production of enriched uranium for 15 years, 
the United States and other members of the United Nations Security 
Council would agree to lift some economic sanctions on Iran. It was the 
basic construct of the agreement.
  As part of that agreement, which included ongoing deadlines that 
needed to be met over a period of years, the United States lifted what 
are often referred to as ``secondary sanctions.'' So these weren't 
direct sanctions on the United States, but these were sanctions on 
foreign companies, foreign entities, and foreign countries that do 
business with those under U.S. sanctions--in this case, Iran.
  Under the Iran deal, other countries were now allowed, for the first 
time, to freely do business with Iran without the risk of the United 
States imposing sanctions on them. That was something that was very 
important to Iran. Iran was also allowed to access money that had been 
frozen abroad in other countries because the threat of U.S. sanctions 
against cooperating foreign partners no longer existed.
  At the same time, really because of the nonnuclear concerns regarding 
Iran, including supporting terrorism, human rights violations, 
ballistic missile development, and basic destabilization of the region, 
U.S. sanctions against Iran remained in place. So our primary sanctions 
stayed in place. This means Iran was banned from directly accessing the 
U.S. financial system, and banks and other private institutions were 
still banned from accessing the U.S. financial systems on behalf of 
Iran.
  This is a big deal. Any country that is sanctioned really wants 
access to our financial system because it is so intertwined with the 
rest of the world, and they were still banned from directly accessing 
our U.S. financial system.
  This was a key point that the Obama administration made clear 
throughout the negotiations with Iran. They repeatedly provided 
assurances to the American people that Iran would not be granted access 
to the U.S. financial system. They made the same claims publicly before 
congressional committees and in testimony here on the Hill.
  On July 23, 2015, before the deal was implemented, a senior Treasury 
official, as an example, said: ``Iranian banks will not be able to 
clear U.S. dollars through New York, hold correspondent account 
relationships with U.S. financial institutions, or enter into financing 
arrangements with U.S. banks.'' This testimony further stated: ``Iran, 
in other words, will continue to be denied access to the world's 
largest financial and commercial market.''
  That is us. That is what they said.
  On August 5, 2015, the then-Acting Under Secretary of Treasury for 
Terrorism and Financial Intelligence testified before the U.S. Senate 
Committee on Banking, Housing, and Urban Affairs that ``Iran will be 
denied access to the world's most important market and unable to deal 
in the world's most important currency''--that being the dollar.
  He also stated: ``Iranian banks will not be able to clear U.S. 
dollars through New York, hold correspondent account relationships with 
U.S. financial institutions, or enter into financing arrangements with 
U.S. banks.''
  These claims were very clear: The U.S. financial system was not to be 
used.
  Despite these claims, the very next year, just after implementation 
of the deal had begun, we started hearing reports that the Obama 
administration was considering changing course on this policy.
  This obviously raised a lot of concerns from Members of Congress on 
both sides of the aisle because the Iranian regime remained a state 
sponsor of terrorism--the No. 1 state sponsor of terror. It continued 
to threaten ballistic missile activities, and it continued to commit 
egregious violations of human rights, as it still does today. In fact, 
in July of 2016, a bipartisan group of 35 Senators sent a letter to 
President Obama expressing deep concern over these rumors that Iran 
might be granted access to the U.S. dollar and to the U.S. financial 
system.
  It was about that time when we started our investigation in the 
Permanent Subcommittee on Investigations. Again, we did so because we 
were hearing rumors that this might be happening.
  Today, after a nearly 2-year investigation, we unveiled a report that 
detailed for the first time how, despite their claims to the contrary, 
the Obama administration secretly granted a specific license 
authorizing the conversion of Iranian assets worth billions of dollars 
using the U.S. financial system.
  Remember that this happened despite repeated assurances to the public 
and Congress that Iran would not be granted access to the U.S. 
financial system. Specifically, the Obama administration asked two 
banks--U.S. banks--to execute the transactions. Fortunately, these two 
big U.S. multinational banks refused to do so. The report outlines key 
findings and recommendations designed to prevent this from happening in 
the future.
