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NA SPOUSES OF 9/11 VICTIMS HOLD NEWS CONFERENCE

FDCH Political Transcripts, February 19, 2002 Tuesday, 9886 words
9/11 Lawsuit Reveals Iran's Direct Involvement in 9/11 Plot
PR Newswire, May 19, 2011 Thursday 4:17 PM EST, 1246 words
Court filings advance claim Iran aided 9/11 hijackers
The Philadelphia Inquirer, May 20, 2011 Friday, BUSINESS; P-com Biz; Pg.
D01, 790 words, By Chris Mondics; Inquirer Staff Writer
9/11 LITIGATION: Iran Has Role in Tragedy, Class Action Claims
Class Action Reporter, July 5, 2011, 1037 words
U.S. District Court Rules Iran Behind 9/11 Attacks
PR Newswire Europe, December 23, 2011 Friday 2:18 PM EST, 1460 words
UK U.S. District Court Rules Iran Behind 9/11 Attacks
African Press Organization, December 23, 2011 Friday 5:25 PM EST, 1454
words
PR Newswire, December 23, 2011 Friday 1:00 PM EST, 1464 words
Vics seize Iran's bldg.
Daily News (New York), April 2, 2014 Wednesday, NEWS; Pg. 14, 170 words, BY
DANIEL BEEKMAN NEW YORK DAILY NEWS
Victims Want Iran's 9/11 Liability To Apply To Entire MDL
Law360, 10 July 2015 Friday, 646 words
http://www.law360.com/classaction/articles/677923
http://www.law360.com/productliability/articles/677923
http://www.law360.com/newyork/articles/677923
REP. MICHAEL G. FITZPATRICK HOLDS A HEARING ON THE IRAN NUCLEAR DEAL AND
ITS IMPACT ON TERRORISM FINANCING, Financial Markets Regulatory Wire , July
22, 2015 Wednesday, COMMITTEE: HOUSE COMMITTEE ON FINANCIAL SERVICES,
SUBCOMMITTEE ON TASK FORCE TO INVESTIGATE TERRORISM FINANCING, LOAD-DATE:
July 23, 2015
REP. MICHAEL G. FITZPATRICK HOLDS A HEARING ON THE IRAN NUCLEAR DEAL AND
ITS IMPACT ON TERRORISM FINANCING, CQ Transcriptions , July 22, 2015
Wednesday, COMMITTEE: HOUSE COMMITTEE ON FINANCIAL SERVICES, SUBCOMMITTEE
ON TASK FORCE TO INVESTIGATE TERRORISM FINANCING, LOAD-DATE: July 23, 2015
House Financial Services Committee Hearing on Task Force to Investigate
Terrorism Financing - The Iran Nuclear Deal and its Impact on Terrorism
Financing
Federal News Service, July 22, 2015 Wednesday, 23405 words
1 of 14 DOCUMENTS
FDCH Political Transcripts
February 19, 2002 Tuesday
NA SPOUSES OF 9/11 VICTIMS HOLD NEWS CONFERENCE

LENGTH: 9886 words
SPEAKER:
NA
LOCATION: WASHINGTON, D.C.
SPOUSES OF 9/11 VICTIMS HOLD NEWS CONFERENCE

FEBRUARY 19, 2002
MELLON (ph): Good afternoon, ladies and gentlemen. My name is Tom Mellon (ph). I'm an attorney in Pennsylvania.
And I would like to introduce you to some of the people in the panel as well as some of the consultants in the room with
us.
First, we have with us today to my extreme left, Fionna Havlish (ph). She is the surviving spouse of her husband
Donald.
We have next to Fionna (ph), again coming to the right, Russa Steiner (ph). Russa (ph), again like Fionna (ph), will be
speaking to you for a few minutes regarding the events of September 11. Russa's husband is, of course, Bill.
And we have Clara Turturillo (ph). Clara's (ph) deceased husband is Peter (ph), and Clara (ph) will also be speaking to
you this afternoon again for two or three minutes regarding her life since September 11.
Tara Bing's (ph) to my immediate left. Tara's husband is Michael (ph). Tara (ph) also will be representing Michael (ph)
and Michael's (ph) interests today.
We then have, to my immediate right, Grace (ph). Grace Parkinson Godshalk (ph). Grace's (ph) son, William, died on
September 11.
And finally we have Ellen Saracini (ph). Her husband is Victor Saracini, and as some of you may or may not know, her
husband was the pilot of Flight 175 that was the flight in the South Tower, the second flight to hit.
We don't have with us today Teresa Ann Austriangio (ph). Teresa (ph) has family matters that prevented her from
coming here today. However, she does have a statement, and that statement will be read by one of the lawyers from my
office, Mr. Steven Corr (ph).
Now we have three other people that I'd like to mention before we get rolling, and that is the consultants that have made
this lawsuit possible. First, at Harvard Law School, there is Professor David Rosenberg. David regrets he cannot be
here today; he is in the classroom. But David is a scholar of federal courts and class actions. And David has reviewed
the plea that hopefully you now have, and has given it his seal of approval.
With us however, is a scholar of international law from Georgetown Law School, Professor Barry E. Carter, and during
the course of the next hour, Barry -- Professor Carter will entertain questions from the press corps and be making a few
comments toward the end.
MELLON (ph): Also with us, and I'm quite honored to have, Mr. Ken McEwan. Ken is a former Foreign Service
diplomat and his expertise to the secretary of defense has been to engage in the study of and reporting of and
investigation of counter-terrorism.
It is with Professor Rosenberg, Professor Carter and Ken McEwan that the information contained in this complaint has
been reviewed and reviewed various times.
Now briefly a word about the complaint. In November, Fionna Havlish (ph) came to the law firm and announced very
clearly, very strongly, even passionately that she wanted to do something regarding the terrorists and a lawsuit relating
to the terroristic activities of September 11. Fionna (ph) made it clear that that was her abiding concern.
I also want to say that Fionna (ph) made it clear she was not and will not sue any American enterprise, whether that's a
security, engineering or architectural firm, whether that's an airline. "No American defendant," was Fionna's (ph)
direction to me, and, of course, I agreed. And I was very pleased to agree, because, like Fionna (ph), we believed, all of
us believed that this is a matter of heinous vicious crime by a terrorist that does not involve complicity directly or
indirectly of any American enterprise.
That being said, Fionna (ph) advised me that she was not alone. She advised me that Russa (ph) had spoken to her, and
that Russa (ph) was interested. She advised me that Clara (ph) was equally interested, and Tara (ph). She advised me
that Grace (ph) and Teresa Ann (ph), and, of course, Ellen (ph), all shared the same common concern and conviction
that something should be done to bankrupt every individual, every business, every organization, every enterprise, every
nation state and anyone else who directly or indirectly finances, funds, aids, abets or support terrorism.
It was with that conviction and that passion that all the ladies here spent hours with co-counsel who I'd also like to
introduce. There's Jack Corr (ph), who is in many ways the architect of most everything you have in your hand, our
principal theoretician and workhorse. Brother Steven Corr (ph) is also in the room and likewise has spent hours with
his brother, Jack Corr (ph), working on the documents you have before you.
With regard to the document, to the best of my knowledge, and I'm virtually certain about this, it is the first class action
filed regarding the World Trade Center. The plaintiffs are all Pennsylvanians. The plaintiffs all had spouses or sons
working in the World Trade Center, but they are not alone because, as you know, there have been 3,062 deaths as a
result of that tragedy, 2,838 in New York, 184 in Washington, and 40, of course, in our own Pennsylvania.
Please understand, the main plaintiffs are Pennsylvanians, but they expect, they welcome and they encourage other
individuals from the Pentagon disaster or the Shanksville, Pennsylvania, disaster to join them as named plaintiffs. To
the extent that they want their names on the next amended copy of this complaint we'll be happy to put them on.
Now, with regard to the contents of the complaint, as I mentioned, it's a class action, I specifically direct your attention
to the following. The states of Iraq and Iran are named. I'd like you to know that the estates of the 19 terrorists are
named. I'd like you to know that Zacarias Moussaoui, on trial this October here in the Washington area -- Virginia -- is
named.
We also have named what we call the executive order defendants. There's 141 businesses, individuals, organizations that
have had their assets frozen here in Washington, and we intend to pursue them as long and as hard as we can for one
purpose: We intend to bankrupt them. We are going to ask the federal judge in this case to level them such damages,
compensatory and punitive in nature, that those individuals, nation-states and organizations will be bled dry under all
circumstances for all time.
Enough about the lawsuit. At this time, I'd like to introduce Fionna Havlish (ph). As I said, Fionna (ph) is the
somewhat initiator, but I know at the same time, her comrade in arms were 100 percent with her. But I'd ask Fionna
(ph) to please speak first.
I want you to know the following, ladies and gentlemen. I think this is important.
MELLON (ph): What these ladies has not been edited by Steven Corr (ph), Jack Corr (ph), Tom Mellon (ph), Ken
McEwan (ph), our diplomat, Professor Barry Carter. We refuse to touch it. It's going to be hard for them. It's going to
be very hard for them, but they want to do it, and I'm asking for your patience as they read their statements.
Fionna (ph)?
HAVLICH: Good afternoon and thank you for coming today. My name is Fionna Havlich (ph), and I am the wife of
Donald G. Havlich Jr. My husband was the senior vice president for Aeon Corporation. He worked as a benefits
consultant on the 101st floor of the south tower of the World Trade Center. He had worked for Aeon for 21 years. He
worked in New York since July 11, 1977.
In addition, Don had a background in philosophy and law. He loved collecting wildlife art and sculptures. He loved his
job, working in New York, and above all, he loved his family.
When his first and only daughter was born four years ago, he changed his schedule in order to be home early enough to
see her each day. He called her his little miracle. Don left at 6 a.m. each morning and returned home between 7 and 8
p.m. each night.
On September 11, I had just dropped our daughter off at the babysitter and was driving to work when my phone rang. It
was my father and he was crying. I begged him to take a deep breath and just get some words out. All he could say was,
"Don -- Trade Center -- plane."
I hung up and pulled over and tried to call Don, but there was no answer. I went to one of my patients' homes and he let
me in. We put on the TV just in time to see a plane go into a tower. They said it was the south tower. I did not realize it
was Don's tower, because I only knew the towers as 1 and 2. I left and picked up my eldest daughter at school. She was
sobbing and crying, because the school had just announced everything over the intercom.
I arrived home at 9:45 a.m. My daughter checked the caller ID and said Don had called. I grabbed the phone and
listened to the message. He stated that there had been an accident in tower 1 but that he was OK, and he would call me
on my cell phone. He never did call. He never came through that front door that night or any night since. I tried
desperately to call him using both my home phone and my cell phone but wasn't able to get through.
I had every TV on in the house. At one point I sat down to try and calm down just in time to see the south tower
collapse. I went numb at that point. I still did not know which tower he was in, and then the north tower collapsed. I
began calling Aeon, family and any number that came across the TV screen.
At 12:30 that day, I took my 4-year-old to her first day of school ever. I then met with the minister of the school, who I
had never met, but who has become my salvation, to discuss with him what to tell my daughter if Don never returned.
For the next two weeks, I had hope. All I did for 12 to 14 hours a day was to make phone calls and do whatever had to
be done. My nephew, sister-in-law, older children and my community helped me at every turn. My nephew and friends
went into New York to pass out pictures, turn in DNA samples and check the hospitals. To the best of my knowledge,
they still have not found Don.
Our daughter cries on and off that she misses Daddy. My elder children, Don's stepchildren, miss him terribly. He was a
positive guide in their lives and a loving stepfather. Don is missed by his family, friends, coworkers and clients. He
always treated everyone equally with integrity, honor and at times humor.
Through this horrendous experience, I have found out how much I love my country and proud I am to be an American
citizen. It is an honor. For this reason, I have no wish to bring a lawsuit against American or domestic persons,
businesses or corporations for this craven attack.
HAVLICH: My husband lived his life with honesty. We believed that each one of us is responsible for his or her own
actions, and that is what we taught the children. I am continuing this belief.
That is why I encourage my friends to join me in bringing this lawsuit. Our goal is simple: We want to prevent all those
responsible for our losses from ever inflicting such pain upon others. We seek to deprive them of the financial means to
ever commit such acts again.
This is not a lawsuit about financial recovery. It is a lawsuit about financial deprivation. I will do whatever I can to
bankrupt all terrorists, those that harbor terrorists and those that help terrorists.
In closing, let me say that I am proud to stand here with my friends and say with one voice that we are fighting back
against terrorism and that we will not let them win.
Thank you.
MELLON (ph): Russa Steiner's (ph) husband Bill worked for the Marsh Company, Inc. (ph). Bill worked on the 97th
floor of the north tower.
Russa (ph)?
STEINER: I'm Russa Steiner (ph), widow of William Steiner, married for 32 years, reside in Pennsylvania with our
children since 1987.
My husband worked for Marsh (ph) and its subsidiaries since 1970. He worked his way up the corporate ranks to
become managing director for information technology. His office was located on the southeast side of the 97th floor, in
the north tower of the World Trade Center.
Born in Newark, New Jersey, 56 years ago, a middle son, Bill lived most of his young life in New Jersey. He graduated
from Week Lake (ph) High School in 1962 and went on to graduate from the College of Insurance, St. John's University,
with degrees in computer sciences, business, insurance and reinsurance.
Well respected and admired, family, friends and coworkers remember Bill as a devoted family man with an impeccable
work ethic. He enjoyed going to the movies, renting videos, watching sports, listening to music, traveling and learning
about history. A car enthusiast for many years, he loved staying at home and tinkering.
With a reserved personality, people who knew him appreciated his generosity and sense of humor. By the way he lived
his life, he has been a role model to many.
Tuesday, September 11, began for me like any other. My husband awoke at 4:30 a.m. to prepare for a commute to a job
that he loved in a city that he loved. He left at 5:30 to get a head start on his work day, which had been his practice
throughout his career. Since it was a beautiful Tuesday morning, on my way to work I stopped off at an outdoor market.
While walking through the aisles, I overheard a news bulletin on the radio which prompted me to ask a vendor to please
repeat what I thought I just heard. A plane hit the World Trade Center. I remember saying, "My husband works there,"
and noticed her horrified expression.
I immediately went to my car to phone my husband. Unsuccessful in my attempts, I went directly home and tried again
to reach him, to no avail. I called my work and explained that I would be in as soon as I heard from my husband.
I next put on the television in our family room with the phone by my side and witnessed the second plane hit the south
tower. I saw the fire and smoke, observed both towers crumble, and watched in disbelief as the horrors of that infamous
day unfolded.
STEINER: After speaking with our children, the older children came directly home to be with me and await revelations.
While dealing with the shock and confusion of what was transpiring, we held out hope for a miracle, not unlike
thousands of other families. We frantically took turns calling hospitals, radio and television stations, coworkers of my
husband, and researching the Internet to obtain information.
After three weeks of being in shock and frozen at home, the status of the missing persons from ground zero changed
from missing to missing; presumed dead. It was at this time that I was forced to face the possibility of what seemed
inevitable: our lives were turned upside down and the possibility that we would never see William again.
As my husband customarily handled the mundane chore of family maintenance, I was both inexperienced and
overwhelmed by the enormity of the task. On Saturday, October 6, I left our home for the first time since September 11,
with my family and an advocate. She took us to an appointment at the New Jersey Family Assistance Center and to
ground zero.
After the site visit, I left our children at the family center in the company of volunteer companions, while I visited the
trailers, with advocates, who assisted me in navigating through the maze of services, charities, organizations and legal
necessities. I did not want to subject my children to the continuing pain of retelling our story or asking for handouts.
Since September 11, I have felt supported and been deeply moved by compassionate acts of family, friends, neighbors,
community members and total strangers. After 32 years of a happy and successful marriage, I'm struggling to adjust to
my new life situation, both emotionally and financially. Dealing with nightmares, children's questions, medication,
psychiatrists, psychologists, family counselors, forms, paperwork and the like -- these are all now staples in my daily
life. My husband is sorely missed.
On September 11, we as Americans lost not only thousands of innocent lives, but also our innocence as a country. My
participation in this endeavor is not about financial gain or getting even; it is about an effort to do something positive to
honor my husband and the thousands of victims of the terrorist attacks who are unable to speak for themselves. By
participating in this class action against the terrorists, I hope to create an obstruction to further financial aid to all
terrorists. I also hope to spare other families the pain and suffering endured by my family and all the others we
represent.
Thank you.
MELLON (ph): Clara Turturillo's (ph) husband, Peter (ph), was also employed by the Marsh Incorporated Company
(ph). He worked on the 98th floor of the north tower.
Like so many families, the number of children who lost a loved one, a mom or a dad, has not been officially tallied, to
the best of our knowledge, but certainly there's over 5,000 children affected by these terroristic acts who have lost a
parent, and I want to tell you that in talking to these women today, that was a very keen motivating force. They wanted
to do something in memory of their late spouses and son; they wanted to do something for their children, to prevent this
type of disaster ever happening again.
It's with that especially that Clara (ph) would like to say a few works, and Clara (ph) has a few thoughts on that regard.
Clara (ph)?
TURTURILLO (ph): On September 11, I lost my husband, my partner, my very best friend, and indeed the future he
and I planned to share together.
TURTURILLO (ph): My sons lost their father, their mentor, and the innocence (ph) that came from years of love,
nurturing and a strong-rooted belief that we would always be there for them and for each other.
I am here today to take a stand against the evil that has invaded our lives. We have always taught our boys to stand up
for themselves and to do what they know to be right in their hearts and in God's eyes. After much thought and prayer, I
believe that what we are doing here today will accomplish this.
I am confident that judgments will be made throughout the world against any and all defendants who took any part in
this heinous act. I need to do whatever possible to bankrupt all nations and individuals supporting terrorism and terrorist
activities. For my sake and that of my sons, I need to know that I have done what I could do to stop these cowards.
At my husband Peter's (ph) memorial service, a letter I wrote to God was read in which I wrote, "I have no regrets.
What I have is 21- plus years of memories and love, and a family we began together, a family who I know will grow
stronger and closer because of our love and our faith in you and in each other, a faith and love that he nourished and
lived with every day of his life."
I believe Peter (ph) would be proud of what I am doing, and I thank God for the strength he has given me to follow
through in helping to stop this evil in our world today.
MELLON (ph): Tara Bing's (ph) husband Michael (ph) worked at Marsh McClennan (ph) on the 100th floor of the
north tower. Tara (ph) has prepared a statement that she would like to read to you as well.
BING (ph): Hi. Thank you for coming.
Al Qaeda and other terrorist groups took action against the American public on September 11, 2001. My husband,
Michael Bing (ph), was one of the thousands that were killed on that day as a result of their hate toward America and
our people.
Michael was employed by Marsh McClennan (ph) as an assistance vice president of the casualty claims division. His
office was on the 100th floor of the north tower of the World Trade Center. He was extremely proud to be working in
the World Trade Center; he was of few people worldwide who worked so high up in the sky.
On Tuesday, September 11, my husband got up for work at about 5:30 in the morning, fed our dogs and kissed me
goodbye. As he left our bedroom, he smiled and said to me, "I love you." He left our house at approximately 6:40 a.m.,
never to return.
I first learned of what happened at approximately 9 a.m. The radio stations stated that a small commuter plane struck the
World Trade Center. My thought was that he would be OK, even if it hit his floor, because he did not sit by the window.
As I continued to drive to work, I heard on another station that a second plane hit the towers, and they were large
commuter commercial jets. The station also indicated that it was a suspected terrorist attack.
The intense fear overtook me. I was shaking uncontrollably and crying. I ran up to my office and ran for a phone. By
this time, I could not see the numbers on the telephone dial because I was crying so much.
I called to a coworker and informed her that my husband was in the buildings, my bother-in-law may be in the buildings
and my father worked downtown. I was unable to contact any of my family members due to the phone lines being
down.
BING (ph): I returned home to my house in time to see the collapse of the towers. As I watched the attacks with panic
rising inside of me, I was still unable to determine if my other family members were OK. It took several hours to hear
from them, and I did learn that they were all safe. But we still did not hear from Michael (ph).
The next few days were full of making grueling phone calls to hospitals and emergency hotlines describing what my
husband looked like, indicating any identifiable features, including birth marks and what he was wearing on 9/11. I had
family and friends visiting hospitals and other places in New York City, placing Michael's (ph) photo around in hopes of
someone recognizing him and receiving some information as to his whereabouts. I had to collect DNA samples of my
husband and track down all dental records as well as past X-rays in the hopes of identifying him either alive or dead.
That first torturous week and a half was spent with my family by my side, hoping, praying that Michael (ph) would be
OK, and waiting for that phone call stating so. During that time, I was filled with the fears and panic of what Michael
(ph) went through. If he jumped out a window in efforts to get away from the flames, if he was burned alive, if he was
trapped and couldn't breathe from all the smoke and flames, if he survived the plane crash and then had to suffer for the
remainder of his life. If he was buried alive once the tower collapsed.
These thoughts still plague me today, and to this day, I am filled with anxiety with regards to receiving that phone call
notifying me of what body part of my husband was discovered, as well as the very real possibility of never having any
part of my husband be recovered.
Michael Bing (ph) was a fun-loving, easygoing, good guy. He loved to spend time with our nieces and nephews playing
sports and games. He enjoyed his home and having family and friends over to visit, playing volleyball and barbequing.
He took care of our dogs and loved having them around.
He recently began playing the guitar again, which he often did as a young adult. I often would come home from work
and find him playing the guitar, and I would just listen and be soothed by it. Now the music has stopped, and I look at
the guitar and I wish I could hear and see him play it again. But that will never happen.
When my husband died, there was a part of me that died also. It was the life that I had planned to share with Michael
(ph). It was raising children together, helping them to grow up as good, moral, fair people, as my husband and I am. It
was growing old together, enjoying our home and our lives.
And now my life is completely different, unfamiliar and lonely. My canvas has been wiped clear, and I have to
rediscover that canvas, incorporating the right colors and forms.
And as I begin to regroup, I realize that I need to take some kind of action. I have to let the terrorist groups know that
though Michael (ph) was killed by their hands and I am filled with pain, hurt and anguish every day of my life, I will
not give up on my life, and I will not give up on all Americans.
Joining this lawsuit is giving me an opportunity to honor Michael (ph) and all those of whom life was cut too short in
the name of terrorism.
This lawsuit is not against any American business, corporation or our government. Those who orchestrated the 9/11
attacks need to be held accountable for their actions, and they are the terrorist groups, Al Qaeda, and the others who
have financed and support them. My expectation with this class action suit is not for financial recovery but for limiting
the terrorists' ability to attack any other part of the United States and protecting our people in the future.
Al Qaeda and all the other terrorist groups, as well as those who harbor them and finance their actions, have caused a
tremendous amount of pain, suffering, and agony in many of us. This destruction of life and land needs to stop. My
intention with this class action suit is to bankrupt the terrorist groups, and prevent them from inflicting the pain and
suffering that I have endured onto any other American.
Our country, its people, and all of our monuments which represent the American dream need not experience the
tragedies of 9/11 ever again.
Thank you.
MELLON (ph): Thank you for doing so. And we do appreciate that.
Grace Parkinson Godshalk (ph) lost her son William Godshalk. William worked for Keefe, Bruyette and Woods on the
89th floor of the south tower.
MELLON (ph): Grace (ph)?
GODSHALK: I'd like to thank you all for being here today to spread our message to the world and also to the families
of the other victims hoping that they will join us in this lawsuit.
This is my cherished son, Bill Godshalk, 35 years old: a vice president of equity sales for Keefe, Bruyette and Woods, a
financial institution on the 89th floor of tower 2, otherwise known as the south tower. He was employed by Keefe,
Bruyette for seven years. Bill loved his families, his friends, his job, and his country.
He was a three-letter varsity man in high school: tennis, baseball and ice hockey. He was a graduate of the University
of Alabama and a member of Phi Gamma Delta fraternity, the only Northerner in his pledge class. He was held in high
regard by his Southern friends, high enough that they have established a scholarship in his memory at the University of
Alabama.
In his adult life, he played squash, basketball and ice hockey each week. He was a 7-handicap golfer, and it was a game
that he loved best. He skiied the Black Diamond trails and flew in a biplane with a World War II ace, and he recently
became certified in scuba diving. One month before he died, he became engaged to his lovely Elise (ph) at the
Riverside Cafe in Manhattan. He lived in Manhattan.
We are heartbroken by the loss of our son in this horrific terroristic attack of September 11. It's hard to face each day
knowing we will not be able to see him, talk to him or hold him in our arms. We will be crying every day for the rest of
our lives.
We will not file any lawsuit against any American persons, businesses or corporations for this terrorist attack. As said
before, he loved his job, and the people he worked with, many of whom are now also lost.
My cause is to stop terrorism worldwide, so that the 67 friends and coworkers of Bill and the thousands of others who
died that day will not have died in vain. I want to alert all nations that terrorism will not be tolerated, and we must
bankrupt any nation or individual supporting terroristic activity. Now, I'd like you to sit back and listen to the messages
from the dead.
From my son Bill, 8:55 a.m., 9/11/01: "Hi, Mom. A jet just hit the Trade Center. The other building. I'm OK. Turn on
the TV. I have to go now." It was the last I heard from him.
From a father to his son, 9:20 a.m.: "We are trapped. Looks like you're now going to make it. You're now the head of
the family. Look after Mom."
From a son to his mother, 9:26 a.m.: "Mom, we made it down to the 87th floor. We're in a conference room. We need
help. We're trapped. We're passing around cell phones, so everyone can call their families. We need help. People have
already passed out."
From a husband to his wife, 9:43 a.m.: They are talking and from afar, she watches tower 2 fall.
It will be my lifetime job to put an end to terrorism so no one else ever has to live this nightmare. God bless America
and united we stand.
MELLON (ph): Last speaker in person today will be Ellen Saracini (ph). However, Teresa Ann Austriangio (ph) cannot
make it today.
MELLON (ph): She has little children. She's tied up at home. However, she asked Steven Corr (ph), one of the
attorneys, to speak on her behalf.
So, Steven (ph), if you'll Teresa Ann's (ph) words please.
CORR (ph): "My name is Teresa Ann Austriangio (ph), and I lost my husband Joe on September 11 as a result of the act
of airline piracy and terrorism on the World Trade Center. He was a lawyer and found his legal background was an
asset in his field of reinsurance. He enjoyed his office location, the 77th floor of tower 1, which allowed frequent
interaction with colleagues.
"My last conversation with my husband was on 9/10/01. He stayed in the city, and we discussed by phone the usual
family news, what bills needed to be paid, our weekend plans, and that he would call me in the afternoon at work, which
was his habit.
"September 11 changed our family's life forever. The events following were of endless calls, searching for any
information, going into panic whenever the phone would ring, disbelief and constant tears.
"My husband Joe was a very caring man, and together we created a caring home for 26 years, for each other and our
two children.
"He had many interests. He was a gourmet cook, an avid guitarist and a community volunteer. But our family was
always his priority. Joe was very active in our children's education and encouraged their interests, always introducing
them to new adventures. He wanted them to be confident and not limit their expectations. Together, we encouraged
them to be spiritual, not to go through the motions of religion, but incorporate goodness, fairness and integrity in their
lives always.
"He had a wonderful sense of humor and an intuitive kindness that he freely shared. You usually felt good after
speaking with Joe. He was a good and sincere person who would problem-solve with uncanny insight.
"There is a void in our family that consumes us each day. We are a very close family, and there is an aging in all of us
due to our loss. Our children have taken leaps into areas of maturity that most adults would have difficulty enduring. I
admire their strength and insight: gifts from their dad.
"My husband Joe was a man of integrity, and we taught our children to always follow what you believe in and be
responsible for your actions. We have no expectation of financial recovery in this class action, and we do not desire to
proceed against any American business or entity. It is our hope that we can bankrupt the nations and groups that support
terrorism and all those who participate in terrorist activity. We need to build a better place for our children and
ourselves so all those lost on September 11 will not have died in vain and we can continue to exhibit that stanch
determination and sense of right that is so characteristic of America."
MELLON (ph): Ladies and gentlemen, before introducing Ken McEwan, who, as I stated previously, was a diplomat for
30 years in the Middle East and a specialist in counterterrorism and intelligence; and before introducing Professor Barry
Carter, our last comments this afternoon will be from Ellen Saracini (ph). Ellen's (ph) husband Victor was the pilot of
United Flight 175, which crashed into the South Tower.
Ellen (ph)?
SARACINI: Good afternoon. My name is Ellen Saracini (ph). My husband was Captain Victor J. Saracini.
United Flight 175 was brutally hijacked and struck the south tower of the World Trade Center on September 11 at 9:03
a.m. I last spoke with Vic the evening of September 10. He was upbeat, he was positive, he made me laugh, as he did
whenever he called, and he told me that he loved me, as he always did.
As Victor arrived at Boston airport early on September 11, the day must have seemed to him pleasant and ordinary in
every way. Surely he enjoyed that beautiful sunshine which bathed the entire Eastern Coast from Boston to Washington,
including our home in Pennsylvania. The day certainly seemed ordinary to me as I got our two daughters out to school.
But little did Victor know that he was about to find himself in the most forward trench of a terrible new kind of war, a
war for which our nation and the world were totally unprepared. Little did I realize that for myself and the girls there
would never again be an ordinary day.
Vic was a good man. No, Vic was a great man. He served his country proudly as a naval aviator. He was a highly
respected pilot at United Airlines, where he loved his job as few men can say they love theirs. He always said he had
the best seat in the house.
He was a true friend to so many. He was a loving father and a devoted husband. He loved aviation, he loved music and
he loved playing his guitar. He loved all his diverse hobbies. He loved and worship his god. But most of all, he loved
ordinary days with his family, doing all the ordinary, insignificant things that dads do with their little girls.
For the girls and myself, there will be no more ordinary days. For the thousands of families that we represent today,
there will be no more ordinary days, just days of longing, days of emptiness and days of wondering what might have
been. Surely, we are all joined together in our sorrow and our pain.
Our objective here today is not monetary gain, for no amount of money could ever replace our losses. Our objective
here today is not to bring additional harm on any American corporation or organization, for we are all common victims,
and we have all suffered enough.
Our objective, rather, is to do what we can as a group to prevent future abominations. Money is the root of all evil.
Money is the fuel of terrorism. Without money, terror is stalled in its tracks. Although the vast cache of wealth which
financed September 11 lies frozen in dozens of accounts worldwide, over time much of it could find its way back into
the organs of terror. This must never be allowed to happen, never.
Our class action suit is designed to tie these funds up in litigation and generate liens, which hopefully will prevent them
from ever again being used to fund cowardly attacks on innocent people.
We harbor no false illusions. We know that is a difficult path we choose, and we know that any success we achieve may
be limited. But we must start somewhere. We must do something. I could not live with myself if I sat back and did
nothing and someone had to go through this unending pain we are experiencing.
I know Victor did everything in his power to stop this from happening. Victor, just like all of our lost loved ones, was
strong, determined and courageous. Surely I know he would approve of what we do.
Thank you and God bless you.
MELLON (ph): Mr. Ken McEwan, as I indicated before, has had a long and distinguished career in the United States
government as a foreign diplomat with some 30 years, 20 of which has been really focusing upon the affairs of the
Middle East, and most recently again as a counterterrorism intelligence officer, especially reporting to the secretary of
defense and state.
I've asked Mr. Ken McEwan to be here today, and he's been very gracious with his time and his information, and he's
agreed to say a few words about the defendants in this case.
Mr. Ken McEwan.
MCEWAN: Tom (ph), as an attorney (inaudible) to say defense. Actually, it was the secretary of state, Foreign Service
officer.
Let me just say a few words about myself first. My last three years in the State Department I was working in the
counterterrorism office, and following in detail global terrorism and all of the efforts that our government takes in its
many instrumentalities to work against this phenomenon.
We've been focusing for years on Al Qaeda, reporting about the dangers that it posed, tracking it, combating it, trying to
track it.
MCEWAN (ph): Also, designated state sponsors of terrorism for years. In particular, two states named in this lawsuit,
Iran and Iraq, have been state sponsors for many years. You'll see it in the complaint, what information there is which
suggests roles by those governments. I'd be happy to address your questions on those points subsequently.
I'd like to say that I appreciate very much the effort going into this lawsuit. A mark of a civilized nation is that it
respects the rule of law and pursues justice through law, not through violence, not through terrorism. And we will
persist and, God willing, this effort will be rewarded.
Thank you.
MELLON (ph): Before entertaining your questions of the plaintiffs, as well as Mr. Ken McEwan, the last speaker this
morning is Professor Barry Carter, Georgetown Law School, scholar in the area of international law, with special
expertise as it pertains to the actual seizure of foreign assets, whether those assets are in the United States or overseas.
Professor Carter?
CARTER: Thank you, Tom (ph).
First of all, it's an honor to be involved in this lawsuit, both working with these women as plaintiffs, whose motives are
just spectacular; it's also a pleasure to be working with Tom Mellon (ph), Jack and Steve Corr (ph), because they have
come, when they came to me, and I know when we talked to Ken McEwan, they made clear that they wanted to bring a
properly formulated lawsuit that would do justice not only to the plaintiffs, but to justice in the circumstances.
And I, in my opinion, think this is a very well-founded lawsuit. A lot of it is straightforward domestic law. After all,
these victims were murdered, and they have rights of action through their families for wrongful death. But there are
also some statutes in U.S. law that allow plaintiffs to go after foreign states and foreign individuals, and we are using
those statutes and we're using them properly.
So I think it's finally up to a court to decide, but that we have a well-founded lawsuit here.
Furthermore, I'd like to add one point. As the women today have pointed out, they're very focused on what they're
going after. They're going after terrorism, not after U.S. aircraft companies or U.S. defendants. But also the complaint,
if you read it, does not go after the present government of Afghanistan. That is a government that the U.S. is
cooperating with, that, in fact, is made up of some of the opposition forces that went after the Taliban.
The lawsuit is against not only the governments of Iran and Iraq for their support of terrorism, and Ken knows a lot
about that, but also against the Islamic Emirate of Afghanistan, which was the Islamic government of the Taliban, which
now, thanks to the heroic actions of the Afghan people, the United States, Great Britain and other states, no longer
controls territories. They're on the run. But we want to -- or the plaintiffs want to go after them and make sure that they
don't have the resources in the future, as they've mentioned, to conduct terrorism in the future.
So I just wanted to clarify exactly who the defendants are. And I think, again, it is the careful focus of the lawsuit to go
after the terrorists and to stop them from doing what they did again.
Thank you.
MELLON (ph): Ladies and gentlemen, Professor David Rosenberg (ph) at Harvard is expecting calls if you wish to talk
to him about points of federal law, federal jurisdiction, class action. We will have, if you wish, a few minutes for
questions. It looks like we have five minutes, by the clock.
QUESTION: Mr. Mellon (ph), can we talk a little bit about the law, just for a second? There have been other lawsuits
filed...
MELLON (ph): Yes, sir.
QUESTION: ... of a similar type. I'm thinking Terry Anderson. I'm thinking the (inaudible) family.
MELLON (ph): That's right.
QUESTION: All of which were successful. They won their verdicts, they won hundreds of millions of dollars, in terms
of verdicts, and had absolutely no effect at all whatsoever. They never received money, money never shifted hands or
anything, there was never any real impact on any of the governments or entities that the lawsuits were filed against.
With all due respect (inaudible), why is what you are doing here little more than just calling these people bad names?
MELLON (ph): OK. First, Mr. Cicipio (ph) from Morristown, Pennsylvania, filed a similar lawsuit. You may recall,
Mr. Cicipio (ph) was a prisoner of war for a long period of time. And, in fact, he did recover.
Now, you all recognize that every lawsuit is its own individual creature, and for procedural reasons, and in these cases
perhaps for international relation reasons, foreign diplomacy reasons and the like. But Mr. Cicipio (ph) did, in fact,
along with four or five other individuals, collect, if I recall, over $100 million.
But the point is this. With the help of Professor Barry Carter, we will have judgments and liens established in foreign
countries, and so those assets will be tied up and be tied up forever. It's not a matter of our getting the money, it's a
matter of their not getting their own.
Now, in the United States in 1998, the Taliban had $300 million tied up. President Bush has decided to give about 75
percent of that money back, at last report, to the new government of Afghanistan. But the point is, it tied up at least
$300 million of the Taliban for a while. Well, to the extent that there are sheiks, businesses, charities, corporations and
other individuals here, in the executive order, 140 defendants, we intend to tie their money up, and we're going to do
that. And we're going to do that to every defendant we can find.
QUESTION: Well, all of you, of course, have suffered a grievous wrong. As a follow-up to that, though, the United
States has already placed liens and frozen these assets as well, at least in this country, as far as we know, and is asking
cooperation of other countries.
What is it that the Bush administration, the United States isn't doing at this point that makes you want to go through this
action?
MELLON (ph): Well, first, if we get a judgment in the United States because of international treaties -- and, Professor
Carter, perhaps you ought to finish out this answer -- because of international treaties, we are able to lodge those
judgments in Switzerland, in Liechtenstein. If you look at the captions, you will see that there are many nations
mentioned, including Saudi Arabia. That is our intent, to lodge our judgments.
But I think there's a second reason. Professor Carter will explain, there's a difference between the United States
government attaching a property and individuals such as these families being able to actually take them money.
Professor?
CARTER: Yes, the U.S. government freeze of these assets is, with two exceptions, all under the International
Emergency Economic Powers Act, known in the trade as IEEPA. That allows the government to freeze the assets, not to
take title to it. The government does not have the power to take title.
Now, maybe the U.S. government will bring its own lawsuit for its damages and ask the court to then say they're entitled
to the money. But in the absence of that, the government can't take the money.
This lawsuit, if there is a judgment against some of the defendants, to the extent their assets are frozen, the court can
authorize that money be attached and given to the plaintiffs; well- deserving plaintiffs, I add.
QUESTION: It's been our understanding that Osama bin Laden funded much of the terrorism through his personal
wealth. We have not been able to find Osama bin Laden, and there have been recent reports about how much of that
wealth has gone out of the country in the form of gold. I mean, isn't this a far more difficult matter to try to recover
financial damages?
CARTER: I don't think anyone's going to underestimate the difficulty of finding all of these assets. But, number one,
there are already some assets that are frozen; President Bush only returned most of the money, but not all to the present
government of Afghanistan. So there is money out there right now that is frozen that can be attached, can, with a court's
order, be transferred to the plaintiffs as their right (inaudible) out of the terrorist.
Secondly, we've got to look to the future. If there is a judgment against some of these people and their assets surface
somewhere, be it here or in Switzerland or elsewhere, there is a judgment then outstanding against them which you can
make an effort to enforce.
Essentially, this case will put all these terrorists on the run, not only for any assets that might have been frozen now, but
in the future. They will be on notice that if they start moving money around in any way that can be detected, then one
can go after that and hopefully seize it and give it to the people that suffered rather than let the terrorists continue to use
it.
QUESTION: Mr. Mellon (ph), your complaint says that Iran and Iraq provided material support and resources to Al
Qaeda and bin Laden. What evidence do you have for that? And what do you have to do to demonstrate or to prove
that to a judge?
MELLON (ph): Well, first, in federal court, as most of you perhaps know, there is something called notice pleading.
You have to give a good-faith allegation based upon your investigation. It is not proof positive as if we were in federal
court today, and it's certainly not proof beyond a reasonable doubt, because the proof at maximum is preponderance of
the evidence.
Now, specifically, what we have for good-faith notice pleadings are contained in that complaint. And most recently, I
refer you to the statements by the president of the United States, the vice president, the secretary of state, the secretary
of defense and specific allegations of the hijackers meeting with Iraqi and Iranian intelligence officers and officials.
So, if you check the complaint, I think you will see it rises to the level of a good faith-pleading.
QUESTION: But no American official has made that allegation.
MELLON (ph): Well, let me have Mr. Ken McEwan make reference, because I think it's better for a diplomat with 30
years of State Department work and an expertise in terrorism to answer.
Ken?
MCEWAN: Thanks.
With respect to Iraq, former CIA Director Woolsey has indicated, and there have been numerous reports that Mohamed
Atta, whose name you will recognize -- he is the acknowledged ring leader of the attackers, bin Laden in his videotape
said Atta was the ring leader. Atta did meet in Prague, according to the Czech interior minister, with Colonel
Mohammed Kalil Ibrahim el-Ani (ph), an Iraqi intelligence agent. That was in April last year. Mr. Atta went to some
lengths, some trouble to get into Prague. He tried to fly in, didn't get a visa, couldn't get in, came back several days
overland. Stayed one day, met el-Ani (ph), and left, went back to the United States. Shortly thereafter, money and
muscle guys headed for the United States.
QUESTION: And Iran?
MCEWAN: I haven't finished about Iraq.
There are reports that several other of the hijackers, the attackers, met in the months prior to the attack in the UAE with
Iraqi intelligence agents. There have been multiple reports from the 1990s through the current period of contacts,
liaison, training between Iraqi agents and Al Qaeda in Sudan, Afghanistan and elsewhere.
MCEWAN: And there have been multiple reports by Iraqi defectors, three of them at least, of training at a location south
of Baghdad, called Suhlman Pak (ph), by Iraqi agents of two different groups at least -- Iraqis in one, non-Iraqis in the
other, including Islamic extremists -- on an old Boeing 707 aircraft, how to hijack an aircraft using knives and hands: no
firearms.
So former Director Woolsey summarized all of these things and other reports. The London Observer had a report on the
same set of allegations in November.
Iran, designated nine months ago in the latest Department of State annual report on terrorism as again the most active
of the state sponsors of terrorism. Named in an indictment by the Justice Department last June in connection with the
indictments of Saudi Hezbollah people responsible for the Khobar bombing -- Khobar Towers. That indictment said that
an Irani official directed the Saudi Hezbollah to surveil sites in Saudi Arabia to attack Americans, that the leader of the
Saudi Hezbollah informed an Iranian official of the planned operation before it took place, and that Iranian officials
were giving money and support to Saudi Hezbollah. So much for Khobar.
The links between Iran and Hezbollah are well established, long known. Iran is one of the founders and long
supporters of Lebanese Hezbollah -- funding, training, support, liaison between Irani intelligence and Lebanese
Hezbollah.
One of the most notorious Hezbollah terrorists is a man named Ihmad Mognea (ph), involved in many terrorists attacks
against American interests. Last October 2000, there was a plea agreement by Ali Mohammed (ph) in the embassy
bombings trial, in which, among other things, he testified to links between Hezbollah and Mognea (ph) specifically,
with Al Qaeda, senior Al Qaeda operatives and perhaps bin Laden himself. He attended meetings with this connection.
So there is a -- there are other reports -- similar reports -- there is a confirmed link between Mognea (ph), Hezbollah and
Al Qaeda. If you understand the relationship between Iran and Hezbollah, and Iranian use of Hezbollah at times as a
surrogate, then you have an indirect connection, which, taken in the context of Iran's state sponsorship of terrorism
which continues and their attitude of the United States, gives a very well-founded allegation.
QUESTION: Mr. Mellon (ph), could I ask a question of Ms. Havlish please?
Could you elaborate for us on what lead you to go to the law office and what lead you to come up with this idea for this
legal action? And the second part of my question would be, we know that the people behind this have a whole different
view of the value of human life than our society does. What makes you think this will have any impact beyond the
financial you hope for on them?
HAVLISH: What made me go to the law firm of the Mellons (ph) was that, as I stated in my statement, that we've
always taught the children to stand up for what they believe in.
HAVLISH: Now it's my turn to show them that I am doing that too.
So that's what brought me to the law firm. And can you repeat the second part of the question?
QUESTION: Well, I'm just wondering, I mean you all talked about the obvious, the emotions that are obvious to all of
us, but what impact beyond the financial do you think this could possibly have on the kind of people who were behind
this? You know, what message could it possibly send to people who have such a different view of...
HAVLISH: That we don't have to stand for it, that we can do something about it.
(CROSSTALK)
HAVLISH: We don't have to just be like them. And we don't have to stand for what they do. We're over here doing our
thing, minding our own business, living our lives, loving each other, going on day to day. We don't have to be like
them. And we don't have to accept their ways. And we're not going to accept their ways.
And if one of the ways we can do this is to stop them from having money, then we need to just say, "OK, we're going to
do this," and get the money out of their hands so that whatever they want to do over there to themselves. But it's our
business right now to stop them from coming over here and doing it to us.
(UNKNOWN): I would like to say something too.
I think some of the terrorists are not only the ones that were willing to give their lives for whatever strange reason they
think they are going to reap in the great beyond, but I think there's a lot of other money that is filtered through for the
people that are leading these people that we probably don't know about. Maybe some people higher up in government
know. There's a large network of money. There's a lot of poor people in these countries that are probably living off
these terrorist organizations. I think that's what we have to find out about, and I think that will come out in our
investigations.
MELLON (ph): A final comment with regard to a question two questions ago. The federal indictment, as you no doubt
know, are very carefully prepared and very carefully supervised and very carefully delivered. The federal indictment
regarding Zacarias Moussaoui, whose trial is October, says they met with Irani officials. That's one of the acts we will
be hearing more about.
I want to thank you all for coming.
Yes, one more question.
QUESTION: Please, clear up just a little point of confusion.
MELLON (ph): Sure.
QUESTION: I thought that in the past, in the recent past, the federal government has fought (ph) attention of monies
that are frozen in this country belonging to enemies, such as the Iranian government. Otherwise, Steve Flatow would
have taken a good little money out of what's frozen in this country.
Has the State Department not fought this in the past? And has something changed?
MELLON (ph): As I understand it, and we have the best person probably in Washington, scholar of foreign attachments
domestic and overseas, as I understand my lessons from Professor Carter, each case is individual, each...
CARTER: I missed the question, to be honest; didn't quite hear all of it.
MELLON (ph): Why don't you ask the question of Professor Carter?
QUESTION: In the fairly recent past, and it seems like one of the big complaints in this town has been that the people
who file suits like this wind up having to try and fight the U.S. federal government, the State Department, which in
essence defends frozen assets.
The Flatow lawsuit is a perfect example, where the court awarded him several hundred million dollars worth of
damages from the Iranian government for the terrorist act that killed his daughter. But he's never been able to do
anything by way of attaching any of that money, because, despite it being Iranian assets that are frozen in this country,
because, amongst other things, the U.S. State Department has fought it.
Seems this is something where there is some sort of diplomatic situation in it that there is something else happening
somewhere else. But it's the government -- the federal government, that fought that.
Why is this lawsuit going to be able to do something better than that, or has something changed?
CARTER: Yes, the Flatow case is quite involved. There was an effort by their lawyers to go after Iran embassy
property here, and the U.S. government opposed it because we have embassy property abroad that we're a little sensitive
about too.
I think it's a different case. As Tom said, each case is different. Number one, to the extent that Taliban are being sued
here and some of the dependents, their assets were frozen and they were not subject to the Flatow lawsuit. The Flatow
lawsuit was simply against Iran: Iran, I think the Iranian minister of defense and a few Iranian individuals.
Flatow lawsuit does not include all of the defendants that this lawsuit includes, some of whom have had their
attachments frozen. So there are assets out there that have been frozen which Flatow didn't deal with that are there that
can be attached.
But again, you know, as our plaintiffs, as our women have said so clearly today, number one is not just they're going
after the assets, but number two, they're also looking to the future.
CARTER: It's not just what might be in hand now, but is to the extent you get a default judgment against these
defendants, then any time their assets can be detected or found in the future, Katie bar the door, one can go after that
money and go after it with a judgment against them.
And so I think it's a different ball game than just suing a pass suit against the Iranians, which is the Flatow case.
QUESTION: But the larger issue is the State Department regards them as their (inaudible). You're right on Flatow, but
it's not just the Flatow case...
(CROSSTALK)
(UNKNOWN): Well, I think I, in the midst of writing an article on this, and I've heard everyone from Stu Eizenstat
when he was in State and Treasury speak on this, what State Department was defending was, number one, they were not
defending Iran, I want to point out, they were protecting the Iranian diplomatic properties, which are just a couple
piddly houses and homes here in Washington, because if we accepted the idea that people could go after these
diplomatic properties, then what about our embassy in China? So that was State Department defense one. But this isn't
what we're talking about with frozen assets.
The second thing State Department was defending was some frozen money in an escrow account left over from the Iran
hostage crisis, where Iran had paid money for buying military weapons. And that money, State said, was in escrow
because of an arbitration.
Now, those are the two things State defended. They did not at all -- and I would hope that State Department supports
this suit. We have partly made sure of that by not suing the present government of Afghanistan, since they are an ally of
the U.S. I would hope that we can go to the legal adviser of State and State Department (inaudible) support us on this,
because the assets we're going after now are the assets frozen separate from the ones in the Flatow case, are the assets
frozen of these Taliban, of people associated with the Al Qaeda, and that is a different set of assets, number one.
Number two, we're going after future assets of these terrorists. These are the same assets that the U.S. government froze
but can't take title to, as I say.
So I would hope that there was State Department support in this case. I do not see at this point where State Department
will oppose this lawsuit. The cause of these plaintiffs. What they're going after they have much more right to than the
defendants do, those assets, and these are not assets that raise these sensitive issues that State was defending before, like
diplomatic property.
MELLON (ph): Thank you all for coming. I will mention that the ladies have asked me to ask you not to interrogate
them or ask them a whole lot of questions. If you do have questions, however, even for the ladies, Barry, Ken, Jack
(ph), Steven (ph), myself will do our best to answer on their behalf.
But honestly, they want to return, in terms of privacy and security. So thank you very much.
END
LOAD-DATE: February 20, 2002
LANGUAGE: ENGLISH
TYPE: NEWS CONFERENCE
NOTES:
[????] - Indicates Speaker Unknown
[--] - Indicates could not make out what was being said.[off mike] - Indicates could not make out what was being said.
Copyright 2002 FDCHeMedia, Inc. All Rights Reserved.
2 of 14 DOCUMENTS
PR Newswire
May 19, 2011 Thursday 4:17 PM EST
9/11 Lawsuit Reveals Iran's Direct Involvement in 9/11 Plot

