Treasury Secretary Jacob Lew played down controversy over a $1.7 billion cash payment the Obama administration made to Iran earlier this year, calling the method of payment a “technicality” after it was revealed this month that the entire sum was paid in cash, despite precedent for wire transfers to the country.
“The method of payment is a technicality,” Lew said Thursday during a hearing before the House Financial Services Committee. “The agreement to settle a contract dispute was a substantive issue.”
The U.S. sent Iran $400 million in cash around the time that the Islamic Republic released American prisoners in January, igniting criticism that the transfer was for ransom. The administration has denied that charge, calling the payment “leverage” and underscoring that the $400 million is part of a larger $1.7 billion legal settlement with Iran for a decades-old arms deal gone awry.
Critics also claim that the administration caved to Iranian demands for cash, which they say can be more easily used for terrorism. Officials have responded that cash had to be used because the U.S. and Iran do not have a banking relationship.
“We couldn’t send them a check and we could not wire the money,” President Obama said in August.
The Treasury Department confirmed last week that the administration wired roughly $848,000 to Iran in July 2015, when a range of sanctions were still in place. The U.S. sent Iran another $8.6 million wire payment in April, after the $1.7 billion cash transfer, for 32 tons of heavy water. Heavy water is a material used in the production of weapons-grade plutonium.
The administration did not inform leading foreign relations lawmakers about the wire payments.
Lew agreed during the hearing that the U.S. made a $900,000 wire payment prior to the $1.7 billion cash transfer, as well as another afterwards, but denied that they were sent directly.
“The wire transfer goes to an account in a foreign bank,” he said. “A European bank, say. It doesn’t go to the Central Bank of Iran directly.”