  What funds are we talking about? Well, before the Iran deal was 
implemented, Iran transferred approximately $13 billion in oil revenue 
assets to bank accounts overseas. They deposited $8.8 billion of that 
oil revenue in one bank account at Bank Muscat in Muscat, Oman.
  Three days after implementation of the agreement on January 19, 2016, 
Bank Muscat contacted the Office of Foreign Assets Control, or OFAC, 
which is the agency within the Treasury Department responsible for 
enforcing U.S. sanctions. They did this on behalf of the Central Bank 
of Iran. This is the Oman bank contacting the U.S. Treasury Department 
saying: We need your help.
  Bank Muscat sought to convert $5.7 billion in Omani money--the rial--
into euros on behalf of Iran. Because the rial is pegged to the U.S. 
dollar, the most efficient conversion was with an intermediary step 
through a U.S. bank using U.S. dollars, so that is what they asked for. 
Iran was eager to convert this money into a more universal currency and 
was adamant about getting this done quickly.
  Despite its public stance that it would not provide Iran access to 
the U.S. financial system and U.S. banks, on February 24, 2016, OFAC 
again--this Department of the Treasury agency--issued a specific 
license to Bank Muscat authorizing Iranian assets worth nearly $5.7 
billion to flow through the U.S. financial system.
  Today I heard some say that this specific license was just a narrow 
exemption or just a minor fix. To that I direct my colleagues to an 
email from a Bank Muscat official, which said that the license was ``a 
gigantic breakthrough which has assured Iran of almost full global 
financial inclusion.'' That doesn't sound like a narrow fix to me.
  Anyone suggesting that the specific license didn't grant access to 
the U.S. financial system hasn't read the report from the Permanent 
Subcommittee on Investigations. I would encourage them to do that. But 
they also haven't read the Obama administration's emails that we cite 
in this report.
  Don't take my word for it, though. As one State Department official 
wrote to his Iranian counterpart: ``OFAC informed Bank Muscat and the 
Central Bank of Oman today that they have a license to convert Iranian 
assets in its

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account to euros through the U.S. financial system.''
  That is from the State Department at the time.
  Members of the Obama administration clearly understood that something 
was wrong here; this was not part of the Iran deal. A senior State 
Department official wrote at the time in 2016 that the transaction was 
``prohibited by U.S. sanctions that are still in place and which we 
were clear we would not be removing as part of the JCPOA.'' That same 
official wrote that granting the transaction ``exceeded'' the JCPOA 
commitments because it authorized the use of the U.S. financial system.
  Let me repeat that so it is crystal clear. The Obama administration 
State Department completely understood this concession--that giving 
Iran access to the U.S. financial system was ``prohibited by U.S. 
sanctions'' that ``we were clear we would not be removing.''
  Those aren't my words. They aren't the words of the subcommittee. 
Those are the words of the senior State Department official at the 
time. There was no confusion about this as far as we can tell.
  Shortly after issuing the specific license to use the U.S. financial 
system to convert the rials, a Treasury official wrote in an email on 
the matter: ``I think we earned the right to never discuss this 
matter ever again.''

  I disagree. I think we have to talk about this and to talk about how 
before, during, and after the Treasury Department and the State 
Department officials testified in front of Congress that Iran would not 
have access to the U.S. financial system, they worked behind the scenes 
to allow exactly that. We have to talk about this to be sure it doesn't 
happen again.
  Following the issuance of the specific license, OFAC contacted these 
two U.S. banks urging them to convert Iran's rials to U.S. dollars. It 
appears the administration was becoming desperate. Iran was making both 
public and private claims that they were not getting the benefit of the 
deal they expected and asserting that the deal could fall apart. You 
all may remember that time period, when there were threats by Iran to 
pull out of the deal.