LENGTH: 1246 words
DATELINE: NEW YORK, May 19, 2011
Attorneys representing families of 9/11 victims today are informing a federal court in Manhattan that they are filing
comprehensive evidence that Iran played a key role in planning and facilitating the 9/11 attacks and called on the U.S.
Government to declassify documents detailing what the U.S. intelligence community knew about Iran's relationship to
al Qaeda prior to September 11, 2001. "Today, nearly a decade after the attacks that took so many of our loved ones
away, we believe the 9/11 families and the American people deserve to know the full truth about Iran's complicity,"
said Thomas E. Mellon, Jr. of Doylestown, Pennsylvania, law firm of Mellon Webster & Shelly, the lead attorney in
Havlish, et al. v. bin Laden, et al., now pending in the U.S. District Court in Manhattan.
"We simply want to make sure that those who are responsible for assisting the September 11 terrorists in their attack on
the United States are found accountable for the harm they caused," said Fiona Havlish whose husband, Donald,
perished on the 101st floor of the North Tower.
Representing eight law firms from across the United States, the attorneys and their team of investigators have turned up
convincing evidence that Imad Mughniyah was the main liaison between Iran's leadership and al Qaeda and that
Mughniyah played an active role in planning the 9/11 attacks. Mughniyah, a Lebanese Shiite, was a top commander in
Hezbollah, the terrorist organization created and supported by Iran since the early 1980s. Mughniyah was assassinated
on February 14, 2008, in Damascus, Syria.
"Our experts, including three former 9/11 Commission staff members, have stated that the evidence is 'clear and
convincing' that the Islamic Republic of Iran was involved in the 9/11 attacks," said Timothy B. Fleming, the lead
investigative attorney in the case, of the D.C. office of the firm Wiggins Childs Quinn & Pantazis.
"The 9/11 Commission called for further investigation by the U.S. Government into the al Qaeda-Iran-Hezbollah
relationship, but until now there's been no indication that any government agency has taken any action to pursue this
matter," said Mellon. "Through interviews with former U.S. Government and intelligence officials, members of the 9/11
Commission staff, former Iranian intelligence officers, and a wide variety of non-governmental experts and fact
witnesses, we have undertaken this 'further investigation,'" Mellon added.
Before 9/11, the FBI considered Mughniyah to be the world's most wanted terrorist.
The United States Government has accused Mughniyah of masterminding the April 1983 attack on the U.S. Embassy in
Beirut, that killed 63 people; the October 1983 simultaneous attacks on the U.S. and French military barracks in Beirut
that killed 241 U.S. Marines and 58 French soldiers; and the kidnapping and murder of numerous U.S. hostages in
Lebanon, including the CIA's Beirut station chief William Buckley and U.S. Marine Lt. Colonel Richard Higgins.
Mughniyah was also wanted by the FBI for his involvement in the 1985 hijacking of TWA flight 847 and the murder of
U.S. Navy diver Robert Dean Stethem, and by INTERPOL for his role in the 1992 attack on the Israeli Embassy, and
the July 1994 attack on the AMIA Jewish community center, both in Buenos Aires.
Today, the Havlish attorneys disclosed that they have taken sworn testimony, which will be filed under seal, from
former Iranian intelligence operatives describing the direct participation of Imad Mughniyah and top government
officials of Iran in the planning of, and preparation for, the 9/11 attacks. These witnesses also describe the roles of
Mughniyah and top Iranian officials in assisting al Qaeda leadership and operatives to escape from Afghanistan after the
U.S.-led invasion in the wake of 9/11. Iran then provided safe haven and support for these al Qaeda members inside
Iran.
"The 9/11 Commission discovered, just days before publication of its report, important U.S. intelligence documents that
detailed Iran's involvement in aiding and abetting the 9/11 plot," Mellon pointed out.
On page 240 of its final report, the 9/11 Commission stated that "a senior Hezbollah operative visited Saudi Arabia to
coordinate activities there," and that this "senior Hezbollah operative" and his associate were on the same air flights as
several of the future hijackers who were traveling to and from Iran between October 2000 and February 2001.
"We have compelling evidence that the 'senior Hezbollah operative' was Imad Mughniyah," added Dennis G. Pantazis,
of the Birmingham, Alabama law firm of Wiggins Childs Quinn & Pantazis.
"Imad Mughniyah was known to be an agent of Iran, running terrorist operations for Iran and Hezbollah. Mughniyah's
participation in the hijackers' preparations for the 9/11 attacks leaves no doubt that Iran was directly involved in, and
had foreknowledge of, a planned terrorist attack on the U.S.," Mellon said. "Discoveries about Mughniyah's role are
very important because, as found by the 9/11 Commission, 'after 9/11, Iran and Hezbollah wished to conceal any past
evidence of cooperation with Sunni terrorists associated with al Qaeda,'" Fleming added.
The Clerk of the U.S. District Court for the Southern District of New York has already entered a default against the
Iranian government defendants, and the Havlish Plaintiffs now ask the Court, based on all the evidence, to enter
judgment against Iran.
The case appears as In Re Terrorist Attacks on September 11, 2001, Civil Action No. 03 MDL 1570 (GBD): Havlish, et
al. v. bin Laden, et al., Civil Action No. 03-CV-9848 (GBD). Over the past nine years, the eight law firms of the
Havlish consortium have invested thousands of hours of time to investigate Iran's involvement in the 9/11 attacks.
"When Tim Fleming and I joined this coalition of attorneys representing the 9/11 families, our immediate and ultimate
goal was to provide the families with a full accounting of what happened, how it happened, and who was responsible for
that terrible day in September 2001," said Pantazis.
"Developing evidence of Iran's involvement with al Qaeda regarding the events of 9/11 is like putting together a large
jigsaw puzzle where many of the pieces are missing and will never be found. Still, the picture is clear that Iran's and
Hezbollah's complicity cannot be seriously challenged," said Mellon. "Over the last nine years, after interviewing
dozens of people, reviewing hundreds of documents, and consulting with many experts in the field, we have developed
a strong evidentiary case of Iran's involvement in the 9/11 attacks," Mellon added.
"These families have waited nearly ten years to hear the truth. Under the scrutiny of a federal Judge, hopefully this will
be accomplished in the next few months," Pantazis said.
Ellen Saracini, the widow of Victor Saracini, Captain of United Flight 175, which was the second aircraft to hit the
World Trade Center, stated, "The September 11 attacks were an attack on the American way of life and on the American
belief in a civil society where we respect others and resolve our differences in an orderly and peaceful way. It is only
appropriate that those who are attacking our way of life are found accountable in our American system."
Attorneys in the case, as well as leading Plaintiff Ellen Saracini, and others, are available for interviews.
SOURCE Mellon Webster & Shelly
CONTACT:Amy Fisher for Mellon Webster & Shelly, Toll-free, +1-855-472-6911 (855-IRAN911),
press@Iran911case.com
URL: http://www.prnewswire.com
LOAD-DATE: July 22, 2011
LANGUAGE: ENGLISH
PUBLICATION-TYPE: Newswire
Copyright 2011 PR Newswire Association LLC

All Rights Reserved
3 of 14 DOCUMENTS
The Philadelphia Inquirer
May 20, 2011 Friday
CITY-C Edition
Court filings advance claim Iran aided 9/11 hijackers

BYLINE: By Chris Mondics; Inquirer Staff Writer
SECTION: BUSINESS; P-com Biz; Pg. D01
LENGTH: 790 words
Lawyers for seven family members of Philadelphia-area victims of the Sept. 11, 2001, attacks filed new documents
Thursday in long-running litigation that they say provide clear evidence the government of Iran aided the hijackers.
Included in the court filings are affidavits from 9/11 Commission staff members alleging that the Iran government
directly aided the attack by facilitating the movement of 9/11 hijacking team members through Iran.
The 9/11 Commission, in its June 16, 2004, report, said that senior al-Qaeda operatives had long maintained contact
with Iranian intelligence officials and that there was "strong evidence" that Iranian border officials had facilitated their
passage through the country on their way to Afghanistan. The commission said there was evidence that Iranian
government officials had agreed not to stamp the passports of traveling al-Qaeda operatives.
They would have been barred from the United States had their documents shown travel in Iran, which the U.S.
government had designated as a state supporter of terrorism. Despite those findings, the commission stopped short of
directly implicating Iran and its proxy in southern Lebanon, the militant group Hezbollah, long linked with terrorist
attacks around the world, in the attacks.
"Developing evidence of Iran's involvement with al-Qaeda regarding the events of 9/11 is like putting together a large
jigsaw puzzle where many of the parts are missing and never will be found," said the plaintiffs' lawyer Thomas E.
Mellon Jr. of Doylestown.
But, he added, "over the last nine years, after interviewing dozens of people, reviewing hundreds of documents, and
consulting with many experts in the field, we have developed a strong evidentiary case of Iran's involvement."
The lawsuit was filed in 2002 in federal District Court in Manhattan. Among the plaintiffs are Ellen Saracini of Bucks
County, wife of Victor Saracini, captain of United Flight 175, the second aircraft to hit the World Trade Center, and
Fiona Havlish, formerly of Bucks County and now of Boulder, Colo., whose husband also died in the attacks.
Mellon cites affidavits from Janice L. Kephart, a former counsel to the 9/11 Commission who focused on the ways the
hijackers evaded border security, and former federal prosecutor Dietrich Snell, also a former 9/11 staff lawyer.
"In sum, it is my expert opinion that there is clear and convincing evidence that Iran and Hezbollah provided material
support to al-Qaeda by actively facilitating the travel of eight to 10 of the 9/11 hijackers to Iran and Beirut," Kephart
said.
Snell added in a similar statement, "There is clear and convincing evidence pointing to involvement on the part of
Hezbollah and Iran in the 9/11 attack."
Mellon's lawsuit is but one of several against foreign governments alleging complicity. But others, including a lawsuit
filed by the Center City firm Cozen O'Connor, are much further along, and lawyers in those actions are obtaining
documents from Islamist charities that they assert aided the attackers with financial and logistical support.
Those suits suffered a setback in June 2009, when the U.S. Supreme Court declined to hear an appeal of rulings that the
Saudi government and Saudi royal family, named initially as defendants, were immune from terrorism lawsuits.
For such lawsuits to go forward, the State Department must find that a foreign government had actively supported
terrorist causes, and in the Saudi case there was no such designation.
The Cozen litigation and other lawsuits that named the Saudis as defendants are still ongoing because other defendants,
including accused terrorism financiers and Islamist charities, remain as defendants.
The lawsuit filed by Mellon does not face the same hurdles because the State Department designated Iran a state
supporter of terrorism.
But it faces obstacles of its own. Iran's assets were frozen years ago, and very little remains to collect.
The Congressional Research Service reported in 2008 that U.S. courts had awarded $19 billion in judgments against
foreign governments found to have supported terrorism. But, it said, "the scarcity of assets within U.S. jurisdiction . . .
has made judgments against terrorist states difficult to enforce."
Mellon said that while it was not likely that the plaintiffs would be able to collect anytime soon, there was value in
exposing key facts about the alleged Iranian involvement through litigation.
"When we started this, it was to answer the questions of the families from the Philadelphia area. That is what motivated
us," he said.
For additional coverage of the lawsuit stemming from the 9/11 terrorist attacks, go to www.philly.com/cozenContact
staff writer Chris Mondics at 215-854-5957 or cmondics@phillynews.com.
LOAD-DATE: May 20, 2011
LANGUAGE: ENGLISH
PUBLICATION-TYPE: Newspaper
Copyright 2011 Philadelphia Newspapers, LLC
All Rights Reserved
4 of 14 DOCUMENTS
Class Action Reporter
July 5, 2011
9/11 LITIGATION: Iran Has Role in Tragedy, Class Action Claims

SECTION: Vol. 13 ISSN: 1525-2272
LENGTH: 1037 words
Laurie Mason Schroeder, writing for phillyBurbs.com, reports that
nearly a decade after the devastating terrorist attacks that
claimed their family members, a group of Bucks County 9/11
survivors says they've found definitive evidence that Iran played
a key role in the Sept. 11, 2001, tragedy.
In documents unsealed on May 19, lawyers for the group named a key
player in the attacks and detailed how, they say, Iranian
officials helped the hijackers enter this country.
And they challenged the U.S. government to declassify documents
they claim validate their findings.
"[Thurs]day, nearly a decade after the attacks that took so many
of our loved ones away, we believe the 9/11 families and the
American people deserve to know the full truth about Iran's
complicity," said Thomas E. Mellon Jr., Esq., a Doylestown
attorney who is leading a consortium of eight law firms involved
in the suit.
"The 9/11 Commission called for further investigation by the U.S.
government into the al-Qaida-Iran-Hezbollah relationship, but
until now there's been no indication that any government agency
has taken any action to pursue this matter."
The documents are part of a $100 billion federal lawsuit filed in
2006 on behalf of seven Bucks County families who lost relatives
in the terror attacks.
Former Lower Makefield resident Fiona Havlish, whose husband,
Donald, died on the 101st floor of the north tower of the World
Trade Center, said she hopes the suit forces U.S. officials to
admit what they know about Iran's role and take action against
that nation.
"We simply want to make sure that those who are responsible for
assisting the Sept. 11 terrorists in their attack on the United
States are found accountable for the harm they caused,"

Ms. Havlish said.
As part of the suit, the lawyers sent investigators all over the
world to ferret out information about the hijackers, and took
depositions from dozens of experts.
Janice Kephart, a former counsel to the U.S. Senate Judiciary
Subcommittee on Technology, Terrorism and Government Information
and former immigration counsel to the Sept. 11 Commission, is an
expert in the suit.
In her affidavit, which was made public Thursday, Ms. Kephart said
Iran put a "senior Hezbollah operative" on flights with the 9/11
hijackers in the months before the attacks, to ensure that the
men's passports, which they obtained in Saudi Arabia, wouldn't be
stamped with Iranian or Afghan travel stamps, red flags that would
have jeopardized their plan.
The lawsuit names Imad Mughniyah as the main liaison between
Iran's leadership and al-Qaida, and says that Mr. Mughniyah played
an active role in planning the 9/11 attacks.
Mr. Mughniyah, a Lebanese Shiite, was a top commander in
Hezbollah, the terrorist organization created and supported by
Iran since the early 1980s, according to the suit. He was killed
on Feb. 14, 2008, in Damascus, Syria.
Before 9/11, Mr. Mellon said, the FBI considered Mr. Mughniyah to
be the world's most wanted terrorist, accusing him of
masterminding the April 1983 attack on the U.S. Embassy in Beirut
that killed 63 people.
He's also implicated in the October 1983 simultaneous attacks on
the U.S. and French military barracks in Beirut that killed 241
U.S. Marines and 58 French soldiers; and the kidnapping and murder
of numerous U.S. hostages in Lebanon, including the CIA's Beirut
station chief William Buckley and U.S. Marine Lt. Colonel Richard
Higgins.
Mr. Mughniyah was also wanted by the FBI for his involvement in
the 1985 hijacking of TWA flight 847 and the murder of U.S. Navy
diver Robert Dean Stethem, and by Interpol for his role in the
1992 attack on the Israeli Embassy, and the July 1994 attack on
the AMIA Jewish community center, both in Buenos Aires.
Mr. Mellon said the 9/11 Commission came to similar conclusions
about Mughniyah's role, as well as the roles of top Iranian
officials in planning the attacks.
"The 9/11 Commission discovered, just days before publication of
its report, important U.S. intelligence documents that detailed
Iran's involvement in aiding and abetting the 9/11 plot,"
Mr. Mellon said.
He pointed to page 240 of the report, in which the commission
stated that "a senior Hezbollah operative visited Saudi Arabia to

coordinate activities there," and that this "senior Hezbollah
operative" and his associate were on the same air flights as
several of the future hijackers who were traveling to and from
Iran between October 2000 and February 2001.
"We have compelling evidence that the senior Hezbollah operative
was Imad Mughniyah," added Dennis G. Pantazis, Esq., another
lawyer involved in the suit.
Mr. Mughniyah was well-known among terrorist experts as an agent
of Iran who organized terrorist operations for Iran and Hezbollah,
Mellon said.
"Mughniyah's participation in the hijackers' preparations for the
9/11 attacks leaves no doubt that Iran was directly involved in,
and had foreknowledge of, a planned terrorist attack on the U.S.,"
he said.
Mr. Mellon said gathering evidence for the suit has been a long
and frustrating process that seems to be finally paying off.
"Developing evidence of Iran's involvement with al-Qaida regarding
the events of 9/11 is like putting together a large jigsaw puzzle
where many of the pieces are missing and will never be found.
Still, the picture is clear that Iran's and Hezbollah's complicity
cannot be seriously challenged," said Mr. Mellon.
The Clerk of the U.S. District Court for the Southern District of
New York has already entered a default judgment against the
Iranian government, Mr. Mellon said, and the Bucks County
plaintiffs have asked the courts to enter judgment against Iran.
Iranian officials have so far ignored every legal notice connected
to the lawsuit, Mr. Mellon said.
Plaintiff Ellen Saracini, a Lower Makefield resident whose
husband, Victor, was captain of United Flight 175, which was the
second aircraft to hit the World Trade Center, said she hoped the
new documents are a step toward justice being served.
"The Sept. 11 attacks were an attack on the American way of life
and on the American belief in a civil society where we respect
others and resolve our differences in an orderly and peaceful way.
It is only appropriate that those who are attacking our way of
life are found accountable in our American system."
LANGUAGE: ENGLISH
PUBLICATION-TYPE: Newsletter
Class Action Reporter
Copyright 1994 - 2011 Bankruptcy Creditors' Service, Inc. and Beard Group, Inc.
All Rights Reserved
5 of 14 DOCUMENTS
PR Newswire Europe
December 23, 2011 Friday 2:18 PM EST

