Legal Experts Defend Big US Payment to Iran

9/7/2016 1:14:00 PM, Britain Eakin
     WASHINGTON (CN) - The Obama administration's $1.7 billion payment to Iran earlier this year was legal, experts told members of a House Judiciary subcommittee Wednesday.
     Republicans hoped to renew caterwauling over the payment as Election Day draws closer. Rather than starting off with a bang, however, the push upon return from a seven-week summer vacation fizzled during a hearing of the Subcommittee on the Constitution and Civil Justice.
     Distinguished law professors summoned as witnesses all answered no when asked if the Obama administration acted illegally by paying Iran from the U.S. Treasury Department's judgment fund, which sets aside a pool of money to pay judgments against the United States.
     The fund was established in 1956 to relieve Congress of the burden of appropriating money for judgments on a case-by-case basis. Initially, the fund had a payment limit of $100,000. Since 1977, however, there has been no limit on payment size. Congress has amended the judgment fund numerous times since, according to the testimony of Neal Kinkof, professor of law at Georgia State University.
     Democrats on the subcommittee accused Republicans of picking a partisan fight over the issue.
     "We've got our priorities all messed up," said Rep. Steve Cohen, D-Tenn. "We ought to be dealing with voting rights and due process and death. That's what we ought to be doing, instead of trying to pick a partisan fight with the administration over bringing some people home from Iran, and giving them back the money they gave us from the 1970s to buy weapons they never got."
     Republicans have slammed President Obama for making the payments to Iran earlier this year, claiming that he handed over the cash as a ransom payment in exchange for the release of four U.S. prisoners held by Iran.
     The payment coincided with the release of the prisoners, which included Washington Post reporter Jason Rezaian, and has become a wedge issue in an unusual presidential campaign season.
     The Obama administration says an initial payment of $400,000, delivered by plane, was intended to settle an arbitration dispute between the U.S. and Iran, which stems from a failed arms deal to the Shah of Iran - a former U.S. ally until he was overthrown during the Iranian revolution in 1979.
     Post-revolution, the United States kept Iran's payment, opting not to deliver the weapons to the new Islamic regime.
     That first payment, which the U.S. had held since the 1970s, was followed with two additional payments made between Jan. 22 and Feb. 5, to account for $1.3 billion in interest.
     Though Obama administration officials have acknowledged that the first payment helped leverage release of the prisoners, they deny the Republican charge that they paid a ransom.
     Democrat subcommittee member Rep. John Conyers, D-Mich., reminded the subcommittee that the judgment fund has long been used for similar purposes.
     "Past administrations going back decades have used the fund to settle claims with Iran. In addition to being perfectly legal, the Iran settlement saved taxpayers billions of dollars," Conyers said, noting that the U.S. could have owed Iran billions more in interest had the claim been adjudicated rather than settled through the judgment fund.
     "Although few would oppose greater transparency over government actions, the majority's examples of purported Executive Branch overreach — and that's not all of the majority, but those that have in settlement negotiations — fail to show that the administration has misused the judgment fund," Conyers added.
     The three witnesses today were unanimous about the legality of the Iran payments, but Paul Figley of American University recommended capping the size of judgment-fund payments.
     "It was never intended to bypass Congress's authority to decide whether to fund programs or policy initiatives, but it has demonstrably been used in that way," Figley said. "The judgment fund as it now stands undermines Congress' power of the purse by providing an unlimited, unreviewable source of funds for some executive branch initiatives. Republican and Democratic presidents have used it to further foreign policy goals by settling claims started by other countries."
     Figley said placing a cap on payments would restore Congress' authority over how the fund is used.
     Kinkof disagreed, saying putting a polarized Congress in charge of the judgment fund , which he says has a broad legal authority, would only increase "political games."
     "Everything that the Obama administration has done is well within not only the letter of the judgment fund law, but within the spirit of that law," Kinkof said.
     To highlight his perception of the fund's broad legal authority, Kinkof noted that using the judgment fund to settle discrimination lawsuits from black, Native American, Hispanic and female farmers is a valid use of the fund. Republicans meanwhile have long criticized such uses.
     One area where the experts agreed was the need to improve the transparency of the judgment fund and improve congressional oversight of it.
     Jeffery Axelrad from George Washington University said in written testimony that the identity of fund recipients is not available when judgment fund statistics are compiled.
     "Likewise, the amount paid to attorneys and the identity of the attorneys is not currently available," he added. "This information is central to knowing whether the Judgment Fund is, or is not, being abused."
     HR 1669, the Judgment Fund Transparency Act, would require the Treasury Department to publicly disclose payment details made from the judgment fund. Figley, Kinkof and Axelrad said they support the bill, though Axelrad noted he would remove the bill's requirement to disclose the underlying facts of the judgment, a provision he says will slow down the claims process.
     Sen. Marco Rubio, R-Fla., meanwhile took legislative efforts a step further Tuesday, introducing the No Ransom No Payments Act, which would prohibit further payments to Iran from the judgment fund until Iran returns the $1.7 billion in "ransom money," and pays U.S. victims of Iranian-sponsored terrorism.