  We discovered an email where a State Department official even 
suggested that the Secretary of State or the Secretary of the Treasury 
should contact these U.S. banks themselves and encourage them to 
facilitate this conversion. By the way, we have no evidence that those 
calls were made, and I am not suggesting that.
  Both U.S. banks declined to complete the transaction. According to 
the banks, they refused to do so due to compliance, reputational, and 
legal risks associated with doing business with Iran. They did the 
right thing.
  Because U.S. banks were unwilling to convert the funds despite 
requests from the Obama administration, ultimately, Bank Muscat was 
unable to effectuate the conversion using the U.S. dollar. The State 
Department has now told us that Iran, over time, converted the funds 
into euros in small increments using European banks.
  The only reason the transaction wasn't executed through the U.S. 
financial system was that these two U.S. banks refused, despite 
pressure, even though the administration asked them to help convert the 
money.
  After the Iran deal was implemented--and after the Treasury 
Department had issued a specific license--the Obama administration 
continued to maintain the false notion that it had not provided Iran 
access to the U.S. financial system.
  On April 5, 2016, Ambassador Thomas Shannon said: ``There is no 
exchange of dollars inside the U.S. financial system, and we have not 
allowed an access to our larger financial system.''
  On May 25, 2016, the Acting Under Secretary of Treasury for Terrorism 
and Financial Intelligence said: ``But Secretary Lew has said exactly 
what I have said here today, and I know he was looking forward to me 
being here to be able to relay his views on this. Iran will not have 
access to our financial system.''
  On June 7, 2016, Treasury wrote a letter to Senators Kirk and Rubio 
saying: ``The administration has not been and is not planning to grant 
Iran access to the U.S. financial system.''
  Time after time--before, during, and after the Iran deal--the Obama 
administration misled the American people and misled Congress on this 
point. I believe it was because the administration was so eager to make 
sure this deal was going to work. They wanted to keep Iran in the deal.
  Our report also shows that the State Department and Treasury 
Department held at least 200 meetings, or ``road shows,'' around the 
world to encourage other countries to do business with Iran. In the 
road shows, Treasury Department officials also downplayed any potential 
future penalties or fines that might result from sanctions.
  During one road show, the head of OFAC reportedly told the audience 
that ``95 percent of the time OFAC sees an apparent violation it 
results in a simple warning letter or no enforcement action.''
  So this is the head of the agency at Treasury responsible for 
enforcing sanctions saying that 95 percent of the time it results in a 
simple warning letter or no enforcement action. We shouldn't be telling 
anyone that we enforce sanctions--one of our most important foreign 
policy tools--only 5 percent of the time.
  One European regulator who attended an OFAC road show commented that 
foreign financial institutions felt, in his words, ``political 
pressure'' to conduct business with Iran and Iranian companies. 
Sanctions are a vital foreign policy tool, yet, in this case, the Obama 
administration seemed to be sending the wrong message about their 
enforcement and effectiveness.
  The PSI report released today outlines key transparency 
recommendations to ensure that undisclosed side deals like this never 
happen again, including requiring the current administration to keep 
congressional committees of jurisdiction up to date on the status of 
any future negotiations with Iran, disclosing to Congress any specific 
licenses that are proposed, and putting in place stronger enforcement 
of U.S. sanctions. Going forward, this report also underscores how 
important the U.S. financial system is to global finance markets, and 
it gives us a substantial amount of leverage in negotiations. We should 
choose to use it.

  We now have an opportunity to fix the fundamental flaws in the Iran 
deal and put in place a stronger agreement that truly protects 
America's national security interests and the interests of our allies 
in the region. Recall that the Iran deal was opposed again by a 
bipartisan majority of this body.
  I support our efforts to work with our European allies to put in 
place a better deal that truly represents our own national security 
interests and those of our allies in the region. I hope this report 
helps us to avoid the kinds of problems that occurred last time the 
next time around.
  Mr. President, I yield the floor.

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