LENGTH: 1460 words
DATELINE: NEW YORK, December 23, 2011
A federal district court in Manhattan yesterday entered a historic ruling that reveals new facts about Iran's support of al
Qaeda in the 9/11 attacks. U.S. District Judge George B. Daniels ruled yesterday that Iran and Hezbollah materially and
directly supported al Qaeda in the September 11, 2001 attacks and are legally responsible for damages to hundreds of
family members of 9/11 victims who are plaintiffs in the case.
Judge Daniels had announced his ruling in Havlish, et al. v. bin Laden, et al., in open court on Thursday, December 15,
2011, following a three-hour courtroom presentation by the families' attorneys. Judge Daniels entered a written Order of
Judgment yesterday backed by 53 pages of detailed Findings of Fact and Conclusions of Law.
Fiona Havlish, whose husband Donald perished in the World Trade Center North Tower on 9/11 said, "This is a historic
day. For ten years we've wanted the truth to be known about who was responsible for our losses. Now we have that
answer."
Ellen Saracini, the wife of United Airlines 175 pilot Victor Saracini, which the hijackers crashed into the WTC South
Tower, said after the hearing last Thursday, "We just came from Judge Daniels' court where he ruled in favor of holding
accountable those who perpetrated the attacks of 9/11... I just smiled up to Victor and I said we're still thinking about
you ... we're there for you ... we'll always be there for you. But today's very special."
In Havlish, et al. v. bin Laden, et al., Judge Daniels held that the Islamic Republic of Iran, its Supreme Leader
Ayatollah Ali Hosseini Khamenei, former Iranian president Ali Akbar Hashemi Rafsanjani, and Iran's agencies and
instrumentalities, including, among others, the Iranian Revolutionary Guard Corps ("IRGC"), the Iranian Ministry of
Intelligence and Security ("MOIS"), and Iran's terrorist proxy Hezbollah, all materially aided and supported al Qaeda
before and after 9/11.
"The families have waited a very long time for this day and they have been through a lot. So I was greatly relieved that
the families received an answer to the question that they asked me ten years ago: they asked who was the responsible
party? How did this happen? Today a federal court judge has said that a principal responsible party is the Islamic
Republic of Iran," said Thomas E. Mellon, Jr. of Doylestown, Pennsylvania, law firm of Mellon Webster & Shelly, the
lead attorney for the Havlish plaintiffs.
The evidence was developed over a seven-year international investigation by the Havlish attorneys who pursued the
9/11 Commission's recommendation regarding an apparent link between Iran, Hezbollah, and the 9/11 hijackers,
following the Commission's own eleventh-hour discovery of significant National Security Agency ("NSA") intercepts:
"We believe this topic requires further investigation by the U.S. government." 9/11 Commission Report, p. 241. The
Havlish evidence included sworn testimony and affidavits from the following:
Ten expert witnesses including three former 9/11 Commission staff members, two former CIA case officers, two
investigative journalists, and an Iran analyst who has testified in 25 cases involving Iranian terrorism. Three Iranian
defectors who were operatives of MOIS and the IRGC. Witness X, whose dramatic testimony was previously filed
under seal, was revealed to be Abolghasem Mesbahi, a former MOIS operative in charge of Iran's espionage operations
in Western Europe. Judge Daniels found that Mesbahi has testified in numerous prosecutions of Iranian and Hezbollah
terrorists, including the Mykonos case in Germany and the AMIA case in Argentina, and found to be highly reliable and
credible. Judge Daniels also credited Mesbahi's testimony that he received messages during the summer of 2001 from
inside the Iranian government that an Iranian contingency plan for unconventional warfare against the U.S. called
"ShaitandarAtash" had been activated. "This is compelling proof that Iran was deeply involved in the 9/11 conspiracy,"
said Tim Fleming, lead investigative attorney for the Havlish group.
Included among Judge Daniels' findings in Havlish are the following:
Members of the 9/11 Commission staff testified that Iran aided the hijackers by concealing their travel through Iran to
access al Qaeda training camps in Afghanistan. Iranian border inspectors refrained from stamping the passports of 8 to
10 of the 9/11 hijackers because evidence of travel through Iran would have prevented the hijackers from obtaining
visas at U.S. embassies abroad or gaining entry into the United States. The 9/11 Commission Report addressed these
facts and called for further investigation. 9/11 Commission Report at pp. 240-41. Expert and U.S. government evidence
also confirmed that Iran facilitated the escape of al Qaeda leaders and members from the U.S. invasion of Afghanistan
into Iran and provided safe haven inside Iran after 9/11. Abolghasem Mesbahi testified he was part of an IRGC-MOIS
task force that designed contingency plans for unconventional warfare against the U.S., code-named "Shaitan dar Atash"
("Satan in Flames") which included crashing hijacked passenger airliners into the World Trade Center, the Pentagon,
and the White House. During the weeks before 9/11, Mesbahi received three coded messages from a source inside
Iran's government indicating that the Shaitan dar Atash plan had been activated. Mesbahi also testified that in 2000
Iran used front companies to obtain a Boeing 757-767-777 flight simulator for training the terrorists. Due to U.S. trade
sanctions, Iran has never had any Boeing 757-767-777 aircraft, but all the airplanes hijacked on 9/11 were Boeing 757
or 767 aircraft. A May 14, 2001 memorandum from inside the Iranian government demonstrating that Iran's Supreme
Leader, Ayatollah Khamenei, was aware of the impending attacks and instructing intelligence operatives to restrict
communications to existing contacts with al Qaeda's Ayman al Zawahiri and Hizballah's Imad Mughniyah. Documents
obtained from German federal prosecutors showing that 9/11 coordinator Ramzi Binalshihb traveled to Iran in January
2001 on his way to Afghanistan to brief Osama bin Laden on the plot's progress. Evidence from the 9/11 Commission
Report that a "senior Hezbollah operative," which the Havlish evidence identifies as Hezbollah terrorist chief Imad
Mughniyah, coordinated activities in Saudi Arabia and was present (or his associate) on flights the hijackers took to and
from Beirut and Iran. 9/11 Commission Report at pp. 240-41. Mughniyah, a longtime agent of Iran, orchestrated a
string of terror operations against the U.S. and Israel during the 1980s and 1990s. He was assassinated in Syria in
February of 2008.
Attorneys emphasized that it is important to understand that Iran, Hezbollah, and al Qaeda formed a terror alliance in
the early 1990s. The attorneys cited their national security and intelligence experts, including Dr. Patrick Clawson, Dr.
Bruce Tefft, Clare Lopez, Kenneth Timmerman, Dr. Ronen Bergman, Edgar Adamson, and 9/11 Commission staff
members Dietrich Snell, Dr. Daniel Byman, and Janice Kephart, as well as the published writings of Robert Baer, to
explain how the pragmatic terror leaders overcame the Sunni-Shi'a divide in order to confront the U.S. (the "Great
Satan") and Israel (the "Lesser Satan"). Iran and Hezbollah then provided training to members of al Qaeda in, among
other things, the use of explosives to destroy large buildings. The Iran-Hezbollah-al Qaeda alliance led to terror strikes
against the U.S. at Khobar Towers, Saudi Arabia (1996), the simultaneous U.S. embassy bombings in Kenya and
Tanzania (1998), and the USS Cole (2000). Shortly after the Cole attack, Iran was facilitating the international travel of
the 9/11 hijackers.
"It was a wonderful day. A great day where the truth was finally revealed in a court of law with strong, strong evidence.
The judge allowed us to put on and present all the evidence that we had filed directly or under seal and he accepted it
and made a ruling in our favor," said Dennis Pantazis, one of the Havlish attorneys. "Now we go on to prove damages
for each one of the family members," he added.
The case is Fiona Havlish, et al v. Usama Bin Laden, et al, 03-CV-9848 (GBD), and is part of the consolidated
proceeding In Re Terrorist Attacks on September 11, 2001, Civil Action No. 03 MDL 1570 (GBD).
For full story information, background documents, and links to broadcast quality footage, including soundbites from
Havlish attorneys and plaintiffs, please visit the case website at http://www.Iran911case.com.
CONTACT:Thomas E. Mellon, Jr., Esq., +1-215-348-7700, Timothy B. Fleming, Esq, +1-202-263-3683, Dennis G.
Pantazis, Esq., +1-205-314-0500, Walter Batty, Esq., +1-610-544-6791
LOAD-DATE: December 23, 2011
LANGUAGE: ENGLISH
Copyright 2011 PR Newswire Europe Limited
All Rights Reserved
6 of 14 DOCUMENTS
African Press Organization
UK U.S. District Court Rules Iran Behind 9/11 Attacks

LENGTH: 1454 words
DATELINE: NEW YORK, December 23, 2011
answer."
- Ten expert witnesses including three former 9/11 Commission staff members,
two former CIA case officers, two investigative journalists, and an Iran analyst who
has testified in 25 cases involving Iranian terrorism.
- Three Iranian defectors who were operatives of MOIS and the IRGC. Witness X,
whose dramatic testimony was previously filed under seal, was revealed to be
Abolghasem Mesbahi, a former MOIS operative in charge of Iran's espionage operations
in Western Europe. Judge Daniels found that Mesbahi has testified in numerous
prosecutions of Iranian and Hezbollah terrorists, including the Mykonos case in
Germany and the AMIA case in Argentina, and found to be highly reliable and credible.
Judge Daniels also credited Mesbahi's testimony that he received messages during the
summer of 2001 from inside the Iranian government that an Iranian contingency plan for
unconventional warfare against the U.S. called "ShaitandarAtash" had been activated.
"This is compelling proof that Iran was deeply involved in the 9/11 conspiracy," said
Tim Fleming, lead investigative attorney for the Havlish group.
- Members of the 9/11 Commission staff testified that Iran aided the
hijackers by concealing their travel through Iran to access al Qaeda training camps in
Afghanistan. Iranian border inspectors refrained from stamping the passports of 8 to
10 of the 9/11 hijackers because evidence of travel through Iran would have prevented
the hijackers from obtaining visas at U.S. embassies abroad or gaining entry into the
United States. The 9/11 Commission Report addressed these facts and called for further
investigation. 9/11 Commission Report at pp. 240-41.
- Expert and U.S. government evidence also confirmed that Iran facilitated the
escape of al Qaeda leaders and members from the U.S. invasion of Afghanistan into Iran
and provided safe haven inside Iran after 9/11.
- Abolghasem Mesbahi testified he was part of an IRGC-MOIS task force that
designed contingency plans for unconventional warfare against the U.S., code-named
"Shaitan dar Atash" ("Satan in Flames") which included crashing hijacked passenger
airliners into the World Trade Center, the Pentagon, and the White House. During the
weeks before 9/11, Mesbahi received three coded messages from a source inside Iran's
government indicating that the Shaitan dar Atash plan had been activated.
- Mesbahi also testified that in 2000 Iran used front companies to obtain a
Boeing 757-767-777 flight simulator for training the terrorists. Due to U.S. trade
sanctions, Iran has never had any Boeing 757-767-777 aircraft, but all the airplanes
hijacked on 9/11 were Boeing 757 or 767 aircraft.
- A May 14, 2001 memorandum from inside the Iranian government demonstrating
that Iran's Supreme Leader, Ayatollah Khamenei, was aware of the impending attacks and
instructing intelligence operatives to restrict communications to existing contacts
with al Qaeda's Ayman al Zawahiri and Hizballah's Imad Mughniyah.
- Documents obtained from German federal prosecutors showing that 9/11
coordinator Ramzi Binalshihb traveled to Iran in January 2001 on his way to

Afghanistan to brief Osama bin Laden on the plot's progress.
- Evidence from the 9/11 Commission Report that a "senior Hezbollah operative,"
which the Havlish evidence identifies as Hezbollah terrorist chief Imad Mughniyah,
coordinated activities in Saudi Arabia and was present (or his associate) on flights
the hijackers took to and from Beirut and Iran. 9/11 Commission Report at pp. 240-41.
Mughniyah, a longtime agent of Iran, orchestrated a string of terror operations
against the U.S. and Israel during the 1980s and 1990s. He was assassinated in Syria
in February of 2008.
the 9/11 hijackers.
Havlish attorneys and plaintiffs, please visit the case website at http://www.Iran911case.com.
Thomas E. Mellon, Jr., Esq., +1-215-348-7700, Timothy B. Fleming, Esq, +1-202-263-3683, Dennis G. Pantazis, Esq.,
+1-205-314-0500, Walter Batty, Esq., +1-610-544-6791
LANGUAGE: ENGLISH
Copyright 2011 African Press Organization
All Rights Reserved
7 of 14 DOCUMENTS
PR Newswire

LENGTH: 1464 words
DATELINE: NEW YORK, Dec. 23, 2011
answer."
Ten expert witnesses including three former 9/11 Commission staff members, two former CIA case officers, two
investigative journalists, and an Iran analyst who has testified in 25 cases involving Iranian terrorism. Three Iranian
defectors who were operatives of MOIS and the IRGC. Witness X, whose dramatic testimony was previously filed
under seal, was revealed to be Abolghasem Mesbahi, a former MOIS operative in charge of Iran's espionage operations
in Western Europe. Judge Daniels found that Mesbahi has testified in numerous prosecutions of Iranian and Hezbollah
terrorists, including the Mykonos case in Germany and the AMIA case in Argentina, and found to be highly reliable and
credible. Judge Daniels also credited Mesbahi's testimony that he received messages during the summer of 2001 from
inside the Iranian government that an Iranian contingency plan for unconventional warfare against the U.S. called
"Shaitan dar Atash" had been activated. "This is compelling proof that Iran was deeply involved in the 9/11
conspiracy," said Tim Fleming, lead investigative attorney for the Havlish group.
Members of the 9/11 Commission staff testified that Iran aided the hijackers by concealing their travel through Iran to
access al Qaeda training camps in Afghanistan. Iranian border inspectors refrained from stamping the passports of 8 to
10 of the 9/11 hijackers because evidence of travel through Iran would have prevented the hijackers from obtaining
visas at U.S. embassies abroad or gaining entry into the United States. The 9/11 Commission Report addressed these
facts and called for further investigation. 9/11 Commission Report at pp. 240-41. Expert and U.S. government evidence
also confirmed that Iran facilitated the escape of al Qaeda leaders and members from the U.S. invasion of Afghanistan
into Iran and provided safe haven inside Iran after 9/11. Abolghasem Mesbahi testified he was part of an IRGC-MOIS
task force that designed contingency plans for unconventional warfare against the U.S., code-named "Shaitan dar Atash"
("Satan in Flames") which included crashing hijacked passenger airliners into the World Trade Center, the Pentagon,
and the White House. During the weeks before 9/11, Mesbahi received three coded messages from a source inside
Iran's government indicating that the Shaitan dar Atash plan had been activated. Mesbahi also testified that in 2000
Iran used front companies to obtain a Boeing 757-767-777 flight simulator for training the terrorists. Due to U.S. trade
sanctions, Iran has never had any Boeing 757-767-777 aircraft, but all the airplanes hijacked on 9/11 were Boeing 757
or 767 aircraft. A May 14, 2001 memorandum from inside the Iranian government demonstrating that Iran's Supreme
Leader, Ayatollah Khamenei, was aware of the impending attacks and instructing intelligence operatives to restrict
communications to existing contacts with al Qaeda's Ayman al Zawahiri and Hizballah's Imad Mughniyah. Documents
obtained from German federal prosecutors showing that 9/11 coordinator Ramzi Binalshihb traveled to Iran in January
2001 on his way to Afghanistan to brief Osama bin Laden on the plot's progress. Evidence from the 9/11 Commission
Report that a "senior Hezbollah operative," which the Havlish evidence identifies as Hezbollah terrorist chief Imad
Mughniyah, coordinated activities in Saudi Arabia and was present (or his associate) on flights the hijackers took to and
from Beirut and Iran. 9/11 Commission Report at pp. 240-41. Mughniyah, a longtime agent of Iran, orchestrated a
string of terror operations against the U.S. and Israel during the 1980s and 1990s. He was assassinated in Syria in
February of 2008.
the 9/11 hijackers.
Havlish attorneys and plaintiffs, please visit the case website at www.Iran911case.com.
SOURCE Mellon Webster & Shelly
CONTACT:Thomas E. Mellon, Jr., Esq., +1-215-348-7700, Timothy B. Fleming, Esq, +1-202-263-3683, Dennis G.
Pantazis, Esq., +1-205-314-0500, Walter Batty, Esq., +1-610-544-6791

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Copyright 2011 PR Newswire Association LLC
All Rights Reserved
8 of 14 DOCUMENTS
Daily News (New York)

April 2, 2014 Wednesday
SPORTS FINAL REPLATE EDITION
Vics seize Iran's bldg.

BYLINE: BY DANIEL BEEKMAN NEW YORK DAILY NEWS
SECTION: NEWS; Pg. 14
LENGTH: 170 words
TERRORISM VICTIMS are celebrating a concrete victory in their decades-long quest to hold Iran accountable for its
role in the 9/11 attacks and other atrocities.
They won the right last week to seize a $500 million Midtown office tower linked to Iran and are near a deal with the
feds to distribute the assets of the property, lawyers said.
"This is about all the families," said Fiona Havlish, whose husband, Donald Havlish, was killed in the World Trade
Center on 9/11. "There really is a light at the end of the tunnel."
The Iranian companies that own 650 Fifth Ave. (below) must forfeit the building to the victims, who hold billions of
dollars in judgments against Iran thanks to successful lawsuits over terrorism, Manhattan Federal Judge Katherine
Forrest ruled Friday.
The 9/11 victims staked claims to the 36-story tower at W. 52nd St. after Manhattan Federal Judge George Daniels, in a
2011 default judgment, said Iran was partly liable for 9/11 because it provided travel support to terrorists.
dbeekman@nydailynews.com
LOAD-DATE: April 2, 2014
LANGUAGE: ENGLISH
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PUBLICATION-TYPE: Newspaper
Copyright 2014 Daily News, L.P.
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Law360
http://www.law360.com/classaction/articles/677923
10 July 2015 Friday
646 words
Victims Want Iran's 9/11 Liability To Apply To Entire MDL Law360, Washington (July 10, 2015, 5:19 PM ET) -Insurance companies and family members of victims in multidistrict litigation over the 9/11 terrorist attacks asked a
New York federal court Thursda...
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Law360
http://www.law360.com/productliability/articles/677923
10 July 2015 Friday
646 words
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http://www.law360.com/newyork/articles/677923
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REP. MICHAEL G. FITZPATRICK HOLDS A HEARING ON THE IRAN NUCLEAR
DEAL AND ITS IMPACT ON TERRORISM FINANCING
July 22, 2015 Wednesday
EVENT DATE: July 22, 2015
TYPE: COMMITTEE HEARING
COMMITTEE: HOUSE COMMITTEE ON FINANCIAL SERVICES, SUBCOMMITTEE ON TASK FORCE TO
INVESTIGATE TERRORISM FINANCING
SPEAKER: REP. MICHAEL G. FITZPATRICK, CHAIRMAN
WITNESSES:
REP. MICHAEL G. FITZPATRICK, R-PA. CHAIRMAN
REP. STEPHEN F. LYNCH, D-MASS. RANKING MEMBER
REP. ROBERT PITTENGER, R-N.C.
REP. KYRSTEN SINEMA, D-ARIZ.
REP. ANN WAGNER, R-MO.
WITNESSES: ILAN BERMAN, VICE PRESIDENT, AMERICAN FOREIGN POLICY COUNCIL
MARK DUBOWITZ, EXECUTIVE DIRECTOR, FOUNDATION FOR DEFENSE OF DEMOCRACIES
STEVEN PERLES, SENIOR ATTORNEY AND FOUNDER, PERLES LAW FIRM, P.C.
OLLI HEINONEN, SENIOR FELLOW, BELFER CENTER FOR SCIENCE AND INTERNATIONAL AFFAIRS,
JOHN F. KENNEDY SCHOOL OF GOVERNMENT
RICHARD NEPHEW, PROGRAM DIRECTOR, ECONOMIC STATECRAFT, SANCTIONS AND ENERGY
MARKETS, CENTER ON GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY
REP. BRAD SHERMAN, D-CALIF.
REP. DENNIS A. ROSS, R-FLA.
REP. AL GREEN, D-TEXAS
REP. JIM HIMES, D-CONN.
REP. ED ROYCE, R-CALIF.
REP. KEITH ROTHFUS, R-PA.
REP. DAVID SCHWEIKERT, R-ARIZ.
REP. ROGER WILLIAMS, R-TEXAS
REP. FRENCH HILL, R-ARK.
TEXT:
FITZPATRICK: The Taskforce to Investigate Terrorism Financing will come to order. The title of today's taskforce
hearing is "The Iran Nuclear Deal and its Impact on Terrorism Financing."
Without objection, the chair is authorized to declare a recess of the taskforce at any time. Without objection, all
members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the
record. Without objection, members of the full committee who are not members of the taskforce may participate in
today's hearing for the purpose of making an opening statement or questioning the witnesses.
The chair now recognizes himself for three minutes for an opening statement.
Over the first several hearings of this taskforce members have heard foreign policy experts and others testify
regarding the pervasiveness of Iran's involvement in the financing and exporting of terror throughout the Middle East
and around the globe. We know that Iran is the leading state sponsor of terror, and as such, any diplomatic
engagements with Iran or understanding or agreements with them would be incomplete without a clear and full
understanding of these facts and its impact on the face of global terror financing.
Today's hearing will explore the recently announced nuclear agreement negotiated by the Obama administration and
the P5+1 nations with Iran -- specifically its impact on terrorism financing through and by Iran.
Most concerning to many members of this bipartisan taskforce is the easing of congressional sanctions and, with it,
the danger that a new influx of cash will find its way to terrorist organizations threatening to strike the United States of
America. It appears this agreement fails to address the reality surrounding Iran's sponsorship of terror while further
empowering its mullahs by infusing -- infusing billions of dollars into the economy through the lifting of sanctions that
successfully brought Iran to the negotiating table in the first place.
The Iranian regime has demonstrated a lack of concern about its own people, leaving in doubt the estimated $150
billion in funds currently held abroad will allow the Iranian economy to fully recover -- not to the benefit of the
oppressed citizens, but to the advantage of the next generation of terror syndicates.
A nation so deeply committed to promoting terror has lost its right to good-faith agreements. That is why over the
next two months members of both the House and the Senate will review the fine points of this agreement before voting
on it, the product of the bipartisan passage of H.R. 1191.
It is my hope that this hearing -- both the questions asked by the members and the testimony of our witnesses -provides vital information for Congress and the American people when looking over this nuclear deal. This agreement
will determine the future of our nation's foreign policy and the global balance of power. It is far more significant than a
presidential legacy or the political goals of any party and cannot -- cannot take place with an eye on the next election or
an ideological allegiance.
Republicans, Democrats, and Independents alike hold the power to turn back a bad deal, and I'm confident that this
taskforce, rooted in bipartisanship, will play an important role in the decision-making process.
This time I'd like to recognize the taskforce's ranking member, my colleague from Massachusetts, Mr. Lynch, for an
opening statement.
LYNCH: Thank you, Mr. Chairman.
I also want to thank our esteemed panel here for your willingness to help the committee with its work.
Last week Iran and the P5+1 -- which I hate using acronyms, but it includes the United States, the U.K., France,
Russia, China, and Germany -- finalized a Joint Comprehensive Plan of Action that attempts to ensure that Iran's
nuclear program can be used exclusively for peaceful purposes, and in exchange for a broad suspension of many U.S.,
European and United Nations sanctions. I'm pleased today -- that today's hearing will present our taskforce with the
opportunity to hear from experts with varying perspectives on that deal.
While there is no such thing as a perfect negotiation that leads to a perfect deal, I think that with proper -- proper
implementation and compliance there's a great deal of good in this deal. I -- I -- I cite section three of the deal, which -which I -- I find particularly comforting, and it says that "Iran reaffirms that under no circumstance will Iran ever seek,
develop, or acquire any nuclear weapons." Of course, in the next section it -- it -- the agreement guarantees that -- that
Iran will have the ability to develop a peaceful, energy-related nuclear industry.
In exchange for some sanctions relief primarily related to oil and banking and, as well, to -- of obtaining nuclear
weapons released for at least a decade, sanctions related to terrorism and human rights abuses will remain in place. I am
cautious but hopeful that we can make this deal work.
I believe there are still some questions that need to be answered. Of particular concern to our taskforce is how to
ensure that the approximately $100 billion in -- in frozen assets do not flow to terrorist organizations.
Now, the State Department has designated Iran as a state sponsor of terrorism since 1984 and notes that Iran
continues to support Hezbollah and the Assad regime in Syria, as well as Hamas, Islamic jihad, and others.
On the other hand, the multilayered sanctions imposed by the U.S. and its allies have weighed heavily on the Iranian
people. Treasury Secretary Jack Lew recently stated that the Iran -- that Iran's GDP sank -- shrank by 9 percent in the
two years ending in -- in March 2014 and is now 15 to 20 percent smaller than it would have been without the sanctions.
Iran's oil, coal, auto, aircraft, financial, and textile industries are reeling from U.S.-led sanctions. And due to the
embargo on aircraft components, visitors have regularly expressed dread at the prospect of flying within Iran because
of the woeful condition of their domestic airlines.
Iran's policies have brought isolation and few allies. Many experts view the election of President Hassan Rouhani,
the relative moderate candidate in that last election, as an expression of Iran's desire to move in a new direction.
Sanctions relief could provide an opportunity for -- for Iran to rebuild its economy, and invest in infrastructure, and
embracing that moderate future.
While the opportunity is here, the trust necessary to move forward is not. Fortunately, I believe this agreement does
not require us to place our trust in Iran.
Under the deal's terms and its road map for clarification on nuclear issues in Iran, this entire agreement hinges on
the adoption and implementation of a rigorous International Atomic Energy Agency inspection, monitoring, and
guidance procedure. Indeed, the agreement relies more on the IAEA inspectors -- and it's good to see Olli Heinonen
here, someone who knows a little bit about that -- than any other party, because in the absence of trust we will need the
IAEA's assurance that Iran will remain in compliance.
While we should move forward with care and every precaution for ourselves and for our allies, I believe we should
move forward.
Mr. Chairman, I yield back the balance of my time.
FITZPATRICK: Now recognize the vice chairman of the taskforce, Mr. Pittenger, for an opening statement for one
minute.
PITTENGER: Thank you, Mr. Chairman. Thank you for calling this meeting.
This agreement, without question, has the most grave outcomes of any agreement negotiated by this government.
Our allies in the Middle East, those whom I have met with countless times -- Prime Minister Netanyahu and other
leaders of the Arab world -- are gravely concerned with the outcome.
They know their neighbor. They know and have watched Iran over the last 35 years, as the greatest exponent (ph)
of terrorism.
Of course, each of us has concerns over the inspections, but clearly this body today is going to address the terrorism
financing capacities that they'll have with $100 billion. No less than National Security Advisor Susan Rice; General
Dunford, who is President Obama's nominee to be chairman of the Joint Chiefs, have expressed the same concerns that
this funding would be used for the purposes of building their military and terrorism financing.
So I look forward to our discussions today and thank you, Mr. Chairman, for calling this meeting.
FITZPATRICK: I now recognize the gentlelady from Arizona, Ms. Sinema, for an opening statement of two minutes.
SINEMA: Thank you, Chairman Fitzpatrick and Ranking Member Lynch, for holding this very important and timely
hearing.
A nuclear Iran is one of the greatest threats to the security of the United States and to peace and stability in the
Middle East. To support this deal the agreement must end Iran's nuclear weapons program and strengthen the safety
and security of both the United States and our allies in the Middle East.
This deal, if Iran does not cheat, prevents Iran from obtaining a nuclear weapon for 10 to 15 years. However, I
have several concerns about the deal's structure, planned execution, and broader implications.
Several question: Number one, is the United States confident in the success of the verification regime established
by this agreement? Number two, what is the exact timing of sanctions relief by the United States and the E.U., and once
these sanctions are removed and foreign investment floods into Iran, can we be confident that sanctions will snap back
into place if or when Iran cheats? Number three, what are the broader consequences of this agreement for our security
and regional stability, and how will an influx of billions of dollars affect the geopolitical balance in the Middle East?
Iran is the number one state sponsor of terrorism, and the current regime is a destabilizing force in the region.
Taking our most effective sanctions tools, the banking and energy sector sanctions, off the table could limit our ability to
counter Iranian aggression, stabilize the region, support our allies, and avoid military conflict.
Fundamentally, I seek to understand whether this deal prevents a nuclear Iran for 15 years with long-term positive
change in the region, or whether it could allow Iran to further destabilize the region using financial resources and new
non-nuclear weapons while becoming an empowered nuclear threshold state.
Over the next several weeks, Mr. Chairman, I know we'll all thoughtfully and thoroughly review these details of the
agreement, including the comments coming from Iran, and I want to thank the chairman and the ranking member for
holding today's hearing and thank our witnesses for coming to share their expertise views with us today.
Thank you.
FITZPATRICK: Gentlelady from Missouri, Ms. Wagner, is recognized for one minute.
WAGNER: Thank you, Mr. Chairman -- and thank you, Ranking Member -- for calling this timely meeting today and
hearing. We've just left our classified briefing, so it couldn't be more timely.
And I thank you, Mr. Chairman, for sounding the alarm about the mistake, I believe, of historic proportions agreed
to by the Obama administration last week in Vienna.
The president has agreed to far-reaching concessions in nearly every area that was supposed to prevent Iran from
acquiring a nuclear weapon. Under this deal, Iran would receive $100 billion to $150 billion in sanctions relief and
regain access to conventional arms and ballistic missiles that has been denied for nearly a decade.
Iran will be free to transfer these weapons, as has been stated, to Hezbollah, the Syrian government, Yemeni rebels,
and other terrorist groups. These organizations threaten the security of the United States, our ally Israel, and the world,
and will further destabilize a region already in crisis.
As Prime Minister Netanyahu said when visiting Congress earlier this year, "No deal is better than a bad deal." By
any measure, this is a bad deal, Mr. Chairman. Congress should show the world that America will not accept a nuclear
Iran.
I yield back and thank you.
FITZPATRICK: Gentlelady yields back.
We now welcome our witnesses.
Ilan Berman -- Ilan Berman is vice president of the American Foreign Policy Council. Mr. Berman has consulted
with the Central Intelligence Agency and the Department of Defense and provided assistance on foreign policy and
national security issues to a range of governmental agencies and congressional offices.
He's a member of the associated (ph) faculty at Missouri State University's Department of Defense and Strategic
Studies. He also serves as a columnist for Forbes.com, the Washington Times, and as editor of the Journal of
International Affairs.
Mark Dubowitz is executive director of the Foundation for Defense of Democracies and director of its Center on
Sanctions and Illicit Finance. He's an expert on sanctions and has testified before Congress and advised the
administration -- Congress and numerous foreign governments on Iran and sanctions issues. He holds a master's degree
in international public policy from Johns Hopkins University's School of Advanced International Studies and Law, and
an MBA degree from the University of Toronto.
Steven Perles is senior attorney and founder of the Perles Law Firm. Mr. Perles has handled a number of cases
before the United States Supreme Court, United States courts of appeals, and district courts across the country.
His litigation practice has included cases in the fields of Foreign Sovereign Immunities Act litigation. He has
lectured on the evolution of anti-terrorism civil litigation at conferences for national crime victims groups. He holds a
law degree from the William and Mary Law School.
Dr. -- Dr. Olli Heinonen is a senior fellow at the Belfer Center for Science and International Affairs at the Harvard
Kennedy School of Government. Before joining the Belfer Center in September of 2010, Dr. Heinonen served 27 years
at the International Atomic -- International Atomic Agency in Vienna.
Dr. Heinonen served as the deputy director general for the IAEA and head of its department of safeguards. Prior to
that, he was director at the agency's various operational divisions and was an inspector at the IAEA's office in Tokyo,
Japan. He studied radiochemistry and completed his Ph.D. dissertation in nuclear material analysis at the University of
Helsinki.
Dr. Richard Nephew is a program director of the economic statecraft, sanctions, and energy markets, Center on
Global Energy Policy at Columbia University. Prior to this position, Dr. Nephew served as the principal deputy
coordinator for sanctions policy at the Department of State.
He also served as the lead sanctions expert for the United States team negotiating with Iran. From May 2011 to
January 2013 he served as the director for Iran on the national security staff. He holds a master's degree in security
policy studies and a bachelor's in international affairs from George Washington University.
The witnesses will now be recognized for five minutes each to give an oral presentation of their written testimony.
Without objection, the witnesses' written statements will be made part of the record following their oral remarks. Once
the witnesses have finished presenting their testimony, each member of the taskforce will have five minutes within
which to ask the witnesses questions.
On your table there are three lights: green, yellow, and red. Yellow means you have one minute remaining, and red
means your time is up. The microphone is sensitive, so please be sure that you're speaking directly into it.
With that, Mr. Berman, you are now recognized for five minutes.
BERMAN: Thank you, sir. And thank you, Mr. Chairman, and Ranking Member Lynch, and distinguished members of
the taskforce, for the opportunity to be here today to speak to you on a truly critical issue.
There's a great deal to say about the Joint Comprehensive Plan of Action, as the new agreement with Iran is
formally called. I simply don't have the time to say it all, and on issues like verification and compliance, I think my
colleagues can acquit (ph) themselves much better than I.
So if I could, I'd like to devote my time to talking about one issue in particular, which is the threat potential of the
Iranian regime and how it will change and expand as a result of the JCPOA.
This relates directly to the question of sanctions relief because under the agreement the Islamic Republic is now
poised to receive massive economic stimulus in the very near future. Specifically, later this year -- or at the very latest,
early next year -- upon verification by the International Atomic Energy Agency that Iran has disclosed the requisite
details of military-related nuclear work, the U.S. will begin unblocking $100 billion to $150 billion of Iranian revenue
from oil sales that have been locked in escrow accounts in China, South Korea, and in other nations.
I think it's necessary to put this in context precisely because it is so large. In 2014 the U.S. government estimated
that Iran's total annual gross domestic product was $415 billion. So what we're talking about here is a quarter, roughly,
of Iran's annual GDP.
I think without -- with very little exaggeration what we're talking about here is a Marshall Plan for the Islamic
Republic -- the financial equivalent thereof. And while White House officials have expressed hope that the Iranian
regime will use these funds to focus internally -- to focus on domestic conditions, on improving the economic welfare of
ordinary Iranians -- it's necessary to point out that money is fungible and the -- an Iranian regime that has this kind of
economic stimulus package has an unprecedented financial windfall that will invariably translate into greater capability
in two areas.
The first area is terrorism. Several years ago the U.S. government publicly estimated that Iran had, quote, "a ninedigit line item in its budget for support of terror organizations," end quote. This included $100 million to -- to $200
million annually to Lebanon's Hezbollah, as much, potentially, as $25 million monthly to Hamas in the Palestinian
Authority, and the list goes on. And this assessment was made at a time when Iran was subject to stringent
international sanctions and there was no financial relief for the Islamic Republic in sight.
Today the situation is very different. The resources at Iran's disposal in this area are poised to expand
exponentially. And as a result, what you see is a much greater potential on the part of Iran to translate its financial
windfall into a financial windfall for its proxies.
The second issue of -- of particular concern to me is the question of Iranian regime expansionism. The Iranian
regime possesses a distinct manifest destiny. Ideologically, it talks about itself as the center, geopolitically, of the
Middle East.
And it has launched -- even in absence of sanctions relief it has launched an ambitious effort to expand its influence
globally, but in particular in the Middle East. What this looks like in practice is a massive investment in propping up the
Assad regime in Syria, which has been estimated to cost the Iranian regime something like $6 billion or more annually.
The Iranians have provided extensive military and economic backing for Yemen's Houthi rebels. And primarily,
although not exclusively, but primarily because of Iran's assistance, the Houthis have managed to change
fundamentally the power dynamic in that country, and Iran has become a key power broker in Yemen's future.
And the same holds true in Iraq, where Iran already possesses extensive political influence. The current fight
against the Islamic State terrorist group and the disarray of Iraqi politics has allowed Iran, through both economic and
military and financial means, to expand its ambit still further.
So what should we expect here? The Iranian leadership already believes that it has an unprecedented opportunity to
dominate the region. The Iran supreme leader, Ali Khamenei, said as much in September of 2014 when he declared
publicly that the power of the West on their two foundations, values and thoughts, and the -- and the political and
military have become shaky and could be subverted.
Now, with the conclusion of the nuclear deal, Iran is poised to have greater resources to accomplish this than ever
before. And this gets us to the question of what we expect.
The White House has said in public that this deal is merely transactional. It's focused strictly on the nuclear issue
and doesn't touch on other issues, including Iran's support for terrorism.
But both in scope and in duration and, frankly, in its material minutia, what you see is a deal that's aspirational. It is
one that hopes that the Iranian regime will, as a result, turn over a new ideological leaf.
But this is not how the deal -- how the framework agreement is being read in Tehran. As the Iranian supreme leader
himself said several days ago, Iran remains steadfast in its opposition of the United States as well as its efforts to
reshape the region in its own image.
So what we end up with is a situation where although Iranian belligerency remains unabated, the Iranian regime,
through the JCPOA, now has dramatically greater financial tools to accomplish its goals.
Thank you.
FITZPATRICK: Mr. Dubowitz, you are now recognized for one minute.
DUBOWITZ: Great. Thank you...
FITZPATRICK: Five minutes.
DUBOWITZ: ... Chairman Fitzpatrick, Ranking Member Lynch. On behalf of the Foundation for Defense of
Democracies and Center on Sanctions and Illicit Finance, it's an honor to testify before you and your taskforce and an
honor to be testifying with these distinguished experts.
I want to focus on the Revolutionary Guard Corps, or the IRGC, which I think is the major beneficiary of this
nuclear deal. And this nuclear deal itself is -- is fundamentally flawed in its both design and architecture.
As a result of these artificial sunset provisions, the IRGC, in fact, which controls Iran's nuclear and ballistic missile
programs, has patient (ph) multiple pathways to developing nuclear weapons and regional power. Again, as long as it's
patient and faithfully complies with the agreement, Iran, over time, will develop an industrial-sized nuclear program
with a near-zero breakout, an advanced-centrifuge-powered sneak-out pathway, and multiple heavy- water reactors.
Iran will be able to buy and sell heavy weaponry with the expiration of the arms embargo. Iran will also be able to
develop long-range ballistic missiles, including an ICBM. And let's be clear that most of the economic sanctions are
being dismantled, unlike the nuclear program.
Now, I'm focusing on the Revolutionary Guards, again, because they are the major beneficiary.
And -- and, Mr. Chairman, last spring FDD provided the U.S. and U.K. governments with a database of 1,290 IRGC
companies and individuals. The full lists are in my testimony; I'd ask them to be please entered into the record.
After 16 months, the U.S. has not sanctioned any of these IRGC entities or individuals. And the non-listing of these
entities provides the IRGC with economic benefits and the ability to operate without restrictions.
So the IRGC stands to benefit even more now because of the JCPOA. The deal requires the U.S. and Europe to
remove numerous IRGC-linked entities from their sanctions lists, including the most important terrorism finance and
money-laundering facilitator, the Central Bank of Iran.
Most Iranian banks, including some IRGC-controlled banks, will be permitted back onto the SWIFT financial
messaging system, given Iran's most dangerous actors access to the global financial system. This is deeply troubling
because the IRGC -- again, the most dangerous actor in Iran -- controls at least one-sixth of Iran's economy, including
major strategic sectors.
Now, these de-listings are a direct challenge to the conduct- based nature of the sanctions regime imposed by the
Obama and Bush administrations. Those sanctions were designed to target the full range of Iran's illicit activities and
not just Iran's nuclear program. And they were also designed, according to Treasury officials, to protect the integrity of
the U.S. financial system.
This was made clear when Treasury issued a finding under section 311 of the USA PATRIOT Act which found that
Iran's financial sector, including its Central Bank, was, quote, "a jurisdiction of primary money-laundering concern."
Treasury cited Iran's, quote, "support for terrorism," and the use of deceptive financial practices.
In short, the entire country's financial system, quote/unquote, "posed illicit (ph) financial risks for the global
financial system." Internationally, the Financial Action Taskforce confirmed these terror-financing and moneylaundering risks.
Though the 311 was conduct-based, this agreement now calls for sanctions relief without a demonstrable change in
Iran's behavior. This mass de-listing includes nearly 650 entities, many involved in Iran's nuclear and ballistic missile
programs.
More than 67 percent are going to be de-listed from Treasury's black lists within 12 months. After eight years, only
a quarter will remain on our lists.
In eight years the U.S. and the European Union will lift sanctions on Abbasi -- on Abbasi-Davani and Mohsen
Fakhrizadeh -- they are the Robert Oppenheimer and A.Q. Khan of Iran's nuclear weapons development; and Gerhard
Visser (ph), who actually ran -- helped run A.Q. Khan's proliferation network. The E.U. will also lift its nuclear
sanctions on notorious Quds Force commander, Qassem Soleimani, though he will remain on the E.U.'s terrorism list
for now.
The deal lifts U.S. sanctions on 47 Iranian banks designated for proliferation, nuclear and ballistic missile activity,
or for providing financial services to other de-listed entities. They're all going to get back onto the SWIFT financial
messaging system.
Now, the White House assures us they have a snapback mechanism -- more that they can impose non-nuclear
sanctions, like terrorism. But the agreement itself notes that Iran may walk away from the deal and its nuclear
commitments if new sanctions are imposed. The agreement also contains an explicit requirement for the European
Union and the United States to not interfere with trade and economic relations with Iran.
So Iran can use these provisions to argue that the reimposition of sanctions, even if implemented on terrorism
grounds, is a violation of the agreement. Iran will threaten to return to its nuclear program, and this gives Iran an
effective nuclear snapback -- much more powerful than our economic snapback -- to -- to intimidate the United States,
and especially Europe, from reinstating sanctions.
Now, Ilan has talked about the hundreds of billions of dollars that are going to go back to Iran, and with Iran back
on the SWIFT system and its banks reintegrated into the formal financial system, halting the flow of these funds to bad
actors will be challenging.
In short, Congress should require the White House to renegotiation and resubmit an amended deal for congressional
review that addresses these weaknesses, including the snapbacks and sunsets, which are dangerous design flaws of the
agreement.
Mr. Chairman, I'm happy to share some of the other recommendations in my testimony during Q&A. Hopefully this
is a good start. And thank you for the opportunity to testify.
FITZPATRICK: Thank you.
Mr. Perles, you're now recognized for five minutes.
PERLES: Thank you very much.
Mr. Chairman, Ranking Member Lynch, Mr. Pittenger, thank you again for the invitation and the honor to testify
before you today.
Over the last 20 or 30 years my law firm has probably represented and reconstructed terrorist attacks involving the
death or personal injuries to U.S. nationals and perhaps the rest of the private bar combined. We have extensive
experience reconstructing and then litigating these matters against countries like Libya, Syria, Iran, and the Sudan.
Our litigation portfolio currently valued at about $17 billion. During the course of that period we have separated
roughly half a billion dollars from the material supporters or financiers of these attacks, and we currently hold $1.9
billion of Iranian assets that were illicitly invested in New York in our trust account awaiting final court orders so that
they can be distributed to various clients.
I was asked to testify for a very explicit and narrow question of expertise. In my view, my opinion, will the release
of $100 billion to Iran result in an increase in Iran's funding of terrorist organizations, resulting in the future deaths
and personal injuries of United States nationals?
I think, based on Iran's behavior that I've looked at since 1979, the answer to that question is, inevitably, yes, there
will be increase -- substantial increase in funding for those organizations, and they will target U.S. nationals.
You know, in a -- in a perverse way of -- of looking at this, Secretary Kerry's next objective in the world diplomatic
arena is the Palestinian peace process. If you study, as -- as we have, because of our client portfolio, the Oslo Peace
Accords, which were negotiated in the mid-1990s, you come to the inevitable conclusion that there was real peace in the
Middle East at the conclusion of Oslo and that the Iranians could not tolerate peace in the Middle East. It's not
consistent with their foreign policy view of how the Middle East should be mapped.
Being unable to tolerate peace in the Middle East, the Iranians sponsored a bus-bombing campaign designed to
destroy the Oslo Peace Process, intentionally targeting American students in Israel. The most famous of these is Alisa
Flatow, of New Jersey; and other students like Matt Eisenfeld, of Connecticut; and Sarah Duker, also of New Jersey.
Alisa Flatow happened to be the first American student killed in an Iranian-sponsored bus bombing intended to destroy
the Oslo Peace Process.
You see Iran engaging in the same kinds of conducts even earlier, back into the 1980s.
The last time the United States entered into this kind of agreement with the Iranians was 1981. It -- that agreement
is known as the Algiers Accords. It resolved and resulted in the release of what are -- people who are called the Tehran
hostages. These are the American diplomats who were held captive in Iran for more than 400 days.
And look at the result, again, through -- through my optic. That agreement was executed in 1981. Thirty-one
months later the Islamic Republic of Iran detonated the largest non-nuclear device ever -- ever exploded, resulting in
the deaths of 241 U.S. servicemen in Beirut.
Those service families are our clients. The $1.9 billion that we hold in our trust account, if this agreement does not
interfere with that distribution, will -- should be distributed to those families sometime this fall.
You know, one country that we have completed the cycle for in this country and this kind of litigation is Libya. You
know, Moammar Gadhafi engaged in a series of bombing campaigns against the United States and U.S. interests in the
late 1980s, including the downing of Lockerbie and the La Belle discotheque bombing, the La Belle victims being our
client.
We separated collectively -- and I am including the work that other law firms did for Lockerbie -- roughly $3 billion
-- something in excess of $3 billion in reparations from -- from Mr. Gadhafi that were distributed to American victims.
I dare say, in retrospect, if Mr. Gadhafi had known in the late 1980s that his bombing campaign was going to result in
his having to cough up $3 billion to his American victims he would have found some other way to be obstreperous. He
would not have engaged in that bombing campaign.
I think that the litigation that Congress has authorized American victims of state-sponsored terrorism to engage in
serves a -- a real national security purpose. There is no amount of money that will help compensate a family for the loss
of their loved ones; the purpose of the litigation is deterrence.
Thank you.
FITZPATRICK: Thank you. Thank you, Mr. Perles.
PERLES: And I apologize for running over.
FITZPATRICK: No, and we'll have an opportunity in the Q&A to get -- to get further into that issue.
Dr. Heinonen, you're now recognized for five minutes.
HEINONEN: Thank you, Chairman Fitzpatrick, Ranking Member Lynch, and distinguished members of the taskforce,
for giving me this opportunity to address one of the most crucial issues in front of us today, which is the Iranian nuclear
deal.
In my testimony I will focus on the verification aspects of the Joint Plan of Action. But in my remarks I am also
mindful that the reference to the road map agreed between the IAEA and Iran -- while it's publicly available, it has
secret attachments which have not been able -- available to me when I made my testimony and statement.
Iran will retain a sizable nuclear program with its supporting nuclear infrastructure. In technical terms, Iran has
not changed its nuclear course. It will maintain substantial uranium enrichment capacity, and it's permitted to expand it
after 10 years without having technical or economical needs to do so.
In addition, implementation of the additional protocol remains provisional until the time when the IAEA has reached
a broader conclusion on the peaceful nature of Iran's nuclear program.
This contradicts current IAEA practices. Such conclusions have only been drawn by the IAEA when the additional
protocol is in force and ratified. This is not a matter easily to dismiss, as we need to be mindful of potential
complications down the road should Iran seek to leverage, pull back, or dilute some of its obligation at some point in
time under its provisions status.
Verification in Iran involves implementation of safeguards agreement, additional protocol, additional transparency
measures agreed by Iran, and the IAEA-Iran road map. The sum of these parts is to block or at least to delay all
pathways for Iran to get a bomb.
Our assessments should focus on whether the verification provisions measure up to this goal and look at the JPOA's
(sic) strengths, limitations, and challenges that it could face. We also need to ask ourselves what measures are in place
that will prevent slippage or account for changing circumstances.
In light of my previous testimonies, I only take (ph) now some salient points.
JCOPA (sic) has, from the verification point of view, strong points but also vulnerabilities. With additional access to
Iran's nuclear facilities, introduction of modern monitoring tools to track nuclear material from cradle to grave, the
IAEA will be able to detect and report in a timely manner any substantial diversion of declared nuclear material at
declared facilities. The measures will also provide a high level of confidence that larger declared facilities, such as
Natanz or the conversion facility in Esfahan, are not used to process undeclared nuclear materials.
At the same time, we know that nuclear proliferation cases of the past have opted not to divert declared nuclear
material, but used undeclared nuclear material or undeclared facilities. To this end, JCPOA could have had included
stronger provisions.
The first one is the expanded declaration. As I have pointed in my previous testimonies, a complete declaration of
all Iran's nuclear activities, including the past ones -- for example, status of equipment and materials from dismantled
installations -- would be an important set for a credible baseline for monitoring and verification.
This is particularly significant since Iran's nuclear program has been subject to several changes, has grown
substantially since Iran stopped its provisional additional protocol implementation at the end of 2005.
Access to undeclared and suspected sites: The JCPO (sic) provides a dispute settlement mechanism, should Iran
refuse to cooperate or challenges the IAEA request. There are (ph), however, concerns that matter.
One example is the mechanism by which information and evidence is provided that would compromise sources of
intelligence and gives for Iran opportunity to take countermeasures to buy time erase evidence.
Timeliness of access also matters. The comprehensive safeguards agreement in 1972, negotiated by IAEA board of
governors, has a provision that the IAEA board can (inaudible) and access to nuclear installation if it believes that the
information gets compromised even during the arbitration process.
Terms of the settlement time, 24 days do not cover credibly all plausible scenarios. It is clear that a facility of
sizable scale cannot be simple erased in three weeks without leaving traces. But likely scenarios involved here would
be small-scale, which would be critical to the weapon manufacturing process, such as manufacturing of uranium
components for a nuclear weapon.
A 24-day adjudicated timeline reduces detection probabilities exactly where the system is weakest: detecting
undeclared facilities, materials, and keeping in mind the breakout times.
Then I have some additional remarks with regard of the manufacturing of centrifuges, possible military dimensions,
noting that IAEA has to provide a report by mid-December. I don't think that this will be a complete (inaudible) report,
which will put the PMD issue rest since IAEA will not have time to do all the investigations according to its prevailing
standards.
And then I (ph) also draw your attention to couple of other things. I think it will be very difficult to use IAEA
American staff on these inspections in next few years in Iran, which I see a deficiency (ph) because U.S. citizens will
bring extra skills which the IAEA otherwise doesn't have, and then on top of that, the IAEA has to, I think, issue a little
bit more transparent reports.
HEINONEN: Thank you.
FITZPATRICK: Thank you, Dr. Heinonen, for your testimony.
Mr. Nephew, you're now recognized for five minutes.
NEPHEW: Thank you, Chairman Fitzpatrick, Ranking Member Lynch, and other members of this taskforce, for
inviting me to speak today. It is an honor to speak to you in my first formal testimony before Congress.
I would like to begin by extending my personal gratitude to the members of the U.S. negotiating team. Regardless
of how one evaluates this deal, we are all most fortunate that this country produced dedicated diplomats, civil servants,
and experts, like those who worked on this deal.
In my opinion, the deal that they negotiated is a very good one, especially compared to the most realistic
alternatives, and any negative consequences can be managed.
The deal reached satisfies the two most important U.S. national security objectives for Iran's nuclear program: one,
lengthening the time that Iran would need to produce enough nuclear material for one nuclear weapon; and two,
ensuring that any such attempt could be quickly detected.
With respect to breakout time, the deal delivers, giving us years before we have a uranium breakout timeline shorter
than a year. For plutonium, breakout can be measured in decades.
Breakout is not the sole measure of a deal. But compared to the status quo -- two to three months to breakout for
uranium, with one to two weapons' worth of plutonium being produced per year at Arak -- we are far better off with the
deal than without it.
Further, with the transparency steps that Iran has accepted, both breakout and any attempt at a covert path will be
easier to detect quickly. Some of these authorities will remain in effect for 20 to 25 years, while Iran's obligations to
the IAEA under its standard treaties will continue in perpetuity.

