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Cotton Questions Banking Committee Witnesses on the Dangers of the $1.7 Billion Cash Ransom Paid to Iran

September 21, 2016

Contact: Caroline Rabbitt (202) 224-2353

Washington, D.C.-- Today, during a Senate Banking Committee hearing, Senator Tom Cotton (R-Arkansas) questioned former U.S. Attorney General Michael Mukasey and former Under Secretary of Defense for Policy Eric Edelman on the terror-financing risk of the $1.7 billion cash ransom paid to Iran by the Obama administration. The witnesses also explained, in response to Sen. Cotton's questioning, that the decision to make the payment in cash was likely made at the highest levels of the administration, up to and including President Obama. A full transcript of their exchange can be found below. Click here to watch a video of their exchange. 

Senator Cotton: Thank you all for joining us this morning to explore the implications of paying ransom in cold hard cash to the worlds worst state sponsor of terrorism. Judge Mukasey I just want to be sure I'm clear about your legal assessment on these matters. As you wrote in the Wall Street Journal, you believe that these cash transfers were legal but not right.

Judge Mukasey: Correct.

Senator Cotton: It has been reported that there were at least two wire transfers to Iran in the last year plus, one was in the summer of 2015 to settle some claims about architectural drawings, fossils, maybe some other artifacts. One was over our purchase of heavy water earlier this year. Do you believe those wire transfers were legal?

Judge Mukasey: Yes. I mean I don't see; I mean the short answer is I don't know the circumstances surrounding those transfers but I know nothing that challenges their legality.

Senator Cotton: So if they are both legal, transferring cash and a wire transfer, do you know why the administration would have chosen to pay this $400 million in cash as opposed to making a wire transfer?

Judge Mukasey: I don't know. I think it is a sensible conclusion that that term was insisted upon by the Iranians.

Senator Cotton: So it was a policy decision then, not a legal decision?

Judge Mukasey: Definitely not a legal decision.

Senator Cotton: Judge Mukasey and Ambassador Edelman, you have both sat in NSC meetings, and Principals Committee meetings, and Deputies Committee meetings, at what level of our government would you expect that kind of policy decision to be made?

Ambassador Edelman: I would expect it to at least have gone to a Principals Committee meeting and probably a full NSC with the President in attendance.

Judge Mukasey: Likewise. I would expect it to go to the highest level.

Senator Cotton: And Ambassador Edelman you have spent some time dealing with Iran and the Middle East throughout your career, if Judge Mukasey's surmise is correct and that it was a demand of the Iranian government that the $400 million be transferred in cash not over wires. Do you have any estimates over which element of the Iranian government would have requested that cash payment?

Ambassador Edelman: It would be pure speculation Senator Cotton, but presumably you could imagine it would be the IRGC which may have played a role in the transfer, we don't know, again it is one of the details that would be good to find out.

Senator Cotton: Not the Ministry of Health?

Ambassador Edelman: I somehow doubt that.

Senator Cotton: Or the Ministry of Transportation?

Ambassador Edelman: Well,we actually know that after the payments were made, that the Iranian military budget was plussed up, interestingly, by $1.7 billion. Now, whether that money stays with the military budget which was just finalized in August, or whether that money is made available to the IRGC in some fashion, we just don't know.

Senator Cotton: Judge Mukasey has explained it is very hard to track cash, almost impossible, and you might only discover years later in whose hands it was found, you don't know whose hands it has passed through. Would you be surprised to find some of that cash in the hands of say, Lebanese Hezbollah, in a year or two or three years, Ambassador Edelman?

Ambassador Edelman: Not in the least.

Senator Cotton: Would you be surprised to find it in, say, the hands of Doctors Without Borders, or other international NGO's performing humanitarian work?

Ambassador Edelman: That would be a first in my experience.

Senator Cotton: Thank you. Since you have spent a lot of time in the Middle East, Ambassador, is this a region where leaders of states understand and depend upon power and will, or do they respect law and rhetoric?

Ambassador Edelman: Well, I would say power is at a premium in this region. One of my concerns is that we should always, in dealing with countries in this region, and it goes beyond Iran, I would say the same of Turkey where I was ambassador, by emphasizing our own clear adherence to the rule of law and how we conduct ourselves.

Senator Cotton: A common phrase in communications, whether it is politicians, or businessman, negotiators, is: it's not what you say, it's what people hear. Many U.S. Government officials from our President down to low level functionaries have repeatedly said that this was not a ransom payment, that is what they are saying. What do you think the ayatollahs in Tehran, and for that matter every other bad actor throughout Middle East or around the world hear whenever they hear that we transferred $400 million =on the same weekend that we received American hostages?

Ambassador Edelman: Again, it requires one to make a surmise Senator Cotton, but my surmise as I stated in my written statement, is that on the Iranian side there was clearly a belief that this payment was being made in exchange for the hostages. And that was articulated by at least one commander of the IRGC who was quoted to that affect in the press.

Senator Cotton: Thank you all.