Even some skeptics may agree that within a 10 to 15-year band of time the deal may work as designed but that the
sunsets present an irreconcilable problem. I disagree that this concern is worth killing the deal.
The argument against sunset presupposes either that there is no point in time in which Iran could be trusted with a
nuclear weapon -- or nuclear program, requiring regime change, or that negotiations could possibly have delivered a
longer sunset. Having been in the room, I believe the length is as long as was achievable.
And in any event, after key restrictions lapse the United States is also free to declare that Iran's nuclear program
remains a concern. Getting international support to do something about it will require effective diplomacy, but it is an
option for a future president.
The other major complaint is that it provides Iran with far too much sanctions relief and that the practical effect of
increasing trade with Iran will render snapback ineffective.
First, it is a blunt reality that Iran was not going to accept major restrictions and invasive monitoring on the cheap.
The administration did the right thing in leveraging sanctions relief for maximum early nuclear steps. Iran is now
under every incentive to take the steps required of it as soon as possible, which the IAEA will verify before Iran gets an
extra dollar.
Of course, the sanctions relief provided by the United States does not equate with unilateral sanctions disarmament.
The United States retains a number of sanctions authorities that will continue to exact consequences for Iranian
violations of human rights and damage Iran's ability to engage in terrorism financing, though I personally believe fears
about the extent of new Iranian spending in this regard are overblown and, according to the L.A. Times anyway, so does
the CIA.
But foremost of our tools remains secondary sanctions. The United States will still be able to pressure banks and
companies into not doing business with the IRGC, the Quds Force, Qassem Soleimani, and Iran's military and missile
forces.
Even if the E.U. and U.N. remove some of these from their lists, these bad actors in Iran generally will find
business stymied until they correct their own behavior in the eyes of the United States. This is both due to the direct risk
of U.S. sanctions and the improvement in international banking practices since 9/11, a bipartisan effort begun under
George Bush and continued under Barack Obama.
The United States will also retain its ability to impose sanctions on those trading with Iran in conventional arms, as
well as with respect to ballistic missiles, even after U.N. restrictions lapse. The United States can also trigger snapback
of existing sanctions.
Even just one JCPOA participant can trigger UNSC review and a vote on a U.N. Security Council resolution to
continue with relief. U.S. veto power in the UNSC gives us the ultimate free hand to reimpose these sanctions.
This could come with political costs, and many skeptics point to these costs as likely, meaning that no such
snapback would ever be triggered. But international reaction to U.S. actions will always depend on the context. If the
rationale for doing so is credible then chances for success will always be higher.
Iran, too, would have much to lose if snapback were to be triggered. The description of the deal as a Marshall Plan
is an exaggeration, except that Iran needs the sort of domestic investment that it would provide due to damage from
sanctions.
Iran's leaders would therefore have to carefully evaluate the costs and benefits of any course of action that threatens
the integrity of the nuclear deal. These costs will grow as Iran's economy grows.
Some may see this as resilience, and I see it as Iran having more to lose.
To conclude, though it is not a perfect deal I believe that the nuclear deal reached by the United States, its P5+1
partners, and Iran, meets our needs and preserves our future options. Like the Algiers Accord, it is necessary even if it
will have consequences which must be managed, and I urge Congress to make the right choice and support this deal.
Thank you.
FITZPATRICK: We thank the witnesses for their testimony. And each of the members of the taskforce will be given
five minutes now to -- to question the witnesses.

I'll recognize myself for five minutes, and I'll first ask Mr. Berman and Mr. Dubowitz if you could respond to the
statement recently of National Security Advisor Susan Rice, who suggested -- admitted, I guess -- that some portion of
the $150 billion that will accrue back to the Islamic Republic of Iran as part of the sanctions relief could be or would be
spent to support international terrorism. So the question is to what extent you believe that these -- and -- and again,
$150 billion is an estimate, but -- but to what extent do you believe that any of these funds would be used to enhance the
capabilities of their terrorist proxies, including Hezbollah, including the Houthi rebels that were mentioned earlier today
in Yemen, to bring terror not just to the region but to American citizens?
BERMAN: Thank you, sir. So I think the best way to illustrate the concerns that I have with regard to the fungible
nature of the money that Iran will get is to harken back to the experience that the U.S. Congress and the U.S.
government had with post-Soviet Russia in the 1990s. During that decade we implemented a program called
Cooperative Threat Reduction, colloquially known as Nunn-Lugar, to help the post-Soviet Russian Federation dismantle
both conventional and unconventional weaponry, including ballistic missiles.
The investment at the time -- and -- and I believe it was somewhere on the order of $600 million -- was intended to
widen the pie, so to speak, with regard to Russia's ability to execute dismantlement that it needed to do anyway. That
was at least the rationale that was given.
What was discovered belatedly was that the Russian government had allocated a certain percentage of its defense
budget for this dismantlement, and an infusion of American cash was not sufficient to widen the pie. Rather, that money
was used for other things, including a revival of the Russian bioweapons program in the late 1990s.
I think the same concern is germane here. The sanctions relief -- and the scope is, indeed, enormous. It's certainly
not a Marshall Plan of the 1940s, which was $800 billion for all of Europe, but $100 billion for one individual country
is still an awfully large sum of money.
There is that concern that that money will -- even if it's spent overwhelmingly on domestic affairs -- will free up
other dollars that will be spent on terror, perhaps significantly so.
FITZPATRICK: Mr. Berman, do you concur?
DUBOWITZ: Mr. Dubowitz. Yeah, I -- I -- I do...
FITZPATRICK: Mr. Dubowitz. I'm sorry.
DUBOWITZ: ... concur with Mr. Berman.
I think we also need to talk about economic relief. It's much more than $100 billion; it's much more than $150
billion. We're talking about economic relief that will allow Iran to sell 2.5 million barrels a day, which will increase its
-- its revenues about $15 billion to $20 billion a year; opens up its auto sector, which is -- represents about 10 percent of
the GDP of Iran; its petrochemical sector. We're talking about hundreds and hundreds of billions of dollars over time.
You know, I agree with Mr. Berman and I agree with Mr. Nephew. I don't think Iran is going to spend all of its
money on terrorism. Iran will spend some of its money on terrorism.
And a small percentage of hundreds and hundreds of billions of dollars means that Iran can keep Bashar Assad in
power for more time. It costs Iran about $6 billion a year, according to the U.S. special envoy on Syria, to keep Bashar
Assad in power, not to mention the hundreds of millions of dollars available for Hezbollah and other terrorist
organizations.
But picking up on a point that Mr. Nephew made, the problem is Iran is also going to spend its money on its
economy -- and not just on growth and diminishing unemployment, but on economic resiliency. See, the -- the Iranians
learned from 2012-2013, when we were hitting them with asymmetric shocks to their economy that plunged them into a
severe recession. They don't want to be in a situation again where their economy is fragile.
So they will keep substantial foreign exchange reserves in place and build up the kind of resilience they need down
the line, so then when we try to snap back our sanctions it will not have the kind of asymmetric impact that it had on
Iran at that time.
Economic resiliency is their rainy-day fund. That's what they're thinking of down the line when they have an
industrial-sized nuclear program with near-zero breakout and we try to use economic leverage in the future to peacefully
enforce the deal.

I believe we will diminish our peaceful enforcement of this deal and we will leave the future president with two
options: accept an Iranian nuclear weapon, or use military force to forestall that possibility, which is why this deal
makes war more likely, and when that war comes, Iran will be stronger and the consequences will be more severe.
Mr. Perles, briefly, if you can, the Beirut barracks bombing, 1983 -- many of those Marines were residents of the
Commonwealth of Pennsylvania, some of their families constituents of mine. They have an open judgment against
Iran for their connection. How do we bring closure to families like those?
PERLES: Two-track process, sir.
First, we have this $1.9 billion of illicit Iranian funds that we captured in New York. That money is almost ready for
distribution. The Supreme Court has solicited the views of the solicitor general of the United States with respect to the
underlying statute that Congress passed to help us get at those funds.
The statute is facially constitutional. If the committee could assure that the solicitor general promptly issues its
statement of interest to the court affirming the constitutionality of that statute we should be able to proceed with
releasing those funds this fall.
PERLES: Second issue, and -- and one that is far more serious from the -- from its implications, are what are referred
to as movement of funds by book entry. That process can -- can simply be described as if you have a billion dollars in a
bank account in New York, and one day it's owned by a commercial company and the next day that billion dollars
belongs to the Islamic Republic of Iran, but instead of moving money by SWIFT back and forth you simply keep track
of who's earning the benefit of that money by a book entry sitting in a bank in Luxembourg. You are able to entirely
avoid sanctions.
FITZPATRICK: Mr. Perles, I'm -- I'm out of time. Maybe we can get back to this in the second round of questioning
if that's possible.
But I want to recognize the ranking member of the taskforce, Mr. Lynch, for five minutes.
And again, thank you to all of our witnesses.
Professor Heinonen, you've actually, in -- in the past, been an IAEA inspector. Is that correct?
HEINONEN: That's true.
LYNCH: OK. And from my earlier conversations -- and -- and I, again, thank you for your -- your willingness to -- to
help the committee -- you -- you indicated that you've been on the ground in Iran previously with -- with inspection
responsibilities. Is that correct?
HEINONEN: Yes, true.
LYNCH: OK. Can you tell me a little about that? How long -- how long were you there in Iran?
HEINONEN: Actually, I have not never counted the number of days I spent...
LYNCH: OK.
HEINONEN: ... but I -- I went there first time, actually, in 1986, and it was a very different Iran.
LYNCH: When's the last time you were in Iran?
HEINONEN: 2009.
LYNCH: OK. So you had a chance to see how the -- the -- the inspection protocols work, and I guess to try to simplify
it for -- for people, on a scale of one to 10 -- let's say one is -- is -- is that the agreement is worthless, OK, and -- and -and 10 means the agreement provides absolute security -- where along the spectrum -- you've had a chance to read this
agreement now and -- and -- and sift through this and try to figure out what the -- what the inspection protocols and
monitoring would provide. Where along that spectrum do you think you would -- you would -- on a scale of one to 10,
what's the value of this agreement, in your estimation?
I'm trying to simplify. I'm sorry, but it's the best we can do.
HEINONEN: Yeah. It's a little bit difficult to give the rating yet because there are few aspects of this agreement which
I don't know, like, you know, what is the real agreement between Iran and IAEA on this possible military dimension.
LYNCH: The PDM?
HEINONEN: PDM. So that's a little bit unknown here. And this is then to do with setting of the baseline for the
monitoring (ph).
LYNCH: Right.
HEINONEN: And then there are certain answer that is also, I think, still in the text with regard of the past activities on
Iran, and that's why I urge that baseline there.
LYNCH: Right.
HEINONEN: If you have a poor baseline then your verification system will get compromised. But with -- with the...
LYNCH: Providing we get that...
HEINONEN: ... information available today, I would rate it, perhaps, one to 10, maybe seven, eight.
LYNCH: OK. Seven or eight.
HEINONEN: Not higher.
LYNCH: OK. I appreciate that.
Mr. Nephew, I noticed that in the agreement that there -- there are carve-outs here. If you look at the -- if you look
at the sanctions that are provided with relief, they're almost exclusively regarding nuclear activity. There are sanctions
that were put in place because of past nuclear activity and nuclear research, uranium enrichment, things like that, that
Congress and the U.N. and the E.U. and -- and the president of the United States have put in because of nuclear activity.
I don't see any lifting of sanctions regarding terrorism or -- or -- or funding. And -- and look, no question about it,
Iran has -- has funded Hezbollah, has funded -- not Al Qaida -- they're -- they're Shia -- they're Sunni, rather -- but has
funded Hamas, has funded the Islamic jihad and others. So I'm not -- I'm not -- I'm not coating that over in any sense.
But the agreement is focused on the nuclear activity and not on the -- the so-called terrorist funding activity. Is that
correct?
NEPHEW: Yes, sir. That's correct.
LYNCH: Is there anything to stop us from maintaining the -- the -- I had a chance to talk to Mr. Zubik (sic) over at
Treasury, who -- who sort of rides herd on all of these financial sanctions, and he tells me that they're -- they're going to
stay in place. Is that your understanding?
NEPHEW: Yes, sir. That's my understanding.
LYNCH: OK. And would anything in this agreement stop us from -- you know, if -- if we saw money going to, you
know, from -- from the Central Bank to any of these groups we could -- we could put sanctions in place against the
Central Bank of Iran if we saw further violations of terrorist financing provisions?
NEPHEW: Yes, sir. That's a possibility.
I -- I think the big issue at that point will be what the Iranian response would be to that. I mean, they have the
ability to say that they think that that kind of sanction would violate the terms of the deal because it would imperil the
rest of their relief. But we have not ceded any ability whatsoever to impose sanctions with respect to our terrorism,
human rights, or other related authorities that are outside of the nuclear arena.
LYNCH: OK. Thank you.
I've got six seconds left. I'll just yield back my time.
Thank you, Mr. Chairman.

FITZPATRICK: Now recognize the vice chairman, Mr. Pittenger, for five minutes.
PITTENGER: Thank you, Mr. Chairman.
Mr. Perles, you stated in your testimony that the representation of victims for you and -- and your legal group has
enabled $1.9 billion.
PERLES: Yes, sir.
PITTENGER: You know, given that, you said that that would be a deterrent toward future actions, considering
Gadhafi and the bombings of Lockerbie and La Belle, that perhaps he would be thinking about future efforts. With that
in mind, with the -- with this agreement it appears what we've done on these cases with these victims, it would basically
wipe out this agreement, resulting that these funds would no longer be accessible.
Is -- is that of concern to you, that -- that they would not be able to receive the judgments repatriated back to them
and have it be accessible?
PERLES: It's a serious concern to us. As -- as I said to Mr. Fitzpatrick, it would be very helpful if the committee could
assure that the -- speaking, again, for the Beirut Marine barracks bombing families -- that that $1.9 billion remained
available as an asset. You know, those funds are no longer with the Islamic Republic of Iran...
PITTENGER: Future funds won't be accessible if -- in the case of...
PERLES: Future funds could be a -- future funds could be a very serious problem. There are no future funds currently
in the United States. Were we to go out and try and reach funds outside the United States -- and we are trying to do that
currently in Italy -- I can tell you that we have not received a warm reception overseas from governments that like to
trade with the Iranians.
In our enforcement activities for the Flatow, Eisenfeld, and Duker case in Italy, where I suspect a lot of this $100
billion will go, as they're Iran's largest trading partner in the E.U., the Italian foreign ministry has formally entered our
proceeding against the Iranians in objection to our domestication of the Flatow, Eisenfeld, and Duker terror victim
judgments in Italy. If the Italian courts abide by the request of their foreign ministry, essentially these judgments
become non-entities in -- in Italy and probably the rest of the European Union.
PITTENGER: Thank you for that.
Mr. Dubowitz and Mr. Berman, we have provided -- repatriated back to Iran $700 million a month for the last 16
months, $12 billion. We certainly see their footprint throughout the Middle East in Yemen, and Syria, and Iraq.
Now they're going to have access to substantially more money than that. It will be an enormous challenge for FATF
and our Treasury, working with other governments, to track these funds as they go through the financial system -through the 47 financial institutions there in -- in Iran, and -- and -- and their capacity through money- laundering.
What advice or -- where do you think we should go? Given that this could very well be the case, what do you
recommend we could do to enhance the role of -- encourage the role of FATF, the 34 nations who work together, and the
role of Treasury? We're going to have a lot more money accessible for terrorism financing.
DUBOWITZ: So my -- Congressman, my recommendation would be that Treasury should submit to House Financial
Services a Iran sanctions rehabilitation program with benchmarks that the financial institutions and the -- the Central
Bank of Iran have to meet before they are allowed back onto SWIFT.
Because here's the problem that Mr. Nephew is not telling you about: The problem is the Central Bank of Iran is
going to go back onto SWIFT. So are dozens of Iranian banks. It will be virtually impossible for us to de-SWIFT those
banks again because the -- the head of VTB Bank in Russia, when the British were talking about de- SWIFTing Russian
banks, called that an act of war.
The Iranians will call that an act of economic war, and what they'll do is they'll use their nuclear snapback in this
agreement to claim that the reimposition of those sanctions and the de-SWIFTing of the Central Bank of Iran and other
banks constitutes a violation of this agreement. Now, we might say, "Well, that's not true. It's -- it's non-nuclear; it's
terrorism. We have the absolute right to do this."
But the problem is that the Iranians will then intimidate the Europeans and they'll say that, "We will walk away from
the agreement. We'll engage in nuclear escalation, because a de-SWIFTing of our banks is an act of war."
We will never get the Iranian banks off SWIFT again. It took an act of God to get them off in the first place. We'll
never get them off again.
Now, once they're plugged back into the formal financial system -- and, by the way, we have not required them to
actually rehabilitate. There is no indication that they're no -- no longer engaged in illicit financial activities.
And, by the way, it wasn't just nuclear. It was ballistic missiles; it was terror financing; it was money-laundering; it
was sanctions evasion. That's the reason the Central Bank got designated in the first place -- designated by Treasury in
a 311 finding.
It wasn't just nuclear, Ranking Member Lynch. It was actually a range of illicit financial activities that constituted
the basis for that designation in the first place.
And so what we've done essentially is we've swept all of that away for a nuclear deal, and we're allowing all of these
banks back onto SWIFT to plug back into the formal financial system without actually having any indication that
they've been rehabilitated. So I would -- if I were House Financial Services I would require Undersecretary Szubin and
the U.S. Treasury Department to present a rehabilitation plan to you with specific benchmarks, and to demonstrate to
you on a timely basis over time that these banks are now rehabilitated banks. And only then should they be dedesignated and put back into SWIFT, because once they're on SWIFT we're not getting them off SWIFT ever again.
FITZPATRICK: Gentleman's time is expired.
PITTENGER: Thank you. I yield back.
FITZPATRICK: The gentleman from California, Mr. Sherman, is recognized for five minutes.
SHERMAN: Thank you.
This deal has the good, the bad, and the ugly. The good is we get -- the good and the bad happen in the first year.
We get rid of the stockpiles; we decommission two-thirds of the centrifuges. The bad, you witnesses have already
commented on: They get their hands on tens of billions of dollars. The ugly is next decade, when they could have an -such an enormous nuclear program that, in the words of the president, their breakout time would be basically zero.
So the question, at -- at a minimum, is how do we put ourselves in a position where we force a renegotiation of this
deal before we get to the ugly?
There's a natural tendency for -- and the witness has done this; I didn't do it -- is -- is to grade the deal, as if we're
pundits trying to say whether the president did a good job or not. And that's a wonderful use of time, but we don't have
a time machine to go back to June 2015. And pundits get to do that, but we have to decide how to vote.
We've got three possible votes coming up. One is a vote to approve the deal. It's got 0.0 percent chance of passing.
If it did pass, it might morally bind future administrations to the deal, so we're not going to -- to do that.
The deal is an executive agreement, which is below an executive legislative agreement, which is below a real treaty.
So this is the weakest possible exchange of notes among the executive branch, and if, God forbid, we were to vote to
approve this, maybe somebody could claim it was an executive legislative agreement. But we won't, and it isn't.
But the real issues before us is whether we vote to disapprove and whether we override. And one of the reasons not
to vote to disapprove is because we'll probably fail to override, and then we're going to be in a circumstance where
we're telling the world Congress has not ratified or endorsed the agreement and the proponents are showing a picture of
themselves celebrating our failure to override the veto. So the last vote will be a victory for the 34 percent or the 40
percent who vote not to override.
That's confusing to the world, so I'm hoping that instead we just vote on a resolution to approve (ph) and vote it
down.
But if we do override, that has real legal binding effects. But we were in the classified hearings, and now I'm here
trying to figure out what those effects would be.
Legally, what it does is it restores the sanctions and deprives the president of his authority to waive the sanctions.
Those sanctions are not sanctions on Iran. Those are sanctions on British and French and Japanese and Indian banks.
Those are sanctions against Italian and Russian and Chinese oil companies.
It's easy to say, "We want to sanction Iran." Start asking people, "Do you want to sanction French banks?"
So the question is, how will other countries react if we try to sanction their businesses for doing something our
president says is a reasonable thing to do, which is do business with Iran as long as they're following the agreement that
Congress may very well repudiate.
So, Mr. Berman, how is -- how are the -- the French, the Italians, the Japanese going to react if Congress wants to
punish their banks and cut them off from the most important financial banking sector in the world because those banks
dare to participate in transactions which the president of the United States says are a legitimate -- and, oh, by the way,
are profitable for the home country?
BERMAN: Well, sir, in a word, not well. And -- and I know you sort of -- you led me to that answer, but if you
remember, earlier this year I had the privilege...
SHERMAN: Could they kowtow? Politically, could they kowtow? Could they say, "Look, we're announcing that
we're going to prevent our banks from doing these transactions, prevent our companies from doing these transactions"?
BERMAN: Yes.
SHERMAN: "The president of the United States thinks they're reasonable. We think they're reasonable. We think
they're profitable. But Congress is so powerful that we're going to prohibit our companies from engaging in reasonable
and profitable businesses."
BERMAN: Sir...
SHERMAN: Could -- could an Indian -- could -- could Modi do that? Could Abe do that? Politically, if -- even if they
wanted to, could they -- could they go to their people and say, "We're kowtowing to Congress"?
BERMAN: So I -- I -- I think Mr. Dubowitz will have some input as well, but my amateurish interpretation of this is,
absolutely they could, provided there is political will to actually enforce those sanctions and enforce those measures.
Because as we've discussed before, one of the bipartisan failings of Iran sanctions up until this point is that while there
are the legislative means to sanction these banks for engaging in this commercial activity with Iran, what we've been
lacking, both -- on both sides of the political aisle, has been the political will to truly enforce...
SHERMAN: If I can just sneak in one comment, we were just at a classified briefing, and a non-classified non-answer
was I asked the administration whether they would follow the law and, under those circumstances, punish those banks.
And the answer was deafening -- deafening non-answer. So it's by no means sure that the president would impose those
sanctions, let alone that our trading partners would adhere to them and would -- would accede to them.
And I yield back.
The gentleman from Florida, Mr. Ross, is recognized for five minutes.
ROSS: Thank you, Mr. Chairman.
And I want to thank the witnesses for being here.
Mr. Berman, you spoke in your opening statements about the -- the use of funds to be funneled, as they have been,
for such things as building Iranian regime contacts. For example, I think you said that they put $6 billion annually into
Bashar Assad's coffers and that we are continuing to fund -- or they're continuing to fund Hezbollah, continuing to fund
Hamas, the Houthis.
We had some witnesses testify before this -- this taskforce some time ago that essentially stated that -- that Iran was
the central bank of terrorism. And so what we are now about ready to do, if this deal is effectuated, is to allow for an
increase anywhere from $100 (ph) to $100 billion in frozen assets, accounts, and then to channel this money through the
same infrastructure that's been there to fund state terrorism.
Now, it seems to me that we have allowed -- or at least the premise of this negotiation has been, let us not have an
Iranian nuclear weapon capability, but let us do so at the expense of expanding international and global terrorism. And
to that end I ask, what are we to expect?
Are we to expect that now those missiles that were funneled down into Gaza are going to be more sophisticated?
What are we going to expect with regard to the missile defense system that now will be sold from Russia to Iran? Are
we here just basically saying that we have licensed the management of nuclear capabilities in Iran totally at the expense
of expanding terrorism throughout this world?
BERMAN: Well, sir, I think you hit upon what -- what I believe is a crucial point, which is that when we begin looking
at this agreement, one of the, I believe, most sober ways to approach it would be to look at the consequences and how -whether or not the United States has the political, economic, and strategic tools to manage the consequences that are
likely to flow from it. Obviously, increased funds allocated to terrorist proxies of the Islamic Republic is a tremendous
concern.
ROSS: And it's -- and it's going to happen, as a matter of fact. I mean, let's say -- let's -- let's just look at history. It's
happened.
And now let's look at history with our relationship with Iran. OK, the only thing that we have to rely on to make
sure that this deal is effectuated as it is written, quite frankly, is the trust of Iran. And so let's look at the history with
Iran.
Let's see, since 1979 on every November 4th they proclaim "death to America" day. Just recently, within the last
year, they've put a mock battleship out in the Persian Gulf and had that attacked and sank in the name of destroying the
United States.
So essentially, we've negotiated a deal that says that we're going to have to trust Iran, and yet we're going to have to
trust them through a third party. So have we managed our consequences to this point? And if not, what in history has
given us any indication that this was a deal that we should have negotiated?
BERMAN: I -- I don't believe we have. And in my opening remarks I made the point that although the premise that
the White House has put forward for the deal is transactional in nature -- that this is limited, it's limited to the Iranian
nuclear program -- the way we've gone about negotiating this and the things that we've put on the table, including
massive sanctions relief, as a result...
ROSS: And the sanctions have worked. You know, the sanctions have worked.
BERMAN: They -- they have. But the ability to rehabilitate the Iranian economy and provide additional aid to terrorist
proxies of the Islamic Republic is a function of the fact that we are looking at this deal privately, aspirationally, the idea
that Iran will turn over a new ideological leaf as a result of these negotiations.
ROSS: And if there is a violation by Iran, the realistic expectation of snapback sanctions is not realistic at all, is it?
BERMAN: I think there are many technical reasons to be very skeptical of snapback, but maybe the most important is
the fact that, as former Secretary of State Henry Kissinger has written about in -- in several books, as you become
deeply enmeshed in negotiations, such as the ones that we're engaged in today, you become a vested stakeholder. And
bad consequences...
ROSS: Exactly.
BERMAN: ... are actually...
ROSS: You do it for the sake of having a deal...
BERMAN: Right.
ROSS: ... not for the sake of the substance of the deal that would have benefited you, had you stayed to your principles
at the outset.
Mr. Perles, one real quickly: What did the administration use to determine what were considered sanctions for
nuclear violations and terrorist violations? If you have -- I've just run out of time, I think.
PERLES: Simple answer to your question: I remain totally befuddled. I have no idea.
ROSS: I agree with you.
Thank you. I yield back.
FITZPATRICK: Gentleman from Texas, Mr. Green, is recognized for five minutes.
GREEN: Thank you, Mr. Chairman.

And I thank the ranking member, as well.
You never know who's tuned into these hearings, and for this reason, if by chance a member -- a family member of
someone who's being held hostage is tuned in, I would like to make it very clear that we are still working to get them
returned, those who are being held hostage. And while we talk about transactions and all of the various ramifications of
a deal, we have not forgotten them. And that's, I think, important for us to say.
Mr. Nephew, I noticed that you were making notes and your name has been mentioned on more than one occasion
and you have not had an opportunity to respond. Do you have something that you would like to say in response to some
of the things that have been said and directed toward you?
NEPHEW: Thank you, sir, for the opportunity. I -- I would say just a couple of things to preserve your time.
First off, I -- I -- I think there are some distinctions about the way in which sanctions were applied against the
Central Bank of Iran that are relevant here. The United States did not impose a designation on the Central Bank of
Iran in the traditional sense in part because we recognized the dramatic economic implications that could result from
that.
Instead, we took sanctions decisions that were intended to clamp off their ability to get access to oil revenues, and
it's a very unique way of doing business. We also imposed sanctions that dealt with -- basically stigmatizing the Iranian
financial system for terrorism and money-laundering-related reasons.
So far as I'm aware, none of those implications are lifted as a result of this deal. Now, there are people out there
who will still sell oil or buy oil from Iran and transact with the Central Bank of Iran, but we have not given a green
light to believe that the Central Bank of Iran is a good institution or an institution that's not involved with respect to
terrorism, or money-laundering, or any of these other things that they're involved with.
The reality is, though, if you're going to get a nuclear deal with Iran they are not going to do it without real
sanctions relief -- without real economic sanctions relief. And the decision that was made by the administration -- and
again, I think it was a good decision -- was that getting 10 to 15 years of real distance from Iranian nuclear weapons
breakout was worth dealing with a future consequence of Iranian economic revival.
I should also not, too, on this issue of $100 billion to $150 billion, I think there is an impression that it's a savings
bank that was opened up for the Iranians and that was -- it's money that's just pouring in that we can't wait to give back
to the Iranians. We should bear in mind that this is Iranian money that we have been restricting from them that they
have not been able to use. It's for this reason that they had the economic downturn that Secretary Lew spoke about
earlier.
So I think the bottom line is the Iranians do have a lot of things they need to do with this money. It is not a gift from
the U.S. taxpayers and it's not manna from heaven for them.
GREEN: Mr. Nephew, you have some knowledge of this. Were you associated in any way with these negotiations?
NEPHEW: Yes, sir. I was the lead sanctions negotiator starting in August of 2013 until I left the government in
December of 2014.
GREEN: And is it your opinion that we can or cannot reopen the negotiations?
NEPHEW: Sir, I do not believe that we can reopen these negotiations. I believe that to do so, or to attempt to do so,
would cripple us in those negotiations, particularly dealing with countries like Russia and China, not even to mention
our European partners.
GREEN: I believe there are others who have opinions that differ, so I'd like to give some equal time.
Let's see. Mr. Dubowitz, you have an -- an opinion that varies from this, I believe.
DUBOWITZ: Well, thank you, Congressman.
I -- I think there's an alternative because President Obama always said there was an alternative. He said that no deal
was better than a bad deal, and the president is a responsible commander in chief and a responsible executive, and he
went into these negotiations knowing that he had an alternative to this deal.
And I believe that we agree with that Mr. -- with the president. He has an alternative. The alternative is to use
coercive American power, including U.S. secondary sanctions, in the context of the U.S. Congress asking this president
to negotiate a better deal, particularly around snapbacks and sunset provisions.
Now, if the president doesn't believe in the power of U.S. secondary sanctions, if his argument is that if you vote
down this deal the sanctions regime will crumble, then unfortunately there is no power in the economic snapback
because the economic snapback actually depends on the power of the U.S. secondary sanctions to send a message of
fear to the marketplace so that financial institutions and energy companies in seven, eight, nine, 10 years, when they've
sunk in hundreds of billions of dollars back into the Iranian economy -- by the way, contracts that are grandfathered -that they will respond by -- by moving out of the Iranian economy.
So the president can't have it both ways. Either there was an alternative to this deal, in which case he was a
responsible negotiator who went in with the best alternative to negotiate an agreement; or there's no alternative to this
agreement, in which case he negotiated with the Iranians without an alternative.
Either U.S. secondary sanctions are powerful, in which case, Congressman Sherman, they will survive if the -- if
Congress votes no, because ultimately they send a message to companies and financial institutions based on risk and
reputation who will not want to go back into Iran, given the power of U.S. secondary sanctions; or they're not powerful,
in which case we're going to have a really significant problem on our hands down the line when Iran has an industrialsized nuclear program with near-zero breakout, significant economic resilience, and their banks are all back on SWIFT,
and we try to go back in in order to try and impose sanctions.
FITZPATRICK: The gentlelady from Missouri, Ms. Wagner, is recognized for five minutes.
WAGNER: Thank you, Mr. Chairman.
I -- and I want to thank the panel for -- for being here today. I have to say that I find all of your comments much
more enlightening and information than the classified briefing that we just attended by 1,000-fold.
It is an absolute fact that the cumulative effect of Western sanctions on Iran is a reason that Iran finally came to the
negotiating table. These sanctions have led to a 15 to 20 percent decline in Iran's GDP since 2010 and have driven
down Iran's crude oil sales by some 60 percent.
Yet, while Iran's economy has significantly declined, their investment in terrorism groups and in regional, I'll say,
proxy militias engaged in conflict has remained the same if not increased. Iran has continued to support -- as we've
heard from everyone, both sides of the aisle -- Hezbollah, Hamas. They've involved themselves in conflicts in -- in
Egypt, Syria, Yemen, Iraq, and have successfully been promoting further instability throughout the region.
It would seem logical to say that if Iran could find the resources to support terrorism and regional turmoil while
under the intense pressures of economic sanctions, as they have been, they will continue to do so under this deal, if not
to a greater extent due to their increased accents -- access to financial resources. In fact, this -- it was National Security
Advisor Susan Rice that admitted that some of that $150 billion that Iran will receive will be spent to support
international terrorism.
I don't think anybody disagrees with that. However, there are some in the administration that have indicated that
they believe Iran will steer this additional funding into its own economy.
Mr. Dubowitz, how likely is it that funding will be steered towards military proxy groups engaged in destabilizing
conflicts in the Middle East, including Iraq?
DUBOWITZ: It's very likely that they will spend money on terrorism and supporting Assad. It's also very likely that
they'll spend money on economic resiliency.
And -- and I think unfortunately the conversation -- the debate is getting lost because economic resiliency, from our
perspective, is a very, very bad thing, because economic resiliency means that Iran can fortify its economic defenses
against future economic pressure.
Now, Dr. Heinonen has spoken about verification and inspection, but verification and inspection is -- is only as good
as enforcement. And the IAEA does not enforce; the United States of America enforces.
So it'll be the United States of America that will enforce this deal against Iranian stonewalling and cheating. And if
we have lost our ability to use peaceful economic leverage to enforce this deal, the Iranians will therefore cheat
incrementally, daring us to respond to them using military force. No president will use military force against
incremental cheating, and Iran will have the ability not just to break out or sneak out to a bomb, but to inch out to a
bomb.
WAGNER: Well, and, you know, we will only have -- the U.S. will only have secondhand knowledge of Iranian
facilities, to be perfectly honest, as we will not and cannot be directly involved in the process of monitoring or -- or of -of verification. I wish I had -- oh, I wish I had an hour to -- to visit with each and every one of you.
I understand Iran's status as a state sponsor of terrorism was not part of this deal. Do you believe, Mr. Berman, that
Iran will seek to be removed from the state sponsor of terrorism list?
BERMAN: Ma'am, I -- I don't -- I don't think necessarily that's a proximate goal, although it's certainly something that,
provided the politics -- the political winds shift in that direction, may be raised with regard to Iran.
What I think -- where I think we enter the zone of danger with regard to increased Iranian sponsorship of terrorism
as a result of the JCPOA is precisely the fact that under the current structure of the deal, and under the current
mechanisms in the hands of the U.S. Treasury Department, the Financial Action Taskforce, and other bodies that are
tasked with overseeing this, we simply don't have mechanisms that allow us to provide responses that are short of
walking away from the table. In other words, there is no scalable responses to Iranian cheating.
And as Mr. Dubowitz said, Iran is far more likely to inch out of its obligations with regard to the deal than to break
out and make a sprint for the bomb. And as a result, what we have is we have a scale problem.
Currently we don't have the ability, short of abandoning the process all together, to exact tactical punishments from
the Iranians for instances of malfeasance, including additional funding for terrorism.
WAGNER: Mr. Berman, as I'm running out of time.
And let me just say this: Mr. Dubowitz, I am very interested in your -- in your discussion about the rehab plan and
the Central Bank of Iran. I spent four years as the United States ambassador to Luxembourg, from 2005 to 2009. I am
very, very familiar with the Central Bank of Iran, and I would consider one of the most important things that I've ever
done in my entire life was to stop terrorist financing from being laundered and -- and sent through the Grand Duchy of
Luxembourg.
So I'm very interested in your -- your thoughts on -- on SWIFT and the rehab plan, and I would love to pursue that
with you in the future.
I'm sorry I'm over my time. I -- I yield back, Mr. Chairman.
FITZPATRICK: Gentlelady's time is expired.
Mr. Himes, of Connecticut, is recognized for five minutes with advice to the members of the taskforce. We're in the
middle of a vote, so at the conclusion of Mr. Himes' questioning we'll go into recess. We'll reconvene at approximately
6:35 for the remainder of the questions.
Mr. Himes?
HIMES: Thank you, Mr. Chairman.
This is clearly a challenging decision for the Congress. It is the opposite of a black and white decision. If there is
anybody who is under the misapprehension that this is an easy call, I think that speaks more to their credibility and bona
fides than it speaks to their understanding of what is a very, very complicated thing.
And to illustrate that, this hearing -- the undercurrent of this hearing is how shocked we are to learn that as a result
of this deal Iran my get some money. There's a little controversy over how much money. The figure of $100 billion to
$150 billion keeps being bandied about. The Treasury secretary -- and I'll let those of you who are saying $100 billion
to $150 billion work this out with the Treasury secretary -- he estimates the money at $56 billion.
Setting that aside, we're shocked that this terrorist regime is going to get money. Folks, this was the deal.
We voted for the sanctions for the express purpose of taking away the money to force them to the table to negotiate
the deal -- now, we may agree that the deal is good or bad -- but to negotiate the deal whereby they would get that
money back. And now we are shocked -- shocked to learn that this bad regime is getting the money back.
Now, bad regime. We get it. We know that. I'm on the Intelligence Committee. I see that day in and day out.
You do these deals with bad regimes. In the '70s and the '80s we did these deals, these similar nuclear deals, with
China and with Russia at a time where I could dare say they were both committing probably things that would qualify
as crimes against humanity. But we do these deals not with our friends but with our enemies.
And context is important here, because we find ourselves with a deal -- it turns out when you negotiate with Persians
you don't get everything you want. You get -- you gotta deal with some things that make you uncomfortable.
But what about the history of deals? Yes, there was the -- the Algiers Agreement, whereby we -- we -- we freed
some hostages.
We haven't mentioned, by the way, the deal that was struck by the Reagan administration in 1985, two years after
the Marine bombing killed over 200 Marines, whereby the Reagan administration provided conventional arms to Iran
so that hostages would be released so that U.S. law could be violated to fund the Contras, violating the Boland
Amendment.
George W. Bush tried to strike a deal at which there would be no enrichment. That deal fell apart and we found
ourselves with 19,000 spinning centrifuges.
So the question I have -- and the idea is that context is important. This isn't a great deal. You don't get a great deal
in situations like this.
I personally believe that the idea that we can just shut it all down -- and the president's coming under a lot of
criticism here. The Russians, the Chinese, the U.K., French, the E.U. -- this was a P5+1 deal.
My question is -- and I haven't gotten a good answer on this. I don't have -- I have two minutes left -- if we
unilaterally say no to something that the world negotiated, that the Security Council has endorsed, that the E.U. has
endorsed, what scenario results in us being in a better position than the position of having 15 years -- and I understand
they may cheat -- but 15 years in -- in which we have some confidence, unless they cheat, that they're not building a
bomb? What happens that puts us into a better place than we are in if we accept this deal? I just open that up for a
scenario that is better than accepting the deal.
DUBOWITZ: Well, Congressman, first of all, this is not a 15-year deal, and it's not even a 10-year deal. You have to
look at this deal not through the prism of nuclear physics; you have to look at the -- this deal through the prism of
Iranian economic, conventional, and military power.
The Iranians have negotiated agreement that, in terms of their deal structure, is frontloaded.
HIMES: But -- but you do agree, this is a nuclear deal. I -- I get that they...
DUBOWITZ: No, it's not a nuclear deal because it's a...
HIMES: No, no, no. You...
DUBOWITZ: We're lifting the arms embargo; we're lifting ballistic missile restrictions. So it's not just a nuclear deal.
HIMES: Got it. Got it. But from the standpoint of developing a nuclear weapon, the centrifuge and the enriched
uranium is, in fact, a 10 to 15 -- unless they cheat, there's a 10 to 15-year period in which there is high confidence and
high visibility that they're not building a bomb, right?
DUBOWITZ: Well, actually I -- I don't think that's true at all.
HIMES: Why not?
DUBOWITZ: In fact, by year eight-and-a-half they begin to develop advanced centrifuges. By year 10 they begin to
enrich at the Natanz facility and install a -- a limited number of centrifuges...
HIMES: But they can't enrich above 3.67, right?
DUBOWITZ: No. So what they've done is they've -- they've phased this so that they can start introducing on a
industrial scale advanced centrifuges. So right at year 15 they can actually enrich not to 3.67 percent, not to 20 percent,
but to 60 percent, because they will use that as justification that they're going to have a -- a nuclear- powered navy.
So what the Iranians have done is they frontloaded the sanctions relief, they're getting the arms embargo lifted, the
ballistic missile restrictions lifted, they're fortifying their regional presence, they're getting back in the formal financial
system, and they've negotiated themselves a patient pathway to a bomb. So when that pathway actually comes -because we're not cutting off the pathways; we're delaying them and then we're expanding them -- when it finally comes
Iran will be much stronger economically, from a nuclear perspective, from a ballistic missile perspective, regionally,
and with respect to terror financing and its proxies.
So when it comes, Congressman, the problem is -- is we are in a worse situation because we now have a hardened
regime with an industrial-sized nuclear program at near-zero breakout, which means it's undetectable breakout, and they
have multiple enrichment facilities buried in a mountain looking like Fordow. And then we have a problem on our
hands.
Now, the problem on our hands at that point is we have no other peaceful way to stop them, which is why this deal,
in my opinion, is going to lead to war, and it'll make war more likely.
The other thing that I want to take issue with is we didn't put these sanctions in place to respond to Iran's nuclear
program. The U.S. Treasury Department, over two administrations, said these were conduct-based sanctions.
Your taskforce is about illicit financial conduct. Your taskforce should be very concerned that we are lifting
sanctions on the Central Bank of Iran and letting all these banks back onto SWIFT despite the fact none of these banks
have been rehabilitated from an illicit financial perspective.
DUBOWITZ: That's a concern.
FITZPATRICK: Appreciate it.
I ask unanimous consent -- I know we -- we said we were going to go to recess. The House Foreign Affairs
Committee chairman is here, Mr. Royce, who would like to be recognized.
Without objection?
ROYCE: Thank you, Chairman.
FITZPATRICK: If there is no objection, Mr. Royce is recognized.
ROYCE: To get a clear sense of the consequences of Iran's support for terrorism I just wanted to give the committee
one horrific example. On January 20th of 2007 a convoy of SUVs cleared several checkpoints to reach a government
compound that included our American security team.
Once inside the base the vehicle occupants, who were wearing U.S. uniforms provided to them and speaking
English, by the way, fatally shot one soldier. They kidnapped four other U.S. soldiers.
With U.S. and Iraqi forces in pursuit, these Iranian-supported militias executed our four soldiers in cold blood. One
was the father of two small children from Southern California.
Hezbollah, the Quds Force, and their Shia militia proxies, were behind this attack. And shortly after, U.S. forces
apprehended Ali Musa Daqduq, senior Hezbollah operative, who, together with the IRGC, masterminded that particular
attack. Unfortunately, the incurrent (ph) administration did not retain custody of this individual and an Iraqi court
released him in 2012.
And the point is this: There are many amongst the IRGC who have had to operate under the restrictions that
sanctions have placed on them, and the sanctions are being lifted, but they remain committed to harming the U.S. And I
don't take their chants of "death to America" as an idle threat.
As part of the nuclear agreement, the Obama administration is committed to bringing the Central Bank of Iran and a
number of major Iranian financial institutions back into the global financial system -- a financial system that is much
different today than the one that Iran knew in 2012. Between the increase of cryptocurrencies and the increase in the
use of nonbanks, our vulnerabilities to Iran's terror finance apparatus have increased.
And our legislative and regulatory structures have not been adjusted for some time, and my concern is that their
effectiveness is beginning to decline. So my question to Mr. Dubowitz and -- and to Steve, to Mr. Perles, as well, is
what specific measures would you recommend Congress take to effectively address these vulnerabilities?
And I'll add one other question to you, Steve. Clearstream, a known money-launderer for Iran, is still moving
Iranian money out of New York to Luxembourg through an illegal book entry system to keep the Beirut Marines -- the
families of those Marines -- from enforcing their judgment. In your experience, what is OFAC doing about this kind of
book entry-based laundering for Iran?
If you don't have time to finish this, by the way, here, we could have for the record.
But, Mr. Dubowitz and Mr. Perles, if you'd like to give it a shot?
DUBOWITZ: Thank you, Chairman Royce. You are exactly right. Europe is going to become a Revolutionary Guards
economic free zone.
The Europeans are lifting sanctions on the Revolutionary Guards and the Quds Force. Iran's Revolutionary Guards
and Quds Force can now operate much more freely in Europe.
What would I do? First, Congress should require that the IRGC be designated as a foreign terrorist organization. It
should also be designated under Executive Order 13224 for directing and supporting international terrorism. The IRGC
is only designated for proliferation purposes under U.S. law.
Second, as I mentioned earlier, Chairman Royce, this taskforce and Congress should require Undersecretary Adam
Szubin to present a rehabilitation program to you with specific benchmarks to explain how these financial institutions,
including the CBI, will be rehabilitated, and to demonstrate to you that they're no longer engaged in a full range of illicit
financing.
ROYCE: Thank you, Mark.
Steve?
PERLES: Thank you, sir. Let me start by saying that the Karbala attack that you referred to in Iraq is one of my cases
and I promise you, sir, I will see that case through to the end.
I take the -- you know, the Department of Defense issued POW medals to each of these servicemen, and -- and, of
course, they were presented to their families. No nation, let alone Iran, gets to take a U.S. serviceman into POW status
and extrajudicially execute them.
I promise you, sir, I will see that case through to the end. It is -- the conduct there is patently offensive by any
standard.
ROYCE: And I think we'd better get the rest of the answer for the record in writing.
And, Mr. Chairman, I think you and I better make tracks to that vote right now. Thank you.
PERLES: Thank you, sir.
FITZPATRICK: The taskforce is in recess. We appreciate the perseverance of the witnesses. We'll be back at
approximately 6:35. Thank you.
(RECESS)
FITZPATRICK: This meeting is reconvened and the hearing called to order. We appreciate the perseverance of the
witnesses and -- and your -- your -- your testimony here today.
Mr. Rothfus, of Pennsylvania, is recognized for five minutes of questions.
ROTHFUS: Thank you, Mr. Chairman.
And again, thank the panel for sticking with us through that series of votes, and apologize for your inconvenience,
but thank you for being here.
I want to talk a little bit about the -- the idea of the intermingling of the types of sanctions -- nuclear, non-nuclear,
ones that were directed towards terror. I'm looking at a report that the Bipartisan Policy Center put out last week, and
they noted that throughout negotiations with Iran the position of the United States has consistently been that we would
only lift nuclear-related sanctions as part of a final agreement.
Given the complexity of the U.S. sanctions regime and numerous overlapping reasons for which sanctions have
been placed on Iran, distinguishing between those measures which are and are not nuclear- related will pose a
significant challenge to the deal's implementation. They -- they continue with their analysis and they say out of more
than 800 entities listed for sanctions relief under the JCPOA, their -- the Bipartisan Policy Center analysis finds a total
of at least 81 agencies, companies, and persons that were sanctioned for reasons that are either explicitly non-nuclear or
could be contested as non-nuclear. These include entities that have been involved in developing ballistic missile
systems, weapon smuggling, supporting terrorism, and violating human rights. Under a strict interpretation of what
constitutes nuclear-related sanctions, these entities should not be subject to sanctions relief.
Mr. Dubowitz, I wonder if you might want to comment on that and -- and give me your opinion on how much of an
issue this is.
DUBOWITZ: Thank you, Congressman. I -- I think it's a big issue, and I think what the administration has done is
that they've started to try and recharacterize non-nuclear sanctions as nuclear sanctions so that they could provide
sanctions relief under the JCPOA. Let me give you an example.
Ballistic missile financing, right, was considered to be a separate example of illicit conduct. And so there are a
number of designations of Iranian banks, the designation of the Central Bank of Iran included in its -- on its predicate,
the financing of ballistic missiles.
But the administration had a problem, which is that the Iranians were demanding in negotiations that a number of
these entities be -- be de-designated, including the Central Bank of Iran. And so what they've done is they've taken
ballistic missile financing and they've recharacterized that as nuclear financing...
ROTHFUS: Well, you might think you might have gotten a concession, if you're releasing a -- a terrorism-related
sanction or a missile-related sanction, that you would have gotten a commitment from Iran, for example, that they'd
stop exporting terror.
DUBOWITZ: Well, that -- that's true, but I -- I think what we've got to be careful of here is -- because the
administration is saying we retain the right to designate on terrorism and human rights grounds, but the fact of the
matter is is that terrorism and human rights sanctions for the most part are not economic sanctions. And -- and as a
result, what we're effectively doing is we're dismantling the economic sanctions regime while still retaining the right to
go after Iran for terrorism and human rights purposes.
The problem, if we ever try to go after Iran for anything that's considered economic, the Iranians will point to the
agreement and they will say, "There was a clause in there that you promised not to interfere with the -- the
normalization of trade and commercial affairs," and...
ROTHFUS: Exactly.
DUBOWITZ: ... they will say that basically, "We retain a nuclear snapback to walk away from the agreement."
So we've dismantled the economic sanctions regime, and the administration has done that by recharacterizing
effectively non- nuclear sanctions as nuclear.
ROTHFUS: Thank you. That's one of the issues I think people really need to take a look at as they look at this
agreement.
I want to direct this one to Mr. Berman. Earlier this year the G-20, whose 34 member countries constitute the
world's major financial centers, met in Istanbul and committed to take action to more aggressively combat terrorism
financing around the world. The G-20 enlisted the assistance of the Financial Action Taskforce, which will hopefully
issue a report later this year on how to prevent terrorist organizations from using the global financial system for fundraising.
Should the JCPOA be implemented, how much damage does it do to this effort by the G-20 and the FAFT (sic)?
BERMAN: Well, thank you, Congressman. I think it does a considerable amount of damage because the sheer volume
of potential funds that'll be transferred from Iranian coffers to its terrorist proxies inevitably will complicate the analysis
of the Financial Action Taskforce and also strain existing mechanisms to monitor and interdict...
ROTHFUS: Well, how -- how -- how much easier is it going to be for Iran to launder money through the financial
system to fund its terrorist proxies under this agreement?
BERMAN: I think that's a good question. I'm going to defer to my colleague, Mr. Dubowitz.
DUBOWITZ: Well, I mean, the -- the problem is is that FATF, at the end of the day, has fundamentally actually
depended on American financial sanctions power. So on one hand you could say that because we retain U.S. financial
sanctions we still have power; on the other hand, it also relies on the ability to get other nations to go along with us.
And what we've effectively done under this sanctions regime is we've dismantled the E.U. sanctions. The E.U.s are
-- they're lifting all of their sanctions because the majority of them are nuclear sanctions.
And so as the Europeans go back to business, and the Chinese, and the Russians, and everybody else, it is going to
be much more difficult to seek the kind of consensus that we need at FATF in order to actually crack down on Iranian
illicit financial flows because our very partners are going to be so deeply invested in the Iranian economy that it'll be
more difficult than it has been in the past to persuade them to -- to enforce these regulations on their financial
institutions.
ROTHFUS: I see my time is expired. Mr. Chairman, I yield back.
FITZPATRICK: Chair now recognizes the gentleman from Arizona, Mr. Schweikert, for five minutes.
SCHWEIKERT: Thank you, Mr. Chairman. And with -- I'd like to ask a U.C. to put some documents into the record
in regards to the charter of SWIFT.
FITZPATRICK: Without objection, they're received.
SCHWEIKERT: Thank you, Mr. Chairman.
Mr. Dubowitz, you're the only one up there who has actually talked about SWIFT, and I -- this is something I've
been trying to get my head around and wanted to focus on just for a couple moments. First, in 30 seconds -- 20 seconds
-- describe what -- the backbone of what SWIFT is.
DUBOWITZ: So, Congressman, if I want to -- if I want to wire money to you, I'm going to wire money from my
financial institution to your financial institution. SWIFT provides the financial messaging codes that essentially allow
my financial institution to identify my bank account and identify your bank account at your financial institution so that
wire transaction can take place.
SWIFT is the international backbone and the global standard for financial messaging that facilitates financial flows
around the world.
SCHWEIKERT: OK. And the -- the secure international backbone of electronic movement of money. Simple
enough, and Belgium-chartered (ph).
So walk -- walk me through a -- a conceptual idea. Let's say this agreement moves forward and all of a sudden
Iranian institutions, banks, others that actually would be -- have had a SWIFT membership would be able to move
money -- except for the fact that if I'm here reading the SWIFT charter, both a country and an institution that's -- have
been involved in bad acts don't have rights to access that system.
So what happens here? I have here where we're obligating ourselves and countries to this agreement. The same
time I have a private electronic backbone moving money that's not allowed to do this.
You know, that's the first question. How does that end up working.
DUBOWITZ: The issue is that under SWIFT's bylaws they can deny access to any financial institution that brings the
SWIFT system into disrepute. SWIFT connects into something called TARGET2, which is essentially the E.U.'s
equivalent of the U.S. Fedwire. Under TARGET2's bylaws it said that no bank engaged in proliferationsensitive
financing, terror financing, or money-laundering should be accessing TARGET2 through SWIFT.
Of course, that fit Iran to a letter, which is why ultimately in 2012 E.U. regulators ordered SWIFT to de-SWIFT
designated Iranian banks. The problem: Now they're going to de-designate all of those Iranian banks, including the
Central Bank of Iran. E.U. regulators will, whether they order or strongly suggest to SWIFT that SWIFT re- SWIFT or
-- or -- or allow them back into the SWIFT system.
And there, by the way, there are a lot of bad banks on the SWIFT system. There are Russian banks, as I mentioned,
who are still there.
But the -- the problem has been that the Russian banks that are still there, as I mentioned earlier, they -- the head of
VTB Bank of Russia said, "If you de-SWIFT my bank that's an act of economic war." So the problem is SWIFT, I think,
will allow these banks back on. Once they're back on it'll be very difficult to de-SWIFT them again, despite the bylaws,
because the only thing that ultimately got SWIFT to move was the -- was congressional pressure in 2012 threatening
sanctions against SWIFT that led to a chain reaction of de-SWIFTing.
SCHWEIKERT: And we've been trained (ph), I also understand, is the chartering country, which is Belgium...
DUBOWITZ: Correct.
SCHWEIKERT: ... do its laws end up effecting here. And my fear is if there's a change of government in Iran or
something happens, are they able to make an excuse at some point and saying, "You haven't given us full access to the
world's financial systems. We're going to blow up the agreement on their end."
DUBOWITZ: Oh, if I'm Iran I'm -- that's exactly what I'm going to do all the way through this process. I'm going to
keep claiming that I am not getting sufficient economic relief, because economic -- the sufficiency of economic relief is
a relative basis. So what Iran will do is claim that they're not getting it and then they'll use that as excuses to not
actually fully comply with their nuclear obligations.
SCHWEIKERT: Not -- not to allow an inspection. I'm just seeing this sort of...
DUBOWITZ: Correct.
SCHWEIKERT: ... tit-for-tat negotiations coming out of nowhere.
Also, the fact of the matter is -- and forgive my language -- sort of the bastardization of the movement of electronic
money and the ethics that we particularly in this country have been trying to drive into this, and now we're about to say,
"Oh, except for in this case ignore the bad acts. Use -- use the international system that we've helped create, and it's OK
to move at least these bad actors money."
DUBOWITZ: Well, to me this is -- this is the -- the -- the -- essentially, this is dropping a bomb on Treasury's mandate,
because Treasury was set up -- TFI, the Office of Terrorism and Financial Intelligence, was set up to protect the integrity
of the U.S. financial system and the global financial system from bad actors. It wasn't set up to get a nuclear deal.
It was set up to protect the integrity of our financial system from money-laundering, terror financing, proliferationsensitive financing, and sanctions evasion. And by giving a nuclear deal to -- this nuclear deal to Iran and the
dismantlement of our sanctions regime, we're effectively saying that it's not about conduct-based sanctions anymore; it's
about a diplomatic achievement.
Now, we made this mistake before with North Korea and Banco Delta Asia. The North Koreans got all their
sanctions relief and they got a nuclear weapon, and we lost our economic leverage on North Korea.
My fear is we're going to do the same thing again, and this has deep consequences for our sanctions programs writ
large, including against Russia and other targets.
SCHWEIKERT: Mr. Chairman, I appreciate your patience. I'm just waiting for the day that we're going to owe a
family or many families an apology because we allowed this backbone to finance some horrible act and we allowed
them to use our own systems.
With that I yield back, Mr. Chairman.
FITZPATRICK: Gentleman yields back.
The gentleman from Texas, Mr. Williams, is recognized for five minutes.
WILLIAMS: Thank you, Mr. Chairman.
And thank all of you for hanging in there with us tonight. We appreciate it.
I'm one of those that really wants to take care of America first and not Iran first. I think a lot of us here on the
taskforce are concerned about trusting Iran.
Obviously, historically speaking, many of us find it hard to believe that Iran will actually allow for an open and
honest process when inspecting their nuclear sites. Determining how the JCPA (sic) will treat military site inspections is
something I'm really concerned about.
Most importantly, however, the fact that the president agreed to a deal that lacked inspection anytime, anywhere, I
believe will have serious consequences.
And I'm a small business owner myself. I make deals all the time. And I'm still concerned why we negotiation with
-- when "death to Americans" and the "death to the Israelis" is a common theme among the people we say we can trust.
Now, my question to you, Mr. Heinonen, is the following: I've heard you say that the 24-day window will allow
Iran to -- to cheat, that Iran has not changed its nuclear course, it's keeping all the options open for building nuclear
arms. Can you explain your comment?
HEINONEN: Thank you, Mr. Congressman. And I perhaps use this opportunity also to clarify my rating, which
Ranking Member Lynch asked earlier today.
He asked me to rate the deal with a scale from one to 10. And as you see from my testimony, I actually have divided
this testimony three parts. One part is the declared facilities with declared materials; one is the rights and provisions to
access undeclared activities, where I raised those concerns; and then there is a third category, which I mentioned in my
written statement, which are some other activities which are proscribed, like activities related to acquisition of
computers software to design nuclear explosive devises, to certain multipoint detonation systems.
When I look the rating from -- for each of those I think it's better (ph) to look each of those and you'll make your
own risk assessment on that.
The first one, when I said a rating seven to eight, this is for declared facilities, the way I see. And why it is not
higher is because there is this dispute settlement process, which you miss (ph) in 24 -- after 24 days or even more.
But then if you ask me to give the rating for this access to suspected sites, undeclared sites, I don't think that I would
give more than five, if we use this -- this rating.
And then if you ask my opinion with other (ph) possibilities to find these computer codes and someone using them,
and there is actually even not really an inspection procedure for that, I think it's a zero. It's not even one.
So I think that this clarifies and answers to your concerns.
And we need to keep also in our mind that the time is here of essence. This problem also traces (ph) with a time
when Iran's capabilities increase, and just as an example -- I'm not a sanctions expert, but yet, when you come to year
15, many Iran can have any number of enrichment facilities any place, perhaps a little bit deeper in ground than in
Fordow. They can produce all enrichments they want, then the breakout time goes down -- goes to the weeks or even
smaller. And then if you add this manufacturing of weapon components and others they have prepared, that -- that adds
two or three weeks to this whole picture.
I don't think that the sanctions have any meaning at that point of time because Iran already achieved what it needed
in the worst case.
WILLIAMS: Next question, addressed to you also, sir: How important is it that Congress knows which military sites
and scientists the administration intends to demand access to?
HEINONEN: Well, that's a difficult question.
WILLIAMS: That's why I ask you.
HEINONEN: Yeah. I think it's important for the international community to know these names and installations in
public, and the reason for me is that there are some other states which may have information which, for example, United
States of America government doesn't have.
So by disclosing these names, these places, we achieve two things: we engage the other states to the process, and
this reinforces the system and makes any concealment by Iran much more difficult. It also makes the verification
system much more transparent when the names are known.
WILLIAMS: Thank you.
Mr. Chairman, I yield back.
FITZPATRICK: Gentleman from Arkansas, Mr. Hill, is recognized for five minutes.
HILL: Thank you, Mr. Chairman.
Dr. Heinonen, I was interested in talking about, for a minute, the IAEA annexes to the agreement. Secretary Kerry
really was quite dismissive of those in the briefing of Congress earlier this afternoon. What amount of importance
should we put on the Iranian document with IAEA in terms of studying that as a part of fully understanding the
verification regime -- inspection regime?
HEINONEN: I think it's one of the most important activities. I have been dealing with Iran 12 years in a row, and one
of the most difficult things -- things we are to get things written down on the paper. What was not written, what was not
specified was allowed.
So therefore, I think that all these documents should be available for IAEA member states. I don't see any technical
reason why those should be secret information from the member states of the IAEA.
IAEA secretariat can perhaps give some of those -- those information in technical briefings, but again, I think the
transparency of the process requires those to be disclosed so that we can see what kind of confidence level we have for
this verification regime which it's forcing (ph).
And as I said in my statement earlier today, I think at the time from mid-August to mid-December is much, much
too short to solve this PMD problem. And then I also pointed out that this IAEA is looking only information which is in
the annex of November 2011 report. But Mr. Amano himself has said that there is some other information which came
afterwards, and the way I read this JCPOA doesn't really give this opportunity to IAEA to go to verify at this stage that
other information.
Plus, that knowing from my own experience from earlier years is that the IAEA puts -- reports only the information
which it is sure at that point of time, and the information which meets its standards for the veracity of the information.
So I am sure that there were also some pieces which, for those reasons, Mr. Amano decided not to include in this
program.
So, therefore, I see essence (ph) (inaudible) that the governments and the (inaudible) parts will see those (inaudible)
so that they can do a full assessment what we can achieve, what we cannot achieve. Because after all, these are the
elements of your risk assessment.
HILL: Right.
And I felt like Secretary Kerry, as I said, Mr. Chairman, was dismissive, and I hope that you'll speak with Chairman
Royce about making sure that we -- we see these annexes and know the detail of the verification regime.
A question for Mr. Berman: You were talking about the GDP in your written testimony, and potential amounts of
money that are being released. Give me some feel for the flow, in addition to any near- frozen money that's released,
but what kind of monthly flow you think their revenue would be.
And also, tell me what you think the actual amount of foreign reserve -- reserves should be for their belt-andsuspenders approach of -- of having adequate cash on hand were snapback sanctions to come back. How much money
would you estimate? Ten percent of GDP? More? What would you say?
BERMAN: I -- I think that's a good question, and -- and sort of it comes down to a -- sort of a -- a term of our calculus.
I think the numbers that we heard earlier from other members of the committee -- of the taskforce -- when we talked
about repatriation of sanctions or frozen funds that -- that have -- have already been released in the context of $12
billion to date, I -- I think that's a useful barometer to look at.
When we look at the sum of money that is expected to be provided...
HILL: So how much would you say would be in foreign -- in -- in -- be held in reserves? Ten percent of GDP? Would
that give them that kind of a surety that they would -- or would it be 5...
BERMAN: I -- I think that's a -- that's a reasonable estimate.
HILL: Too high?
BERMAN: My colleagues might -- might disagree, might have a different estimate.
DUBOWITZ: Well, just to give you a sense of this, in 2012-2013 Iran's fully accessible foreign exchange reserves
were $20 billion and an economy of about $350 billion GDP. That's why they were at four to six months from a severe
balance of payments crisis.
At -- at the point where we could have actually accelerated the sanctions and brought them to severe crisis we let up.
We gave them $12 billion, which took their foreign exchange reserves, increased it by 60 percent to $32 billion.
Now we're going to give them at least $100 billion. Now their foreign exchange reserves are going to get to $132
billion.
And they're effectively gone from 6 percent of their GDP to almost about 40 percent of their GDP, so that what
we've done is we've built up their foreign exchange reserves, which now increases their economic resilience. And with
that kind of foreign exchange reserve rainy-day fund, over time it's going to make it very difficult for us to snap back
sanctions and create the kind of economic pain in time.
And Dr. Heinonen is right. When they're an industrial-sized, near-zero breakout, days away from actually breaking
out to a nuclear weapon, our ability to actually impose that kind of economic coercive force at that time will be
significantly diminished because it will take much longer to have any kind of impact, never mind the impact we had in
2012.
HILL: Thank you, Mr...
BERMAN: Might I -- might I add one additional factoid, just to -- sort of to round out the discussion?
I think it's useful to point out when we were having the earlier discussion about the amount of constriction that has
occurred with the -- with regard to the Iranian economy as a result of sanctions, we heard about a fifth, with regard to
sort of the constriction of Iranian GDP.
If these numbers are anywhere near accurate, if we are, indeed, looking at $100 billion to $150 billion, we are
actually providing or facilitating the expansion of Iranian -- of the Iranian economy by a significant portion. We are
wiping clean the constriction that occurred as a result of sanctions, and we're actually forcing an expansion. And I think
that should be noted because, as I said before, money is fungible and this expanded revenue is likely to trickle in various
ways to Iranian regional activities as well as to terrorism.
FITZPATRICK: Gentleman's time is expired. We'll now proceed to a second round of questions, and I would seek
unanimous consent to do so.
So without objection, I'll recognize Mr. Sherman, of California, for five minutes.
SHERMAN: I have heard reports that Iran really has as little as $28 billion or as much as $150 billion. I'd like to
know how much money they have on deposit, and then what are the obligations that the host bank or the host country is
going to extract from that, because obviously nobody's going to give Iran its money if it owes it to a domestic vendor or
if it owes it to a -- to the bank where -- where -- where they have the deposit.
So, Mr. Nephew, how much do they have worldwide gross, and how much of that is obligated?
NEPHEW: So, sir, thank you for the question. I would have to defer to the colleagues at the Treasury Department for a
very accurate, specific set of numbers.
I mean, my last information suggested, again, that they've got someplace between $100 billion and $150 billion in
total reserves worldwide. Some of that is in Iran, and some of that is in...
SHERMAN: When you say "in Iran" you mean they have currency of another country in a vault in Iran, or they have
their own money, which, of course, they have an unlimited amount of?
NEPHEW: No, sir, that they've got some of other countries' currencies...
SHERMAN: OK.
NEPHEW: ... as well as gold, which would also tend to count as reserves, as well.
SHERMAN: OK. So excluding what's in their country, which obviously we're not giving back to them, what do they
have outside their country?
NEPHEW: So again, my estimate would only be preliminary. I have to defer to Treasury.
SHERMAN: OK.
NEPHEW: I would say somewhere in the neighborhood of...
SHERMAN: Well, trying to get a straight answer out of Treasury is impossible, and at a classified briefing it's almost
impossible. So can you tell me what percentage is in China, what percentage is in Japan and Korea, what percentage is
in India?
NEPHEW: So I -- I would say a large percentage is in China, probably on the -- the neighborhood of 20 to 30 percent.
SHERMAN: OK.
NEPHEW: I would say that another maybe 20 percent is in Japan, and that the rest is spread between Korea, India, and
Turkey, which are the other main oil, you know, importers from Iran, so...
SHERMAN: And none is in Europe because they stopped importing a while ago.
NEPHEW: Right. There -- there is some that is in Europe, but again, if we're talking percentages, you're probably in
the -- the single-digit percentages.
SHERMAN: OK.
OK, Mr. Heinonen, this picks up on earlier questioning. We're being told that 24 days is enough because whatever
Iran does is going to have this signature and you're going to be able to tell that something radioactive was there.
What I'm most concerned about is can they perfect and create arrays of their IR-8 centrifuges. Now, in order to
build these centrifuges they're going to have to test them and calibrate them. Do they need to use gasified uranium to
calibrate, or could they use an alternative gas in order to create an array of centrifuges that I'll call a virgin set -- it's
never touched uranium; there's nothing radioactive in the room but they're ready to go.
HEINONEN: Mr. Congressman, when you develop this kind of centrifuge it's actually -- it's a basically three-step
process.
The first step is that you do what is called a mechanical testing. You just get them to spin and see that they survive
long enough under this very severe conditions where they are running.
The next step after that is normally that people use some other gas, like xenon.
SHERMAN: Like what?
HEINONEN: Like xenon, which is a noble gas...
SHERMAN: Yeah, OK.
HEINONEN: ... to test the centrifuge just to see that they work, because xenon has several isotopes so you can see the
enrichment factor. So this is very often the second step. And the beauty of that, if I may say, is that it doesn't cause any
corrosion or...
SHERMAN: It's an inert gas, yes.
HEINONEN: Yeah. Inert gas.
And then the third step is when you run, you know, with the uranium gas to see that it still really works as it was
designed. So one...
SHERMAN: Is there any substitute for the third step that does not leave a radioactive signature?
HEINONEN: I don't think that you can perfect a centrifuge in such a way that it can survive in a corrosive...
SHERMAN: So the 24 days might be long enough to catch them if they went to the third step. They can do computer
modeling; obviously we'd never catch that.
HEINONEN: I don't think -- sir, I don't think that this 24 days has much to do with that, because this -- first of all,
these things happen in different places. And when you go to this test -- the last step of the test, you don't need to test so
many machines. You test...
SHERMAN: So you don't need to calibrate each one. You...
HEINONEN: No. You need to use uranium hexafluoride. You need a room which is probably size of this. That's all
what you need.
And then if you have three weeks' time to sanitize it, sir, Mr. Albright (ph) also agrees with me, it's a doable if you
do the planning in advance. And this is, I think, that we also to recognize that when people talk about the reception (ph)
techniques of Iran in 2003, they were ad hoc erasements (ph). They were caught by surprise.
But if they have to do it today, they will have very different...
SHERMAN: So you're -- you're saying that you could actually use uranium hexafluoride gas...
HEINONEN: Yes.
SHERMAN: ... in a centrifuge in a room like this, and walk into that room 24 days later and not be able to detect that
there had been any radioactive material in the room?
HEINONEN: Yes, you can, but you have to plan it in advance how you -- how you dismantle it. And you can design it
in such a way that this can be done swiftly.
And I want to remind that there were places in...
SHERMAN: I -- I would hope that you would issue a -- a paper or something on this to get it the kind of definitive
press coverage, because we're being told and the American people are being told that the 24 days is not too long because
if they're doing anything with uranium involved it can be detected, and you're saying not if you -- not if you plan it in
advance.
HEINONEN: Yes. There were cases in 2003 that the IAEA did find in certain places enriched uranium even though
they -- there should have been.
SHERMAN: So if we just happened to bring a box of uranium into this room -- hopefully without us in it -- and then
moved it out of this room in a few days, it's not certain that you could detect that uranium had been in the room?
HEINONEN: Provided that you renovate the room.
SHERMAN: Renovate the room. OK. That usually takes more than 24 days, but this is the U.S. Congress.
I yield back.
And I'm referring to this exact room.
FITZPATRICK: The vice chairman of the taskforce, Mr. Pittenger, is recognized for five minutes.
Mr. Heinonen, 20 years ago when we negotiated with the North Koreans we had the support of allies over there, and
the Japanese who supported it, South Korea. Is the world safer because of that agreement? Is the world safer because
of the agreement that we have with North Korea that was negotiated 20 years ago?
HEINONEN: North Korea? Yes, I was actually involved myself from the IAEA side for the Agreed Framework.
I think that the vision of the people who designed the Agreed Framework at that point of time was that the North
Korean regime will not live very long time, so this agreement, which was supposed -- has been now lasted two decades,
was not supposed to last two decades. And that's why the provisions were like they were.
PITTENGER: Excuse me. Is the world safer today?
HEINONEN: No.
PITTENGER: Thank you.
HEINONEN: For sure not in North Korea.
PITTENGER: That's my question.
In my discussions with the IAEA in Vienna my understanding is that they are limited, when they have access, just to
those 17 sites. Is that correct? They can't go...
HEINONEN: Yes...
PITTENGER: They can't go anywhere else in the country.
HEINONEN: At this point of time not, but when the -- these additional protocol provisions and then this extra
transparency undertakings (ph) by Iran will be implemented, IAEA can have access to additional places.
PITTENGER: To the original places.
HEINONEN: Additional places like centrifuges...
PITTENGER: To the predetermined, pre-agreed, but restricted to that and not -- not accessible to anywhere else in the
country? No -- if there's some other clandestine effort taking place are we -- do we have access to go to other places
besides those 17 approved sites?
HEINONEN: The problem is that there are certain limitations for this access, which I have explained in my written
testimony. This is not anytime, anywhere. You need to justify in writing why you want to go there and what is the
information which drives to you.
PITTENGER: But if I could, just for time's sake -- is that clarified to just be the approved sites, those 17 sites? Can
they say, "We want to go to another part of the country"?
HEINONEN: According to this agreement, yes.
PITTENGER: OK.
Since the Iranians can stall through the ICPA (ph) for at least a month or -- or more, and in reality several months,
how will we know if Iran is removing compromising material during this time, and how significant is this lead time?
Does it compromise the inspection process?
HEINONEN: Yes, it does, and this is the reason why I made the clarification to my statement with regard to the access
of suspected and undeclared sites. There the detection probability is much lower -- lower because of this time lag
(inaudible) access and going there, and in addition to this extra justifications (ph), which IAEA has to give and which
the counterpart can use to deceive the organization if it so wishes.
PITTENGER: OK, thank you.
Thank you, Mr. Chairman. I yield back.
The chair recognizes himself for -- for five minutes.
Mr. Dubowitz, the administration has stated that all sanctions relief is from the nuclear sanctions regime only. And
after reviewing the list of entities and individual de-designated, which I think you referred to in your opening statement
-- I think that was the list you referred to, and if it was we want to include it as part of the record.
My question to you is, do you agree with the administration's statement?
DUBOWITZ: As I mentioned earlier, Mr. Chairman, the administration is taking non-nuclear sanctions and
recharacterizing them as nuclear sanctions. So if -- on -- on that basis I don't agree with the administration.
There were sanctions put in place that -- that were not related to Iran's nuclear program; they were related to Iran's
ballistic missile program, its money-laundering, its illicit financial activities.
And if you look at the Central Bank of Iran, which to me is the classic example of this -- and there are other -- other
examples, but the Central Bank of Iran was designated -- legislatively designated and designated by the administration,
and there was a finding under section 311 of the PATRIOT Act, and there were numerous Treasury statements to -- to
confirm this, it was engaged in a range of illicit financial activities -- nuclear, ballistic missile, terrorism, moneylaundering, sanctions evasion -- and yet the administration is essentially allowing the Central Bank of Iran back into the
global financial system.
I -- I disagree with Mr. Nephew. There were other ways to negotiate this.
There are ways to actually allow the CBI back partially. There are ways to actually put down specific benchmarks
and say to the Iranians, "Once you have established and met those benchmarks then we will rehabilitate your Central
Bank of Iran, but we are not going to wipe away all of these illicit financial activities just because we have a nuclear
agreement."
That could have been -- that could have been proposed and won in a negotiation. It is not good enough to say that
the Iranians would have rejected it and therefore we took it off the table.
FITZPATRICK: Why do you think that's happening?
DUBOWITZ: I don't want to speculate in -- what's in the minds of the negotiators, and I have a lot of respect for -- for
the men and women who've -- who've put a lot of years of -- of their life into this, including Mr. Nephew. But I do think
that we went into these negotiations, and I -- I believe that the fundamental precept on the sanctions side was that we
can sweep away these sanctions but we will reinstate them if we have to.
And that's the construct. The construct is we'll take them away and then we'll reimpose them if we need to, instead
of saying, "How are we going to defend the sanctions architecture in key ways so that we maintain the economic
leverage, particularly on the full range of Iran's illicit financial activities?" and have said to the Iranians, "We'll give
you relief here but we're not giving you relief there until you establish that your banks are no longer engaged in the full
range of illicit financial activities."
That could have been a separate construct. I think we could have defended that. I think we would have had
international support for that.
But at the end of the day, the administration had a very different construct: Take it all away and reimpose it if they
cheat.
FITZPATRICK: My concern is that some of those de-designations may affect the rights of American citizens who
have judgments against Iran.
And Mr. Perles and I, in my first round of questioning, we -- we talked about the -- the Beirut barracks bombing
case that I -- I believe you were involved in. We spoke off the record before the hearing about after September 11th the
district that I represent, Bucks County, Pennsylvania, had too many families who lost a loved one in the towers and -and in other places around the country.
Fiona Havlish was a lead plaintiff in a case, I think Ellen Saracini was involved in the case, against the Islamic
Republic of Iran. They did receive a judgment in excess of a billion dollars, which is yet uncollected.
I saw a Congressional Research list of total awards against Iran, and this -- excluding punitive damages, just
compensatory damages -- exceeds $20 billion and doesn't even include the Havlish case from my district. So what
message are we sending to -- and I completely associate myself with the remarks of Mr. Green earlier about the four
individuals who are hostage today in Iran, and we speak their names on the floor of the House and -- and we don't
forget them and -- and we continue to work for them.
What message are we sending to the individuals that have claims and judgments uncollected against the Republic?
Might those claims be wiped out as part of this agreement?
Any -- any of you.
PERLES: As counsel for many of the claimants, and -- and I spoke earlier with you off the record, we share a -- we
share an enforcement activity with the Havlish plaintiffs and the Justice Department in New York. The target of that
enforcement activity was a skyscraper, 650 Fifth Avenue in Manhattan, that Iran was using as a money-laundering
facility.
We sit at the knife's edge today not knowing what the impact of this agreement will be on all of those enforcement
activities. We don't know what instruction the administration will give to the Justice Department with respect to this
joint seizure that we've done with the -- the -- the Havlish plaintiffs. We're -- we're simply stuck in stasis in this waitand-see attitude.
What we do know is, at least in the case of this bookkeeping entry system that we touched upon earlier, which is
really the world's largest Hawala banking system, that all it -- that's all it is at the end of the day is -- is the world's
largest Hawala banking system. Federal judge in Manhattan last year asked OFAC to comment on the lawfulness of this
Hawala system.
This is Clearstream S.A., a Luxembourg company owned by Deutsche Borse, running one -- well, we tracked -- I
have no idea how much money really went through the account. We were able to track $1.67 billion of Iranian money
going in and out of JPMorgan Chase by this bookkeeping system. And OFAC, frankly, declined to opine upon the
lawfulness of that sort of transaction.
From a practitioner's perspective, that's very frightening because if you can -- if a Clearstream can move Iranian
money in and out of New York by book entry without it being a violation of law, the entire sanctions regime -- and I'm
not talking about Iranian sanctions; I'm talking about sanctions across the board -- collapses. It means that any drug
cartel, for example, could move their money to Luxembourg in a -- in a Gulfstream and have a Luxembourg-based bank
move it into the U.S. system by book entry. It's unreportable and untraceable.
FITZPATRICK: And, Mr. Perles, that skyscraper to which you refer on Fifth Avenue in Manhattan, New York City...
PERLES: Yes.
FITZPATRICK: ... I believe is owned by Assa Corporation...
PERLES: Correct.
FITZPATRICK: .. which is alleged to be a shell corporation controlled by Iranians.
PERLES: That's correct.
FITZPATRICK: My concern is Assa Corporation is on the list of organizations to be de-designated, which goes back
to Mr. Dubowitz's concern, what does this have to do with nuclear sanctions, and what is really happening here, and
what is the impact. But perhaps a -- a subject for -- for another hearing.
DUBOWITZ: Mr. Chairman, if I could just add one quick thought, I mean, Mr. Nephew said we're going to give $100
billion of Iran's money back to Iran. It's interesting, I -- I wonder if U.S. negotiators -- maybe you could ask Secretary
Kerry this -- did they ever say to the Iranians, "Of the $100 billion that we're going to give you back, we're going to take
X percent and we're going to use that to satisfy the claims of -- for the judgments of Iranian victims of terrorism. So
before we give you money back so you can use it to create future victims of Iranian terrorism, you're going to pay those
judgments out of that money and we're going to give you -- for every dollar that we give you -- for every dollar that we
take, we're going to give 80 cents back to you and 20 cents back to the victims of Iranian terrorism."
Would have been an easy way to have settled this issue.
FITZPATRICK: My time is well expired, and the vice chairman of the committee is recognized for the final question
of the hearing.
Mr. Perles, in representation of your clients you made contact with OFAC, DOJ, the solicitor general, as I
understand it, on behalf of your clients.
PERLES: On a variety of matters related to -- yes.
PITTENGER: Seeking assistance on their behalf. Could you tell us the nature of that? We understand that your
request was denied on one occasion at least, and you didn't -- you were rebuffed by them. Could you give us some
context for that?
And is this consistent with your previous work with the government? Have they been cooperative in the past, and
why were they not this time?
PERLES: Yeah. What we currently see, it could be more appropriately characterized as nonresponsiveness.
You know, we just talked about the fact that a federal judge asked OFAC to opine upon the lawfulness of this
gigantic Hawala banking system. We were in touch with OFAC after that request was made and OFAC simply failed to
respond. They advised the federal judge that they were not going to respond.
We had hoped to be finishing up our activities at the Supreme Court last spring. We're waiting for the solicitor
general to opine upon the constitutionality of statutes that you gentlemen passed to assist victims of terror. We're still
waiting.
I certainly hope that the solicitor general will opine upon the constitutionality of those statutes this fall, but we have
no schedule. We -- we really don't know where we are.

That is in very different contrast to where we were at the conclusion of the Bush administration. Stuart Levey, who
I have enormous respect for, turned intelligence data over to us so that we could seize the $1.9 billion that was transiting
New York.
At that time he said to us, "Your point of contacting the Treasury will be the general counsel of OFAC." The general
counsel of OFAC gave me a phone number to call when I needed to reach him. It was always answered by a recording
and I always, without fail, received a call back from him within 10 minutes of the time I called.
We just don't see that anymore. It's just not happening.
PITTENGER: So you've seen a reluctance on behalf of those who represent our government to assist American
citizens in their claims against Iran?
PERLES: Yes, sir.
PITTENGER: Thank you very much.
I yield back.
I'd like to again thank our witnesses for their testimony here today. Without objection, all members will have five
legislative days within which to submit additional written questions to the chair, which will be forwarded to the
witnesses. I ask our witnesses to please respond as promptly as you are able.
Without objection, this hearing is adjourned.
END
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REP. MICHAEL G. FITZPATRICK HOLDS A HEARING ON THE IRAN NUCLEAR
DEAL AND ITS IMPACT ON TERRORISM FINANCING
EVENT DATE: July 22, 2015
TYPE: COMMITTEE HEARING
COMMITTEE: HOUSE COMMITTEE ON FINANCIAL SERVICES, SUBCOMMITTEE ON TASK FORCE TO
INVESTIGATE TERRORISM FINANCING
SPEAKER: REP. MICHAEL G. FITZPATRICK, CHAIRMAN
WITNESSES:
REP. MICHAEL G. FITZPATRICK, R-PA. CHAIRMAN
REP. STEPHEN F. LYNCH, D-MASS. RANKING MEMBER
REP. ROBERT PITTENGER, R-N.C.
REP. KYRSTEN SINEMA, D-ARIZ.
REP. ANN WAGNER, R-MO.
WITNESSES: ILAN BERMAN, VICE PRESIDENT, AMERICAN FOREIGN POLICY COUNCIL
MARK DUBOWITZ, EXECUTIVE DIRECTOR, FOUNDATION FOR DEFENSE OF DEMOCRACIES
STEVEN PERLES, SENIOR ATTORNEY AND FOUNDER, PERLES LAW FIRM, P.C.
OLLI HEINONEN, SENIOR FELLOW, BELFER CENTER FOR SCIENCE AND INTERNATIONAL AFFAIRS,
JOHN F. KENNEDY SCHOOL OF GOVERNMENT
RICHARD NEPHEW, PROGRAM DIRECTOR, ECONOMIC STATECRAFT, SANCTIONS AND ENERGY
MARKETS, CENTER ON GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY
REP. BRAD SHERMAN, D-CALIF.
REP. DENNIS A. ROSS, R-FLA.
REP. AL GREEN, D-TEXAS
REP. JIM HIMES, D-CONN.
REP. ED ROYCE, R-CALIF.
REP. KEITH ROTHFUS, R-PA.
REP. DAVID SCHWEIKERT, R-ARIZ.
REP. ROGER WILLIAMS, R-TEXAS
REP. FRENCH HILL, R-ARK.
TEXT:
hearing is "The Iran Nuclear Deal and its Impact on Terrorism Financing."
Without objection, the chair is authorized to declare a recess of the taskforce at any time. Without objection, all
members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the
record. Without objection, members of the full committee who are not members of the taskforce may participate in
today's hearing for the purpose of making an opening statement or questioning the witnesses.
Over the first several hearings of this taskforce members have heard foreign policy experts and others testify
regarding the pervasiveness of Iran's involvement in the financing and exporting of terror throughout the Middle East
and around the globe. We know that Iran is the leading state sponsor of terror, and as such, any diplomatic
engagements with Iran or understanding or agreements with them would be incomplete without a clear and full
understanding of these facts and its impact on the face of global terror financing.
Today's hearing will explore the recently announced nuclear agreement negotiated by the Obama administration and
the P5+1 nations with Iran -- specifically its impact on terrorism financing through and by Iran.
Most concerning to many members of this bipartisan taskforce is the easing of congressional sanctions and, with it,
the danger that a new influx of cash will find its way to terrorist organizations threatening to strike the United States of
The Iranian regime has demonstrated a lack of concern about its own people, leaving in doubt the estimated $150
billion in funds currently held abroad will allow the Iranian economy to fully recover -- not to the benefit of the
oppressed citizens, but to the advantage of the next generation of terror syndicates.
A nation so deeply committed to promoting terror has lost its right to good-faith agreements. That is why over the
next two months members of both the House and the Senate will review the fine points of this agreement before voting
on it, the product of the bipartisan passage of H.R. 1191.
an ideological allegiance.
Republicans, Democrats, and Independents alike hold the power to turn back a bad deal, and I'm confident that this
taskforce, rooted in bipartisanship, will play an important role in the decision-making process.
opening statement.
Last week Iran and the P5+1 -- which I hate using acronyms, but it includes the United States, the U.K., France,
Russia, China, and Germany -- finalized a Joint Comprehensive Plan of Action that attempts to ensure that Iran's
nuclear program can be used exclusively for peaceful purposes, and in exchange for a broad suspension of many U.S.,
European and United Nations sanctions. I'm pleased today -- that today's hearing will present our taskforce with the
opportunity to hear from experts with varying perspectives on that deal.
I believe there are still some questions that need to be answered. Of particular concern to our taskforce is how to
ensure that the approximately $100 billion in -- in frozen assets do not flow to terrorist organizations.
Now, the State Department has designated Iran as a state sponsor of terrorism since 1984 and notes that Iran
continues to support Hezbollah and the Assad regime in Syria, as well as Hamas, Islamic jihad, and others.
Iran's policies have brought isolation and few allies. Many experts view the election of President Hassan Rouhani,
the relative moderate candidate in that last election, as an expression of Iran's desire to move in a new direction.
Sanctions relief could provide an opportunity for -- for Iran to rebuild its economy, and invest in infrastructure, and
embracing that moderate future.
While the opportunity is here, the trust necessary to move forward is not. Fortunately, I believe this agreement does
not require us to place our trust in Iran.
Under the deal's terms and its road map for clarification on nuclear issues in Iran, this entire agreement hinges on
the adoption and implementation of a rigorous International Atomic Energy Agency inspection, monitoring, and
guidance procedure. Indeed, the agreement relies more on the IAEA inspectors -- and it's good to see Olli Heinonen
here, someone who knows a little bit about that -- than any other party, because in the absence of trust we will need the
move forward.
minute.
This agreement, without question, has the most grave outcomes of any agreement negotiated by this government.
Our allies in the Middle East, those whom I have met with countless times -- Prime Minister Netanyahu and other
leaders of the Arab world -- are gravely concerned with the outcome.
They know their neighbor. They know and have watched Iran over the last 35 years, as the greatest exponent (ph)
of terrorism.
hearing.
A nuclear Iran is one of the greatest threats to the security of the United States and to peace and stability in the
Middle East. To support this deal the agreement must end Iran's nuclear weapons program and strengthen the safety
and security of both the United States and our allies in the Middle East.
This deal, if Iran does not cheat, prevents Iran from obtaining a nuclear weapon for 10 to 15 years. However, I
have several concerns about the deal's structure, planned execution, and broader implications.
Several question: Number one, is the United States confident in the success of the verification regime established
by this agreement? Number two, what is the exact timing of sanctions relief by the United States and the E.U., and once
these sanctions are removed and foreign investment floods into Iran, can we be confident that sanctions will snap back
into place if or when Iran cheats? Number three, what are the broader consequences of this agreement for our security
and regional stability, and how will an influx of billions of dollars affect the geopolitical balance in the Middle East?
Iran is the number one state sponsor of terrorism, and the current regime is a destabilizing force in the region.
Taking our most effective sanctions tools, the banking and energy sector sanctions, off the table could limit our ability to
Thank you.
And I thank you, Mr. Chairman, for sounding the alarm about the mistake, I believe, of historic proportions agreed
to by the Obama administration last week in Vienna.
The president has agreed to far-reaching concessions in nearly every area that was supposed to prevent Iran from
acquiring a nuclear weapon. Under this deal, Iran would receive $100 billion to $150 billion in sanctions relief and
regain access to conventional arms and ballistic missiles that has been denied for nearly a decade.
Iran will be free to transfer these weapons, as has been stated, to Hezbollah, the Syrian government, Yemeni rebels,
and other terrorist groups. These organizations threaten the security of the United States, our ally Israel, and the world,
and will further destabilize a region already in crisis.
As Prime Minister Netanyahu said when visiting Congress earlier this year, "No deal is better than a bad deal." By
any measure, this is a bad deal, Mr. Chairman. Congress should show the world that America will not accept a nuclear
Iran.
Ilan Berman -- Ilan Berman is vice president of the American Foreign Policy Council. Mr. Berman has consulted
with the Central Intelligence Agency and the Department of Defense and provided assistance on foreign policy and
national security issues to a range of governmental agencies and congressional offices.
Steven Perles is senior attorney and founder of the Perles Law Firm. Mr. Perles has handled a number of cases
before the United States Supreme Court, United States courts of appeals, and district courts across the country.
His litigation practice has included cases in the fields of Foreign Sovereign Immunities Act litigation. He has
lectured on the evolution of anti-terrorism civil litigation at conferences for national crime victims groups. He holds a
law degree from the William and Mary Law School.
Dr. Heinonen served as the deputy director general for the IAEA and head of its department of safeguards. Prior to
that, he was director at the agency's various operational divisions and was an inspector at the IAEA's office in Tokyo,
Japan. He studied radiochemistry and completed his Ph.D. dissertation in nuclear material analysis at the University of
Helsinki.
Dr. Richard Nephew is a program director of the economic statecraft, sanctions, and energy markets, Center on
Global Energy Policy at Columbia University. Prior to this position, Dr. Nephew served as the principal deputy
coordinator for sanctions policy at the Department of State.
He also served as the lead sanctions expert for the United States team negotiating with Iran. From May 2011 to
January 2013 he served as the director for Iran on the national security staff. He holds a master's degree in security
policy studies and a bachelor's in international affairs from George Washington University.
There's a great deal to say about the Joint Comprehensive Plan of Action, as the new agreement with Iran is
formally called. I simply don't have the time to say it all, and on issues like verification and compliance, I think my
colleagues can acquit (ph) themselves much better than I.
This relates directly to the question of sanctions relief because under the agreement the Islamic Republic is now
poised to receive massive economic stimulus in the very near future. Specifically, later this year -- or at the very latest,
early next year -- upon verification by the International Atomic Energy Agency that Iran has disclosed the requisite
details of military-related nuclear work, the U.S. will begin unblocking $100 billion to $150 billion of Iranian revenue
from oil sales that have been locked in escrow accounts in China, South Korea, and in other nations.
I think it's necessary to put this in context precisely because it is so large. In 2014 the U.S. government estimated
that Iran's total annual gross domestic product was $415 billion. So what we're talking about here is a quarter, roughly,
of Iran's annual GDP.
I think without -- with very little exaggeration what we're talking about here is a Marshall Plan for the Islamic
Republic -- the financial equivalent thereof. And while White House officials have expressed hope that the Iranian
regime will use these funds to focus internally -- to focus on domestic conditions, on improving the economic welfare of
ordinary Iranians -- it's necessary to point out that money is fungible and the -- an Iranian regime that has this kind of
economic stimulus package has an unprecedented financial windfall that will invariably translate into greater capability
in two areas.
The first area is terrorism. Several years ago the U.S. government publicly estimated that Iran had, quote, "a ninedigit line item in its budget for support of terror organizations," end quote. This included $100 million to -- to $200
million annually to Lebanon's Hezbollah, as much, potentially, as $25 million monthly to Hamas in the Palestinian
Authority, and the list goes on. And this assessment was made at a time when Iran was subject to stringent
international sanctions and there was no financial relief for the Islamic Republic in sight.
Today the situation is very different. The resources at Iran's disposal in this area are poised to expand
exponentially. And as a result, what you see is a much greater potential on the part of Iran to translate its financial
windfall into a financial windfall for its proxies.
The second issue of -- of particular concern to me is the question of Iranian regime expansionism. The Iranian
regime possesses a distinct manifest destiny. Ideologically, it talks about itself as the center, geopolitically, of the
Middle East.
And the same holds true in Iraq, where Iran already possesses extensive political influence. The current fight
against the Islamic State terrorist group and the disarray of Iraqi politics has allowed Iran, through both economic and
military and financial means, to expand its ambit still further.
The White House has said in public that this deal is merely transactional. It's focused strictly on the nuclear issue
and doesn't touch on other issues, including Iran's support for terrorism.
But both in scope and in duration and, frankly, in its material minutia, what you see is a deal that's aspirational. It is
one that hopes that the Iranian regime will, as a result, turn over a new ideological leaf.
Thank you.
I want to focus on the Revolutionary Guard Corps, or the IRGC, which I think is the major beneficiary of this
nuclear deal. And this nuclear deal itself is -- is fundamentally flawed in its both design and architecture.
So the IRGC stands to benefit even more now because of the JCPOA. The deal requires the U.S. and Europe to
remove numerous IRGC-linked entities from their sanctions lists, including the most important terrorism finance and
money-laundering facilitator, the Central Bank of Iran.
Now, these de-listings are a direct challenge to the conduct- based nature of the sanctions regime imposed by the
Obama and Bush administrations. Those sanctions were designed to target the full range of Iran's illicit activities and
not just Iran's nuclear program. And they were also designed, according to Treasury officials, to protect the integrity of
the U.S. financial system.
In short, the entire country's financial system, quote/unquote, "posed illicit (ph) financial risks for the global
financial system." Internationally, the Financial Action Taskforce confirmed these terror-financing and moneylaundering risks.
programs.
More than 67 percent are going to be de-listed from Treasury's black lists within 12 months. After eight years, only
a quarter will remain on our lists.
for now.
The deal lifts U.S. sanctions on 47 Iranian banks designated for proliferation, nuclear and ballistic missile activity,
or for providing financial services to other de-listed entities. They're all going to get back onto the SWIFT financial
messaging system.
Now, the White House assures us they have a snapback mechanism -- more that they can impose non-nuclear
sanctions, like terrorism. But the agreement itself notes that Iran may walk away from the deal and its nuclear
commitments if new sanctions are imposed. The agreement also contains an explicit requirement for the European
Union and the United States to not interfere with trade and economic relations with Iran.
So Iran can use these provisions to argue that the reimposition of sanctions, even if implemented on terrorism
grounds, is a violation of the agreement. Iran will threaten to return to its nuclear program, and this gives Iran an
effective nuclear snapback -- much more powerful than our economic snapback -- to -- to intimidate the United States,
and especially Europe, from reinstating sanctions.
Now, Ilan has talked about the hundreds of billions of dollars that are going to go back to Iran, and with Iran back
on the SWIFT system and its banks reintegrated into the formal financial system, halting the flow of these funds to bad
agreement.
Mr. Chairman, I'm happy to share some of the other recommendations in my testimony during Q&A. Hopefully this
is a good start. And thank you for the opportunity to testify.
Mr. Chairman, Ranking Member Lynch, Mr. Pittenger, thank you again for the invitation and the honor to testify
before you today.
Over the last 20 or 30 years my law firm has probably represented and reconstructed terrorist attacks involving the
death or personal injuries to U.S. nationals and perhaps the rest of the private bar combined. We have extensive
experience reconstructing and then litigating these matters against countries like Libya, Syria, Iran, and the Sudan.
Our litigation portfolio currently valued at about $17 billion. During the course of that period we have separated
roughly half a billion dollars from the material supporters or financiers of these attacks, and we currently hold $1.9
billion of Iranian assets that were illicitly invested in New York in our trust account awaiting final court orders so that
they can be distributed to various clients.
I was asked to testify for a very explicit and narrow question of expertise. In my view, my opinion, will the release
of $100 billion to Iran result in an increase in Iran's funding of terrorist organizations, resulting in the future deaths
and personal injuries of United States nationals?
I think, based on Iran's behavior that I've looked at since 1979, the answer to that question is, inevitably, yes, there
will be increase -- substantial increase in funding for those organizations, and they will target U.S. nationals.
Being unable to tolerate peace in the Middle East, the Iranians sponsored a bus-bombing campaign designed to
destroy the Oslo Peace Process, intentionally targeting American students in Israel. The most famous of these is Alisa
Flatow, of New Jersey; and other students like Matt Eisenfeld, of Connecticut; and Sarah Duker, also of New Jersey.
Alisa Flatow happened to be the first American student killed in an Iranian-sponsored bus bombing intended to destroy
the Oslo Peace Process.
The last time the United States entered into this kind of agreement with the Iranians was 1981. It -- that agreement
is known as the Algiers Accords. It resolved and resulted in the release of what are -- people who are called the Tehran
And look at the result, again, through -- through my optic. That agreement was executed in 1981. Thirty-one
months later the Islamic Republic of Iran detonated the largest non-nuclear device ever -- ever exploded, resulting in
the deaths of 241 U.S. servicemen in Beirut.
client.
We separated collectively -- and I am including the work that other law firms did for Lockerbie -- roughly $3 billion
-- something in excess of $3 billion in reparations from -- from Mr. Gadhafi that were distributed to American victims.
I dare say, in retrospect, if Mr. Gadhafi had known in the late 1980s that his bombing campaign was going to result in
his having to cough up $3 billion to his American victims he would have found some other way to be obstreperous. He
I think that the litigation that Congress has authorized American victims of state-sponsored terrorism to engage in
serves a -- a real national security purpose. There is no amount of money that will help compensate a family for the loss
of their loved ones; the purpose of the litigation is deterrence.
Thank you.
deal.
In my testimony I will focus on the verification aspects of the Joint Plan of Action. But in my remarks I am also
mindful that the reference to the road map agreed between the IAEA and Iran -- while it's publicly available, it has
secret attachments which have not been able -- available to me when I made my testimony and statement.
Iran will retain a sizable nuclear program with its supporting nuclear infrastructure. In technical terms, Iran has
not changed its nuclear course. It will maintain substantial uranium enrichment capacity, and it's permitted to expand it
after 10 years without having technical or economical needs to do so.
In addition, implementation of the additional protocol remains provisional until the time when the IAEA has reached
a broader conclusion on the peaceful nature of Iran's nuclear program.
The first one is the expanded declaration. As I have pointed in my previous testimonies, a complete declaration of
all Iran's nuclear activities, including the past ones -- for example, status of equipment and materials from dismantled
Access to undeclared and suspected sites: The JCPO (sic) provides a dispute settlement mechanism, should Iran
refuse to cooperate or challenges the IAEA request. There are (ph), however, concerns that matter.
One example is the mechanism by which information and evidence is provided that would compromise sources of
intelligence and gives for Iran opportunity to take countermeasures to buy time erase evidence.
Terms of the settlement time, 24 days do not cover credibly all plausible scenarios. It is clear that a facility of
sizable scale cannot be simple erased in three weeks without leaving traces. But likely scenarios involved here would
be small-scale, which would be critical to the weapon manufacturing process, such as manufacturing of uranium
components for a nuclear weapon.
A 24-day adjudicated timeline reduces detection probabilities exactly where the system is weakest: detecting
undeclared facilities, materials, and keeping in mind the breakout times.
standards.
And then I (ph) also draw your attention to couple of other things. I think it will be very difficult to use IAEA
American staff on these inspections in next few years in Iran, which I see a deficiency (ph) because U.S. citizens will
bring extra skills which the IAEA otherwise doesn't have, and then on top of that, the IAEA has to, I think, issue a little
bit more transparent reports.
NEPHEW: Thank you, Chairman Fitzpatrick, Ranking Member Lynch, and other members of this taskforce, for
inviting me to speak today. It is an honor to speak to you in my first formal testimony before Congress.
I would like to begin by extending my personal gratitude to the members of the U.S. negotiating team. Regardless
of how one evaluates this deal, we are all most fortunate that this country produced dedicated diplomats, civil servants,
and experts, like those who worked on this deal.
In my opinion, the deal that they negotiated is a very good one, especially compared to the most realistic
alternatives, and any negative consequences can be managed.
Further, with the transparency steps that Iran has accepted, both breakout and any attempt at a covert path will be
easier to detect quickly. Some of these authorities will remain in effect for 20 to 25 years, while Iran's obligations to
the IAEA under its standard treaties will continue in perpetuity.
First, it is a blunt reality that Iran was not going to accept major restrictions and invasive monitoring on the cheap.
The administration did the right thing in leveraging sanctions relief for maximum early nuclear steps. Iran is now
under every incentive to take the steps required of it as soon as possible, which the IAEA will verify before Iran gets an
extra dollar.
Of course, the sanctions relief provided by the United States does not equate with unilateral sanctions disarmament.
The United States retains a number of sanctions authorities that will continue to exact consequences for Iranian
violations of human rights and damage Iran's ability to engage in terrorism financing, though I personally believe fears
about the extent of new Iranian spending in this regard are overblown and, according to the L.A. Times anyway, so does
the CIA.
forces.
Even if the E.U. and U.N. remove some of these from their lists, these bad actors in Iran generally will find
business stymied until they correct their own behavior in the eyes of the United States. This is both due to the direct risk
of U.S. sanctions and the improvement in international banking practices since 9/11, a bipartisan effort begun under
George Bush and continued under Barack Obama.
Even just one JCPOA participant can trigger UNSC review and a vote on a U.N. Security Council resolution to
continue with relief. U.S. veto power in the UNSC gives us the ultimate free hand to reimpose these sanctions.
This could come with political costs, and many skeptics point to these costs as likely, meaning that no such
snapback would ever be triggered. But international reaction to U.S. actions will always depend on the context. If the
rationale for doing so is credible then chances for success will always be higher.
Iran, too, would have much to lose if snapback were to be triggered. The description of the deal as a Marshall Plan
is an exaggeration, except that Iran needs the sort of domestic investment that it would provide due to damage from
sanctions.
Iran's leaders would therefore have to carefully evaluate the costs and benefits of any course of action that threatens
the integrity of the nuclear deal. These costs will grow as Iran's economy grows.
Thank you.
FITZPATRICK: We thank the witnesses for their testimony. And each of the members of the taskforce will be given
five minutes now to -- to question the witnesses.
I'll recognize myself for five minutes, and I'll first ask Mr. Berman and Mr. Dubowitz if you could respond to the
statement recently of National Security Advisor Susan Rice, who suggested -- admitted, I guess -- that some portion of
the $150 billion that will accrue back to the Islamic Republic of Iran as part of the sanctions relief could be or would be
spent to support international terrorism. So the question is to what extent you believe that these -- and -- and again,
$150 billion is an estimate, but -- but to what extent do you believe that any of these funds would be used to enhance the
capabilities of their terrorist proxies, including Hezbollah, including the Houthi rebels that were mentioned earlier today
in Yemen, to bring terror not just to the region but to American citizens?
I think the same concern is germane here. The sanctions relief -- and the scope is, indeed, enormous. It's certainly
not a Marshall Plan of the 1940s, which was $800 billion for all of Europe, but $100 billion for one individual country
is still an awfully large sum of money.
There is that concern that that money will -- even if it's spent overwhelmingly on domestic affairs -- will free up
other dollars that will be spent on terror, perhaps significantly so.
I think we also need to talk about economic relief. It's much more than $100 billion; it's much more than $150
billion. We're talking about economic relief that will allow Iran to sell 2.5 million barrels a day, which will increase its
-- its revenues about $15 billion to $20 billion a year; opens up its auto sector, which is -- represents about 10 percent of
the GDP of Iran; its petrochemical sector. We're talking about hundreds and hundreds of billions of dollars over time.
You know, I agree with Mr. Berman and I agree with Mr. Nephew. I don't think Iran is going to spend all of its
money on terrorism. Iran will spend some of its money on terrorism.
organizations.
But picking up on a point that Mr. Nephew made, the problem is Iran is also going to spend its money on its
economy -- and not just on growth and diminishing unemployment, but on economic resiliency. See, the -- the Iranians
learned from 2012-2013, when we were hitting them with asymmetric shocks to their economy that plunged them into a
severe recession. They don't want to be in a situation again where their economy is fragile.
So they will keep substantial foreign exchange reserves in place and build up the kind of resilience they need down
the line, so then when we try to snap back our sanctions it will not have the kind of asymmetric impact that it had on
Iran at that time.
Economic resiliency is their rainy-day fund. That's what they're thinking of down the line when they have an
industrial-sized nuclear program with near-zero breakout and we try to use economic leverage in the future to peacefully
enforce the deal.
I believe we will diminish our peaceful enforcement of this deal and we will leave the future president with two
options: accept an Iranian nuclear weapon, or use military force to forestall that possibility, which is why this deal
makes war more likely, and when that war comes, Iran will be stronger and the consequences will be more severe.
underlying statute that Congress passed to help us get at those funds.
The statute is facially constitutional. If the committee could assure that the solicitor general promptly issues its
statement of interest to the court affirming the constitutionality of that statute we should be able to proceed with
releasing those funds this fall.
PERLES: Second issue, and -- and one that is far more serious from the -- from its implications, are what are referred
to as movement of funds by book entry. That process can -- can simply be described as if you have a billion dollars in a
avoid sanctions.
FITZPATRICK: Mr. Perles, I'm -- I'm out of time. Maybe we can get back to this in the second round of questioning
if that's possible.
LYNCH: OK.
HEINONEN: 2009.
LYNCH: OK. So you had a chance to see how the -- the -- the inspection protocols work, and I guess to try to simplify
it for -- for people, on a scale of one to 10 -- let's say one is -- is -- is that the agreement is worthless, OK, and -- and -and 10 means the agreement provides absolute security -- where along the spectrum -- you've had a chance to read this
agreement now and -- and -- and sift through this and try to figure out what the -- what the inspection protocols and
monitoring would provide. Where along that spectrum do you think you would -- you would -- on a scale of one to 10,
what's the value of this agreement, in your estimation?
HEINONEN: Yeah. It's a little bit difficult to give the rating yet because there are few aspects of this agreement which
I don't know, like, you know, what is the real agreement between Iran and IAEA on this possible military dimension.
LYNCH: The PDM?
monitoring (ph).
LYNCH: Right.
LYNCH: Right.
Mr. Nephew, I noticed that in the agreement that there -- there are carve-outs here. If you look at the -- if you look
at the sanctions that are provided with relief, they're almost exclusively regarding nuclear activity. There are sanctions
that were put in place because of past nuclear activity and nuclear research, uranium enrichment, things like that, that
I don't see any lifting of sanctions regarding terrorism or -- or -- or funding. And -- and look, no question about it,
Iran has -- has funded Hezbollah, has funded -- not Al Qaida -- they're -- they're Shia -- they're Sunni, rather -- but has
correct?
I -- I think the big issue at that point will be what the Iranian response would be to that. I mean, they have the
ability to say that they think that that kind of sanction would violate the terms of the deal because it would imperil the
rest of their relief. But we have not ceded any ability whatsoever to impose sanctions with respect to our terrorism,
human rights, or other related authorities that are outside of the nuclear arena.

PERLES: Yes, sir.
PITTENGER: You know, given that, you said that that would be a deterrent toward future actions, considering
Gadhafi and the bombings of Lockerbie and La Belle, that perhaps he would be thinking about future efforts. With that
in mind, with the -- with this agreement it appears what we've done on these cases with these victims, it would basically
wipe out this agreement, resulting that these funds would no longer be accessible.
Is -- is that of concern to you, that -- that they would not be able to receive the judgments repatriated back to them
and have it be accessible?
PERLES: Future funds could be a -- future funds could be a very serious problem. There are no future funds currently
in the United States. Were we to go out and try and reach funds outside the United States -- and we are trying to do that
In our enforcement activities for the Flatow, Eisenfeld, and Duker case in Italy, where I suspect a lot of this $100
billion will go, as they're Iran's largest trading partner in the E.U., the Italian foreign ministry has formally entered our
Now they're going to have access to substantially more money than that. It will be an enormous challenge for FATF
and our Treasury, working with other governments, to track these funds as they go through the financial system -through the 47 financial institutions there in -- in Iran, and -- and -- and their capacity through money- laundering.
Because here's the problem that Mr. Nephew is not telling you about: The problem is the Central Bank of Iran is
going to go back onto SWIFT. So are dozens of Iranian banks. It will be virtually impossible for us to de-SWIFT those
banks again because the -- the head of VTB Bank in Russia, when the British were talking about de- SWIFTing Russian
But the problem is that the Iranians will then intimidate the Europeans and they'll say that, "We will walk away from
the agreement. We'll engage in nuclear escalation, because a de-SWIFTing of our banks is an act of war."
We will never get the Iranian banks off SWIFT again. It took an act of God to get them off in the first place. We'll
never get them off again.
And, by the way, it wasn't just nuclear. It was ballistic missiles; it was terror financing; it was money-laundering; it
was sanctions evasion. That's the reason the Central Bank got designated in the first place -- designated by Treasury in
a 311 finding.
It wasn't just nuclear, Ranking Member Lynch. It was actually a range of illicit financial activities that constituted
the basis for that designation in the first place.
SHERMAN: Thank you.
So the question, at -- at a minimum, is how do we put ourselves in a position where we force a renegotiation of this
deal before we get to the ugly?
pundits trying to say whether the president did a good job or not. And that's a wonderful use of time, but we don't have
a time machine to go back to June 2015. And pundits get to do that, but we have to decide how to vote.
We've got three possible votes coming up. One is a vote to approve the deal. It's got 0.0 percent chance of passing.
If it did pass, it might morally bind future administrations to the deal, so we're not going to -- to do that.
The deal is an executive agreement, which is below an executive legislative agreement, which is below a real treaty.
So this is the weakest possible exchange of notes among the executive branch, and if, God forbid, we were to vote to
But the real issues before us is whether we vote to disapprove and whether we override. And one of the reasons not
to vote to disapprove is because we'll probably fail to override, and then we're going to be in a circumstance where
we're telling the world Congress has not ratified or endorsed the agreement and the proponents are showing a picture of
That's confusing to the world, so I'm hoping that instead we just vote on a resolution to approve (ph) and vote it
down.
But if we do override, that has real legal binding effects. But we were in the classified hearings, and now I'm here
trying to figure out what those effects would be.
Legally, what it does is it restores the sanctions and deprives the president of his authority to waive the sanctions.
Those sanctions are not sanctions on Iran. Those are sanctions on British and French and Japanese and Indian banks.
Those are sanctions against Italian and Russian and Chinese oil companies.
So the question is, how will other countries react if we try to sanction their businesses for doing something our
president says is a reasonable thing to do, which is do business with Iran as long as they're following the agreement that
Congress may very well repudiate.
SHERMAN: Could they kowtow? Politically, could they kowtow? Could they say, "Look, we're announcing that
we're going to prevent our banks from doing these transactions, prevent our companies from doing these transactions"?
BERMAN: Yes.
SHERMAN: "The president of the United States thinks they're reasonable. We think they're reasonable. We think
they're profitable. But Congress is so powerful that we're going to prohibit our companies from engaging in reasonable
and profitable businesses."
BERMAN: Sir...
And I yield back.
Mr. Berman, you spoke in your opening statements about the -- the use of funds to be funneled, as they have been,
for such things as building Iranian regime contacts. For example, I think you said that they put $6 billion annually into
Hamas, the Houthis.
We had some witnesses testify before this -- this taskforce some time ago that essentially stated that -- that Iran was
the central bank of terrorism. And so what we are now about ready to do, if this deal is effectuated, is to allow for an
Are we to expect that now those missiles that were funneled down into Gaza are going to be more sophisticated?
What are we going to expect with regard to the missile defense system that now will be sold from Russia to Iran? Are
we here just basically saying that we have licensed the management of nuclear capabilities in Iran totally at the expense
of expanding terrorism throughout this world?
concern.
happened.
And now let's look at history with our relationship with Iran. OK, the only thing that we have to rely on to make
sure that this deal is effectuated as it is written, quite frankly, is the trust of Iran. And so let's look at the history with
Iran.
Let's see, since 1979 on every November 4th they proclaim "death to America" day. Just recently, within the last
year, they've put a mock battleship out in the Persian Gulf and had that attacked and sank in the name of destroying the
United States.
BERMAN: I -- I don't believe we have. And in my opening remarks I made the point that although the premise that
the White House has put forward for the deal is transactional in nature -- that this is limited, it's limited to the Iranian
bad consequences...
ROSS: Exactly.
BERMAN: Right.
at the outset.
Mr. Perles, one real quickly: What did the administration use to determine what were considered sanctions for
nuclear violations and terrorist violations? If you have -- I've just run out of time, I think.

Mr. Nephew, I noticed that you were making notes and your name has been mentioned on more than one occasion
and you have not had an opportunity to respond. Do you have something that you would like to say in response to some
of the things that have been said and directed toward you?
First off, I -- I -- I think there are some distinctions about the way in which sanctions were applied against the
Central Bank of Iran that are relevant here. The United States did not impose a designation on the Central Bank of
Iran in the traditional sense in part because we recognized the dramatic economic implications that could result from
that.
Instead, we took sanctions decisions that were intended to clamp off their ability to get access to oil revenues, and
it's a very unique way of doing business. We also imposed sanctions that dealt with -- basically stigmatizing the Iranian
So far as I'm aware, none of those implications are lifted as a result of this deal. Now, there are people out there
who will still sell oil or buy oil from Iran and transact with the Central Bank of Iran, but we have not given a green
light to believe that the Central Bank of Iran is a good institution or an institution that's not involved with respect to
terrorism, or money-laundering, or any of these other things that they're involved with.
The reality is, though, if you're going to get a nuclear deal with Iran they are not going to do it without real
sanctions relief -- without real economic sanctions relief. And the decision that was made by the administration -- and
again, I think it was a good decision -- was that getting 10 to 15 years of real distance from Iranian nuclear weapons
breakout was worth dealing with a future consequence of Iranian economic revival.
I should also not, too, on this issue of $100 billion to $150 billion, I think there is an impression that it's a savings
bank that was opened up for the Iranians and that was -- it's money that's just pouring in that we can't wait to give back
to the Iranians. We should bear in mind that this is Iranian money that we have been restricting from them that they
have not been able to use. It's for this reason that they had the economic downturn that Secretary Lew spoke about
earlier.
So I think the bottom line is the Iranians do have a lot of things they need to do with this money. It is not a gift from
the U.S. taxpayers and it's not manna from heaven for them.
December of 2014.
I -- I think there's an alternative because President Obama always said there was an alternative. He said that no deal
was better than a bad deal, and the president is a responsible commander in chief and a responsible executive, and he
went into these negotiations knowing that he had an alternative to this deal.
And I believe that we agree with that Mr. -- with the president. He has an alternative. The alternative is to use
coercive American power, including U.S. secondary sanctions, in the context of the U.S. Congress asking this president
to negotiate a better deal, particularly around snapbacks and sunset provisions.
Now, if the president doesn't believe in the power of U.S. secondary sanctions, if his argument is that if you vote
down this deal the sanctions regime will crumble, then unfortunately there is no power in the economic snapback
because the economic snapback actually depends on the power of the U.S. secondary sanctions to send a message of
fear to the marketplace so that financial institutions and energy companies in seven, eight, nine, 10 years, when they've
sunk in hundreds of billions of dollars back into the Iranian economy -- by the way, contracts that are grandfathered -that they will respond by -- by moving out of the Iranian economy.
So the president can't have it both ways. Either there was an alternative to this deal, in which case he was a
responsible negotiator who went in with the best alternative to negotiate an agreement; or there's no alternative to this
agreement, in which case he negotiated with the Iranians without an alternative.
I -- and I want to thank the panel for -- for being here today. I have to say that I find all of your comments much
more enlightening and information than the classified briefing that we just attended by 1,000-fold.
It would seem logical to say that if Iran could find the resources to support terrorism and regional turmoil while
under the intense pressures of economic sanctions, as they have been, they will continue to do so under this deal, if not
to a greater extent due to their increased accents -- access to financial resources. In fact, this -- it was National Security
I don't think anybody disagrees with that. However, there are some in the administration that have indicated that
they believe Iran will steer this additional funding into its own economy.
Now, Dr. Heinonen has spoken about verification and inspection, but verification and inspection is -- is only as good
as enforcement. And the IAEA does not enforce; the United States of America enforces.
So it'll be the United States of America that will enforce this deal against Iranian stonewalling and cheating. And if
we have lost our ability to use peaceful economic leverage to enforce this deal, the Iranians will therefore cheat
bomb.
What I think -- where I think we enter the zone of danger with regard to increased Iranian sponsorship of terrorism
as a result of the JCPOA is precisely the fact that under the current structure of the deal, and under the current
mechanisms in the hands of the U.S. Treasury Department, the Financial Action Taskforce, and other bodies that are
tasked with overseeing this, we simply don't have mechanisms that allow us to provide responses that are short of
walking away from the table. In other words, there is no scalable responses to Iranian cheating.
And as Mr. Dubowitz said, Iran is far more likely to inch out of its obligations with regard to the deal than to break
out and make a sprint for the bomb. And as a result, what we have is we have a scale problem.
Currently we don't have the ability, short of abandoning the process all together, to exact tactical punishments from
the Iranians for instances of malfeasance, including additional funding for terrorism.
And let me just say this: Mr. Dubowitz, I am very interested in your -- in your discussion about the rehab plan and
the Central Bank of Iran. I spent four years as the United States ambassador to Luxembourg, from 2005 to 2009. I am
very, very familiar with the Central Bank of Iran, and I would consider one of the most important things that I've ever
done in my entire life was to stop terrorist financing from being laundered and -- and sent through the Grand Duchy of
Luxembourg.
So I'm very interested in your -- your thoughts on -- on SWIFT and the rehab plan, and I would love to pursue that
with you in the future.
Mr. Himes?
And to illustrate that, this hearing -- the undercurrent of this hearing is how shocked we are to learn that as a result
of this deal Iran my get some money. There's a little controversy over how much money. The figure of $100 billion to
$150 billion keeps being bandied about. The Treasury secretary -- and I'll let those of you who are saying $100 billion
to $150 billion work this out with the Treasury secretary -- he estimates the money at $56 billion.
We voted for the sanctions for the express purpose of taking away the money to force them to the table to negotiate
the deal -- now, we may agree that the deal is good or bad -- but to negotiate the deal whereby they would get that
money back. And now we are shocked -- shocked to learn that this bad regime is getting the money back.
Now, bad regime. We get it. We know that. I'm on the Intelligence Committee. I see that day in and day out.
You do these deals with bad regimes. In the '70s and the '80s we did these deals, these similar nuclear deals, with
China and with Russia at a time where I could dare say they were both committing probably things that would qualify
as crimes against humanity. But we do these deals not with our friends but with our enemies.
But what about the history of deals? Yes, there was the -- the Algiers Agreement, whereby we -- we -- we freed
some hostages.
We haven't mentioned, by the way, the deal that was struck by the Reagan administration in 1985, two years after
the Marine bombing killed over 200 Marines, whereby the Reagan administration provided conventional arms to Iran
so that hostages would be released so that U.S. law could be violated to fund the Contras, violating the Boland
Amendment.
So the question I have -- and the idea is that context is important. This isn't a great deal. You don't get a great deal
in situations like this.
I personally believe that the idea that we can just shut it all down -- and the president's coming under a lot of
criticism here. The Russians, the Chinese, the U.K., French, the E.U. -- this was a P5+1 deal.
My question is -- and I haven't gotten a good answer on this. I don't have -- I have two minutes left -- if we
unilaterally say no to something that the world negotiated, that the Security Council has endorsed, that the E.U. has
endorsed, what scenario results in us being in a better position than the position of having 15 years -- and I understand
they may cheat -- but 15 years in -- in which we have some confidence, unless they cheat, that they're not building a
bomb? What happens that puts us into a better place than we are in if we accept this deal? I just open that up for a
scenario that is better than accepting the deal.
The Iranians have negotiated agreement that, in terms of their deal structure, is frontloaded.
HIMES: But -- but you do agree, this is a nuclear deal. I -- I get that they...
HIMES: Why not?
DUBOWITZ: No. So what they've done is they've -- they've phased this so that they can start introducing on a
industrial scale advanced centrifuges. So right at year 15 they can actually enrich not to 3.67 percent, not to 20 percent,
but to 60 percent, because they will use that as justification that they're going to have a -- a nuclear- powered navy.
hands.
Now, the problem on our hands at that point is we have no other peaceful way to stop them, which is why this deal,
in my opinion, is going to lead to war, and it'll make war more likely.
Your taskforce is about illicit financial conduct. Your taskforce should be very concerned that we are lifting
sanctions on the Central Bank of Iran and letting all these banks back onto SWIFT despite the fact none of these banks
have been rehabilitated from an illicit financial perspective.
I ask unanimous consent -- I know we -- we said we were going to go to recess. The House Foreign Affairs
Committee chairman is here, Mr. Royce, who would like to be recognized.
Without objection?
Once inside the base the vehicle occupants, who were wearing U.S. uniforms provided to them and speaking
English, by the way, fatally shot one soldier. They kidnapped four other U.S. soldiers.
With U.S. and Iraqi forces in pursuit, these Iranian-supported militias executed our four soldiers in cold blood. One
was the father of two small children from Southern California.
And the point is this: There are many amongst the IRGC who have had to operate under the restrictions that
sanctions have placed on them, and the sanctions are being lifted, but they remain committed to harming the U.S. And I
don't take their chants of "death to America" as an idle threat.
And I'll add one other question to you, Steve. Clearstream, a known money-launderer for Iran, is still moving
Iranian money out of New York to Luxembourg through an illegal book entry system to keep the Beirut Marines -- the
families of those Marines -- from enforcing their judgment. In your experience, what is OFAC doing about this kind of
book entry-based laundering for Iran?
economic free zone.
The Europeans are lifting sanctions on the Revolutionary Guards and the Quds Force. Iran's Revolutionary Guards
and Quds Force can now operate much more freely in Europe.
financing.
Steve?
I promise you, sir, I will see that case through to the end. It is -- the conduct there is patently offensive by any
standard.
(RECESS)
And again, thank the panel for sticking with us through that series of votes, and apologize for your inconvenience,
but thank you for being here.
I want to talk a little bit about the -- the idea of the intermingling of the types of sanctions -- nuclear, non-nuclear,
ones that were directed towards terror. I'm looking at a report that the Bipartisan Policy Center put out last week, and
they noted that throughout negotiations with Iran the position of the United States has consistently been that we would
only lift nuclear-related sanctions as part of a final agreement.

Given the complexity of the U.S. sanctions regime and numerous overlapping reasons for which sanctions have
been placed on Iran, distinguishing between those measures which are and are not nuclear- related will pose a
significant challenge to the deal's implementation. They -- they continue with their analysis and they say out of more
than 800 entities listed for sanctions relief under the JCPOA, their -- the Bipartisan Policy Center analysis finds a total
of at least 81 agencies, companies, and persons that were sanctioned for reasons that are either explicitly non-nuclear or
could be contested as non-nuclear. These include entities that have been involved in developing ballistic missile
systems, weapon smuggling, supporting terrorism, and violating human rights. Under a strict interpretation of what
constitutes nuclear-related sanctions, these entities should not be subject to sanctions relief.
issue this is.
DUBOWITZ: Thank you, Congressman. I -- I think it's a big issue, and I think what the administration has done is
that they've started to try and recharacterize non-nuclear sanctions as nuclear sanctions so that they could provide
sanctions relief under the JCPOA. Let me give you an example.
Ballistic missile financing, right, was considered to be a separate example of illicit conduct. And so there are a
number of designations of Iranian banks, the designation of the Central Bank of Iran included in its -- on its predicate,
the financing of ballistic missiles.
But the administration had a problem, which is that the Iranians were demanding in negotiations that a number of
these entities be -- be de-designated, including the Central Bank of Iran. And so what they've done is they've taken
ballistic missile financing and they've recharacterized that as nuclear financing...
DUBOWITZ: Well, that -- that's true, but I -- I think what we've got to be careful of here is -- because the
administration is saying we retain the right to designate on terrorism and human rights grounds, but the fact of the
matter is is that terrorism and human rights sanctions for the most part are not economic sanctions. And -- and as a
result, what we're effectively doing is we're dismantling the economic sanctions regime while still retaining the right to
go after Iran for terrorism and human rights purposes.
ROTHFUS: Exactly.
agreement.
I want to direct this one to Mr. Berman. Earlier this year the G-20, whose 34 member countries constitute the
world's major financial centers, met in Istanbul and committed to take action to more aggressively combat terrorism
financing around the world. The G-20 enlisted the assistance of the Financial Action Taskforce, which will hopefully
issue a report later this year on how to prevent terrorist organizations from using the global financial system for fundraising.

And what we've effectively done under this sanctions regime is we've dismantled the E.U. sanctions. The E.U.s are
-- they're lifting all of their sanctions because the majority of them are nuclear sanctions.
And so as the Europeans go back to business, and the Chinese, and the Russians, and everybody else, it is going to
be much more difficult to seek the kind of consensus that we need at FATF in order to actually crack down on Iranian
illicit financial flows because our very partners are going to be so deeply invested in the Iranian economy that it'll be
more difficult than it has been in the past to persuade them to -- to enforce these regulations on their financial
institutions.
SCHWEIKERT: Thank you, Mr. Chairman. And with -- I'd like to ask a U.C. to put some documents into the record
in regards to the charter of SWIFT.
Mr. Dubowitz, you're the only one up there who has actually talked about SWIFT, and I -- this is something I've
been trying to get my head around and wanted to focus on just for a couple moments. First, in 30 seconds -- 20 seconds
-- describe what -- the backbone of what SWIFT is.
around the world.
SCHWEIKERT: OK. And the -- the secure international backbone of electronic movement of money. Simple
enough, and Belgium-chartered (ph).
So walk -- walk me through a -- a conceptual idea. Let's say this agreement moves forward and all of a sudden
Iranian institutions, banks, others that actually would be -- have had a SWIFT membership would be able to move
money -- except for the fact that if I'm here reading the SWIFT charter, both a country and an institution that's -- have
been involved in bad acts don't have rights to access that system.
So what happens here? I have here where we're obligating ourselves and countries to this agreement. The same
time I have a private electronic backbone moving money that's not allowed to do this.
And there, by the way, there are a lot of bad banks on the SWIFT system. There are Russian banks, as I mentioned,
who are still there.
DUBOWITZ: Correct.
DUBOWITZ: Correct.
Now, we made this mistake before with North Korea and Banco Delta Asia. The North Koreans got all their
sanctions relief and they got a nuclear weapon, and we lost our economic leverage on North Korea.
My fear is we're going to do the same thing again, and this has deep consequences for our sanctions programs writ
large, including against Russia and other targets.
SCHWEIKERT: Mr. Chairman, I appreciate your patience. I'm just waiting for the day that we're going to owe a
family or many families an apology because we allowed this backbone to finance some horrible act and we allowed
them to use our own systems.
I'm one of those that really wants to take care of America first and not Iran first. I think a lot of us here on the
taskforce are concerned about trusting Iran.
Obviously, historically speaking, many of us find it hard to believe that Iran will actually allow for an open and
honest process when inspecting their nuclear sites. Determining how the JCPA (sic) will treat military site inspections is
And I'm a small business owner myself. I make deals all the time. And I'm still concerned why we negotiation with
-- when "death to Americans" and the "death to the Israelis" is a common theme among the people we say we can trust.
Now, my question to you, Mr. Heinonen, is the following: I've heard you say that the 24-day window will allow
Iran to -- to cheat, that Iran has not changed its nuclear course, it's keeping all the options open for building nuclear
arms. Can you explain your comment?
He asked me to rate the deal with a scale from one to 10. And as you see from my testimony, I actually have divided
this testimony three parts. One part is the declared facilities with declared materials; one is the rights and provisions to
When I look the rating from -- for each of those I think it's better (ph) to look each of those and you'll make your
own risk assessment on that.
The first one, when I said a rating seven to eight, this is for declared facilities, the way I see. And why it is not
higher is because there is this dispute settlement process, which you miss (ph) in 24 -- after 24 days or even more.
And then if you ask my opinion with other (ph) possibilities to find these computer codes and someone using them,
and there is actually even not really an inspection procedure for that, I think it's a zero. It's not even one.
And we need to keep also in our mind that the time is here of essence. This problem also traces (ph) with a time
when Iran's capabilities increase, and just as an example -- I'm not a sanctions expert, but yet, when you come to year
15, many Iran can have any number of enrichment facilities any place, perhaps a little bit deeper in ground than in
Fordow. They can produce all enrichments they want, then the breakout time goes down -- goes to the weeks or even
smaller. And then if you add this manufacturing of weapon components and others they have prepared, that -- that adds
two or three weeks to this whole picture.
I don't think that the sanctions have any meaning at that point of time because Iran already achieved what it needed
in the worst case.
So by disclosing these names, these places, we achieve two things: we engage the other states to the process, and
this reinforces the system and makes any concealment by Iran much more difficult. It also makes the verification
system much more transparent when the names are known.

Dr. Heinonen, I was interested in talking about, for a minute, the IAEA annexes to the agreement. Secretary Kerry
really was quite dismissive of those in the briefing of Congress earlier this afternoon. What amount of importance
should we put on the Iranian document with IAEA in terms of studying that as a part of fully understanding the
verification regime -- inspection regime?
And as I said in my statement earlier today, I think at the time from mid-August to mid-December is much, much
too short to solve this PMD problem. And then I also pointed out that this IAEA is looking only information which is in
the annex of November 2011 report. But Mr. Amano himself has said that there is some other information which came
other information.
program.
So, therefore, I see essence (ph) (inaudible) that the governments and the (inaudible) parts will see those (inaudible)
so that they can do a full assessment what we can achieve, what we cannot achieve. Because after all, these are the
HILL: Right.
A question for Mr. Berman: You were talking about the GDP in your written testimony, and potential amounts of
money that are being released. Give me some feel for the flow, in addition to any near- frozen money that's released,
but what kind of monthly flow you think their revenue would be.
And also, tell me what you think the actual amount of foreign reserve -- reserves should be for their belt-andsuspenders approach of -- of having adequate cash on hand were snapback sanctions to come back. How much money
would you estimate? Ten percent of GDP? More? What would you say?
BERMAN: I -- I think that's a good question, and -- and sort of it comes down to a -- sort of a -- a term of our calculus.
I think the numbers that we heard earlier from other members of the committee -- of the taskforce -- when we talked
HILL: Too high?

At -- at the point where we could have actually accelerated the sanctions and brought them to severe crisis we let up.
We gave them $12 billion, which took their foreign exchange reserves, increased it by 60 percent to $32 billion.
billion.
And they're effectively gone from 6 percent of their GDP to almost about 40 percent of their GDP, so that what
we've done is we've built up their foreign exchange reserves, which now increases their economic resilience. And with
that kind of foreign exchange reserve rainy-day fund, over time it's going to make it very difficult for us to snap back
And Dr. Heinonen is right. When they're an industrial-sized, near-zero breakout, days away from actually breaking
out to a nuclear weapon, our ability to actually impose that kind of economic coercive force at that time will be
significantly diminished because it will take much longer to have any kind of impact, never mind the impact we had in
2012.
If these numbers are anywhere near accurate, if we are, indeed, looking at $100 billion to $150 billion, we are
actually providing or facilitating the expansion of Iranian -- of the Iranian economy by a significant portion. We are
wiping clean the constriction that occurred as a result of sanctions, and we're actually forcing an expansion. And I think
that should be noted because, as I said before, money is fungible and this expanded revenue is likely to trickle in various
ways to Iranian regional activities as well as to terrorism.
SHERMAN: I have heard reports that Iran really has as little as $28 billion or as much as $150 billion. I'd like to
know how much money they have on deposit, and then what are the obligations that the host bank or the host country is
going to extract from that, because obviously nobody's going to give Iran its money if it owes it to a domestic vendor or
if it owes it to a -- to the bank where -- where -- where they have the deposit.
I mean, my last information suggested, again, that they've got someplace between $100 billion and $150 billion in
total reserves worldwide. Some of that is in Iran, and some of that is in...
SHERMAN: OK.

SHERMAN: OK.
in India?
SHERMAN: OK.
NEPHEW: Right. There -- there is some that is in Europe, but again, if we're talking percentages, you're probably in
the -- the single-digit percentages.
SHERMAN: OK.
OK, Mr. Heinonen, this picks up on earlier questioning. We're being told that 24 days is enough because whatever
Iran does is going to have this signature and you're going to be able to tell that something radioactive was there.
What I'm most concerned about is can they perfect and create arrays of their IR-8 centrifuges. Now, in order to
build these centrifuges they're going to have to test them and calibrate them. Do they need to use gasified uranium to
process.
The first step is that you do what is called a mechanical testing. You just get them to spin and see that they survive
long enough under this very severe conditions where they are running.
SHERMAN: Like what?
SHERMAN: Yeah, OK.
corrosion or...
designed. So one...
HEINONEN: I don't think -- sir, I don't think that this 24 days has much to do with that, because this -- first of all,
these things happen in different places. And when you go to this test -- the last step of the test, you don't need to test so
many machines. You test...

what you need.
And then if you have three weeks' time to sanitize it, sir, Mr. Albright (ph) also agrees with me, it's a doable if you
do the planning in advance. And this is, I think, that we also to recognize that when people talk about the reception (ph)
HEINONEN: Yes.
SHERMAN: I -- I would hope that you would issue a -- a paper or something on this to get it the kind of definitive
press coverage, because we're being told and the American people are being told that the 24 days is not too long because
if they're doing anything with uranium involved it can be detected, and you're saying not if you -- not if you plan it in
advance.
HEINONEN: Yes. There were cases in 2003 that the IAEA did find in certain places enriched uranium even though
they -- there should have been.
I yield back.
Mr. Heinonen, 20 years ago when we negotiated with the North Koreans we had the support of allies over there, and
the Japanese who supported it, South Korea. Is the world safer because of that agreement? Is the world safer because
of the agreement that we have with North Korea that was negotiated 20 years ago?
I think that the vision of the people who designed the Agreed Framework at that point of time was that the North
Korean regime will not live very long time, so this agreement, which was supposed -- has been now lasted two decades,
was not supposed to last two decades. And that's why the provisions were like they were.
HEINONEN: No.
HEINONEN: Yes...
PITTENGER: But if I could, just for time's sake -- is that clarified to just be the approved sites, those 17 sites? Can
they say, "We want to go to another part of the country"?
PITTENGER: OK.
Since the Iranians can stall through the ICPA (ph) for at least a month or -- or more, and in reality several months,
how will we know if Iran is removing compromising material during this time, and how significant is this lead time?
Does it compromise the inspection process?
Mr. Dubowitz, the administration has stated that all sanctions relief is from the nuclear sanctions regime only. And
after reviewing the list of entities and individual de-designated, which I think you referred to in your opening statement
-- I think that was the list you referred to, and if it was we want to include it as part of the record.
There are ways to actually allow the CBI back partially. There are ways to actually put down specific benchmarks
and say to the Iranians, "Once you have established and met those benchmarks then we will rehabilitate your Central
Bank of Iran, but we are not going to wipe away all of these illicit financial activities just because we have a nuclear
agreement."
That could have been -- that could have been proposed and won in a negotiation. It is not good enough to say that
the Iranians would have rejected it and therefore we took it off the table.
And that's the construct. The construct is we'll take them away and then we'll reimpose them if we need to, instead
of saying, "How are we going to defend the sanctions architecture in key ways so that we maintain the economic
leverage, particularly on the full range of Iran's illicit financial activities?" and have said to the Iranians, "We'll give
you relief here but we're not giving you relief there until you establish that your banks are no longer engaged in the full
range of illicit financial activities."
That could have been a separate construct. I think we could have defended that. I think we would have had
international support for that.
But at the end of the day, the administration had a very different construct: Take it all away and reimpose it if they
cheat.
FITZPATRICK: My concern is that some of those de-designations may affect the rights of American citizens who
have judgments against Iran.
And Mr. Perles and I, in my first round of questioning, we -- we talked about the -- the Beirut barracks bombing
case that I -- I believe you were involved in. We spoke off the record before the hearing about after September 11th the
Any -- any of you.
facility.
We sit at the knife's edge today not knowing what the impact of this agreement will be on all of those enforcement
activities. We don't know what instruction the administration will give to the Justice Department with respect to this
joint seizure that we've done with the -- the -- the Havlish plaintiffs. We're -- we're simply stuck in stasis in this waitand-see attitude.
What we do know is, at least in the case of this bookkeeping entry system that we touched upon earlier, which is
really the world's largest Hawala banking system, that all it -- that's all it is at the end of the day is -- is the world's
largest Hawala banking system. Federal judge in Manhattan last year asked OFAC to comment on the lawfulness of this
Hawala system.
This is Clearstream S.A., a Luxembourg company owned by Deutsche Borse, running one -- well, we tracked -- I
have no idea how much money really went through the account. We were able to track $1.67 billion of Iranian money
going in and out of JPMorgan Chase by this bookkeeping system. And OFAC, frankly, declined to opine upon the
lawfulness of that sort of transaction.
From a practitioner's perspective, that's very frightening because if you can -- if a Clearstream can move Iranian
money in and out of New York by book entry without it being a violation of law, the entire sanctions regime -- and I'm
not talking about Iranian sanctions; I'm talking about sanctions across the board -- collapses. It means that any drug
cartel, for example, could move their money to Luxembourg in a -- in a Gulfstream and have a Luxembourg-based bank
move it into the U.S. system by book entry. It's unreportable and untraceable.
PERLES: Yes.
PERLES: Correct.
FITZPATRICK: My concern is Assa Corporation is on the list of organizations to be de-designated, which goes back
to Mr. Dubowitz's concern, what does this have to do with nuclear sanctions, and what is really happening here, and
what is the impact. But perhaps a -- a subject for -- for another hearing.
FITZPATRICK: My time is well expired, and the vice chairman of the committee is recognized for the final question
of the hearing.
Mr. Perles, in representation of your clients you made contact with OFAC, DOJ, the solicitor general, as I
understand it, on behalf of your clients.
PITTENGER: Seeking assistance on their behalf. Could you tell us the nature of that? We understand that your
request was denied on one occasion at least, and you didn't -- you were rebuffed by them. Could you give us some
context for that?
And is this consistent with your previous work with the government? Have they been cooperative in the past, and
why were they not this time?
You know, we just talked about the fact that a federal judge asked OFAC to opine upon the lawfulness of this
gigantic Hawala banking system. We were in touch with OFAC after that request was made and OFAC simply failed to
respond. They advised the federal judge that they were not going to respond.
We had hoped to be finishing up our activities at the Supreme Court last spring. We're waiting for the solicitor
general to opine upon the constitutionality of statutes that you gentlemen passed to assist victims of terror. We're still
waiting.
I certainly hope that the solicitor general will opine upon the constitutionality of those statutes this fall, but we have
no schedule. We -- we really don't know where we are.
That is in very different contrast to where we were at the conclusion of the Bush administration. Stuart Levey, who
I have enormous respect for, turned intelligence data over to us so that we could seize the $1.9 billion that was transiting
New York.
PITTENGER: So you've seen a reluctance on behalf of those who represent our government to assist American
citizens in their claims against Iran?
PERLES: Yes, sir.
I yield back.
END
14 of 14 DOCUMENTS
Federal News Service
House Financial Services Committee Hearing on Task Force to Investigate

Terrorism Financing - The Iran Nuclear Deal and its Impact on Terrorism
Financing
LENGTH: 23405 words
Subject: Iran Nuclear Deal and Terrorism Financing
Participants: Representative Jeb Hensarling (R-TX)
Witnesses: Ilan Berman, vice president of the American Foreign Policy Council; Mark Dubowitz, executive director of
Foundation for Defense of Democracies; Steven Perles, senior attorney and founder of Perles Law Firm, P.C.; Olli
Heinonen, senior fellow in the Belfer Center for Science and International Affairs at the John F. Kennedy School of
Government; Richard Nephew, program director of Economic Statecraft, Sanctions and Energy Markets at the Center
on Global Energy Policy of Columbia University
Location: 2128 Rayburn House Office Building
Time: 16:15:00
Date: 2015-07-22
hearing is "The Iran Nuclear Deal and its Impact on Terrorism Financing." Without objection, the chair is authorized to
declare a recess of the taskforce at any time. Without objection, all members will have five legislative days within which
to submit extraneous materials to the chair for inclusion in the record. Without objection, members of the full committee
who are not members of the taskforce may participate in today's hearing for the purpose of making an opening
statement or questioning the witnesses.
Over the first several hearings of this taskforce members have heard foreign policy experts and others testify regarding
the pervasiveness of Iran's involvement in the financing and exporting of terror throughout the Middle East and around
the globe. We know that Iran is the leading state sponsor of terror, and as such, any diplomatic engagements with Iran
or understanding or agreements with them would be incomplete without a clear and full understanding of these facts and
its impact on the face of global terror financing.
Today's hearing will explore the recently announced nuclear agreement negotiated by the Obama administration and the
P5+1 nations with Iran -- specifically its impact on terrorism financing through and by Iran.
Most concerning to many members of this bipartisan taskforce is the easing of congressional sanctions and, with it, the
danger that a new influx of cash will find its way to terrorist organizations threatening to strike the United States of
The Iranian regime has demonstrated a lack of concern about its own people, leaving in doubt the estimated $150 billion
in funds currently held abroad will allow the Iranian economy to fully recover -- not to the benefit of the oppressed
citizens, but to the advantage of the next generation of terror syndicates.
A nation so deeply committed to promoting terror has lost its right to good-faith agreements. That is why over the next
two months members of both the House and the Senate will review the fine points of this agreement before voting on it,
the product of the bipartisan passage of H.R. 1191.
an ideological allegiance. Republicans, Democrats, and Independents alike hold the power to turn back a bad deal, and
I'm confident that this taskforce, rooted in bipartisanship, will play an important role in the decision-making process.
opening statement.
Last week Iran and the P5+1 -- which I hate using acronyms, but it includes the United States, the U.K., France, Russia,
China, and Germany -- finalized a Joint Comprehensive Plan of Action that attempts to ensure that Iran's nuclear
program can be used exclusively for peaceful purposes, and in exchange for a broad suspension of many U.S., European
and United Nations sanctions. I'm pleased today -- that today's hearing will present our taskforce with the opportunity to
hear from experts with varying perspectives on that deal.
I believe there are still some questions that need to be answered. Of particular concern to our taskforce is how to ensure
that the approximately $100 billion in -- in frozen assets do not flow to terrorist organizations.
Now, the State Department has designated Iran as a state sponsor of terrorism since 1984 and notes that Iran continues
to support Hezbollah and the Assad regime in Syria, as well as Hamas, Islamic jihad, and others.
Iran's policies have brought isolation and few allies. Many experts view the election of President Hassan Rouhani, the
relative moderate candidate in that last election, as an expression of Iran's desire to move in a new direction. Sanctions
relief could provide an opportunity for -- for Iran to rebuild its economy, and invest in infrastructure, and embracing
that moderate future.
While the opportunity is here, the trust necessary to move forward is not. Fortunately, I believe this agreement does not
require us to place our trust in Iran.
Under the deal's terms and its road map for clarification on nuclear issues in Iran, this entire agreement hinges on the
adoption and implementation of a rigorous International Atomic Energy Agency inspection, monitoring, and guidance
procedure. Indeed, the agreement relies more on the IAEA inspectors -- and it's good to see Olli Heinonen here,
someone who knows a little bit about that -- than any other party, because in the absence of trust we will need the
move forward.
minute.
This agreement, without question, has the most grave outcomes of any agreement negotiated by this government. Our
allies in the Middle East, those whom I have met with countless times -- Prime Minister Netanyahu and other leaders of
the Arab world -- are gravely concerned with the outcome.
They know their neighbor. They know and have watched Iran over the last 35 years, as the greatest exponent (ph) of
terrorism.
hearing.
A nuclear Iran is one of the greatest threats to the security of the United States and to peace and stability in the Middle
East. To support this deal the agreement must end Iran's nuclear weapons program and strengthen the safety and
security of both the United States and our allies in the Middle East.
This deal, if Iran does not cheat, prevents Iran from obtaining a nuclear weapon for 10 to 15 years. However, I have
several concerns about the deal's structure, planned execution, and broader implications.
Several question: Number one, is the United States confident in the success of the verification regime established by this
agreement? Number two, what is the exact timing of sanctions relief by the United States and the E.U., and once these
sanctions are removed and foreign investment floods into Iran, can we be confident that sanctions will snap back into
place if or when Iran cheats? Number three, what are the broader consequences of this agreement for our security and
regional stability, and how will an influx of billions of dollars affect the geopolitical balance in the Middle East?
Iran is the number one state sponsor of terrorism, and the current regime is a destabilizing force in the region. Taking
our most effective sanctions tools, the banking and energy sector sanctions, off the table could limit our ability to
Thank you.
And I thank you, Mr. Chairman, for sounding the alarm about the mistake, I believe, of historic proportions agreed to by
the Obama administration last week in Vienna. The president has agreed to far-reaching concessions in nearly every
area that was supposed to prevent Iran from acquiring a nuclear weapon. Under this deal, Iran would receive $100
billion to $150 billion in sanctions relief and regain access to conventional arms and ballistic missiles that has been
denied for nearly a decade.
Iran will be free to transfer these weapons, as has been stated, to Hezbollah, the Syrian government, Yemeni rebels, and
other terrorist groups. These organizations threaten the security of the United States, our ally Israel, and the world, and
will further destabilize a region already in crisis.
As Prime Minister Netanyahu said when visiting Congress earlier this year, "No deal is better than a bad deal." By any
measure, this is a bad deal, Mr. Chairman. Congress should show the world that America will not accept a nuclear Iran.
Ilan Berman -- Ilan Berman is vice president of the American Foreign Policy Council. Mr. Berman has consulted with
the Central Intelligence Agency and the Department of Defense and provided assistance on foreign policy and national
security issues to a range of governmental agencies and congressional offices.
Steven Perles is senior attorney and founder of the Perles Law Firm. Mr. Perles has handled a number of cases before
the United States Supreme Court, United States courts of appeals, and district courts across the country.
His litigation practice has included cases in the fields of Foreign Sovereign Immunities Act litigation. He has lectured
on the evolution of anti-terrorism civil litigation at conferences for national crime victims groups. He holds a law degree
from the William and Mary Law School.
Dr. Heinonen served as the deputy director general for the IAEA and head of its department of safeguards. Prior to that,
he was director at the agency's various operational divisions and was an inspector at the IAEA's office in Tokyo, Japan.
He studied radiochemistry and completed his Ph.D. dissertation in nuclear material analysis at the University of
Helsinki.
Dr. Richard Nephew is a program director of the economic statecraft, sanctions, and energy markets, Center on Global
Energy Policy at Columbia University. Prior to this position, Dr. Nephew served as the principal deputy coordinator for
sanctions policy at the Department of State.
He also served as the lead sanctions expert for the United States team negotiating with Iran. From May 2011 to January
2013 he served as the director for Iran on the national security staff. He holds a master's degree in security policy
studies and a bachelor's in international affairs from George Washington University.
There's a great deal to say about the Joint Comprehensive Plan of Action, as the new agreement with Iran is formally
called. I simply don't have the time to say it all, and on issues like verification and compliance, I think my colleagues
can acquit (ph) themselves much better than I.
This relates directly to the question of sanctions relief because under the agreement the Islamic Republic is now poised
to receive massive economic stimulus in the very near future. Specifically, later this year -- or at the very latest, early
next year -- upon verification by the International Atomic Energy Agency that Iran has disclosed the requisite details of
military-related nuclear work, the U.S. will begin unblocking $100 billion to $150 billion of Iranian revenue from oil
sales that have been locked in escrow accounts in China, South Korea, and in other nations.
I think it's necessary to put this in context precisely because it is so large. In 2014 the U.S. government estimated that
Iran's total annual gross domestic product was $415 billion. So what we're talking about here is a quarter, roughly, of
Iran's annual GDP.
I think without -- with very little exaggeration what we're talking about here is a Marshall Plan for the Islamic Republic
-- the financial equivalent thereof. And while White House officials have expressed hope that the Iranian regime will
use these funds to focus internally -- to focus on domestic conditions, on improving the economic welfare of ordinary
Iranians -- it's necessary to point out that money is fungible and the -- an Iranian regime that has this kind of economic
stimulus package has an unprecedented financial windfall that will invariably translate into greater capability in two
areas.
The first area is terrorism. Several years ago the U.S. government publicly estimated that Iran had, quote, "a nine-digit
line item in its budget for support of terror organizations," end quote. This included $100 million to -- to $200 million
annually to Lebanon's Hezbollah, as much, potentially, as $25 million monthly to Hamas in the Palestinian Authority,
and the list goes on. And this assessment was made at a time when Iran was subject to stringent international sanctions
and there was no financial relief for the Islamic Republic in sight.
Today the situation is very different. The resources at Iran's disposal in this area are poised to expand exponentially.
And as a result, what you see is a much greater potential on the part of Iran to translate its financial windfall into a
financial windfall for its proxies.
The second issue of -- of particular concern to me is the question of Iranian regime expansionism. The Iranian regime
possesses a distinct manifest destiny. Ideologically, it talks about itself as the center, geopolitically, of the Middle East.
And the same holds true in Iraq, where Iran already possesses extensive political influence. The current fight against
the Islamic State terrorist group and the disarray of Iraqi politics has allowed Iran, through both economic and military
and financial means, to expand its ambit still further.
The White House has said in public that this deal is merely transactional. It's focused strictly on the nuclear issue and
doesn't touch on other issues, including Iran's support for terrorism.
But both in scope and in duration and, frankly, in its material minutia, what you see is a deal that's aspirational. It is one
that hopes that the Iranian regime will, as a result, turn over a new ideological leaf.
Thank you.
I want to focus on the Revolutionary Guard Corps, or the IRGC, which I think is the major beneficiary of this nuclear
deal. And this nuclear deal itself is -- is fundamentally flawed in its both design and architecture.
So the IRGC stands to benefit even more now because of the JCPOA. The deal requires the U.S. and Europe to remove
numerous IRGC-linked entities from their sanctions lists, including the most important terrorism finance and moneylaundering facilitator, the Central Bank of Iran.
Now, these de-listings are a direct challenge to the conduct- based nature of the sanctions regime imposed by the Obama
and Bush administrations. Those sanctions were designed to target the full range of Iran's illicit activities and not just
Iran's nuclear program. And they were also designed, according to Treasury officials, to protect the integrity of the U.S.
financial system.
In short, the entire country's financial system, quote/unquote, "posed illicit (ph) financial risks for the global financial
system." Internationally, the Financial Action Taskforce confirmed these terror-financing and money-laundering risks.
programs.
More than 67 percent are going to be de-listed from Treasury's black lists within 12 months. After eight years, only a
quarter will remain on our lists.
for now.
The deal lifts U.S. sanctions on 47 Iranian banks designated for proliferation, nuclear and ballistic missile activity, or for
providing financial services to other de-listed entities. They're all going to get back onto the SWIFT financial messaging
system.
Now, the White House assures us they have a snapback mechanism -- more that they can impose non-nuclear sanctions,
like terrorism. But the agreement itself notes that Iran may walk away from the deal and its nuclear commitments if
new sanctions are imposed. The agreement also contains an explicit requirement for the European Union and the United
States to not interfere with trade and economic relations with Iran.
So Iran can use these provisions to argue that the reimposition of sanctions, even if implemented on terrorism grounds,
is a violation of the agreement. Iran will threaten to return to its nuclear program, and this gives Iran an effective
nuclear snapback -- much more powerful than our economic snapback -- to -- to intimidate the United States, and
especially Europe, from reinstating sanctions.
Now, Ilan has talked about the hundreds of billions of dollars that are going to go back to Iran, and with Iran back on
the SWIFT system and its banks reintegrated into the formal financial system, halting the flow of these funds to bad
agreement.
Mr. Chairman, I'm happy to share some of the other recommendations in my testimony during Q&A. Hopefully this is a
good start. And thank you for the opportunity to testify.
Mr. Chairman, Ranking Member Lynch, Mr. Pittenger, thank you again for the invitation and the honor to testify before
you today. Over the last 20 or 30 years my law firm has probably represented and reconstructed terrorist attacks
involving the death or personal injuries to U.S. nationals and perhaps the rest of the private bar combined. We have
extensive experience reconstructing and then litigating these matters against countries like Libya, Syria, Iran, and the
Sudan.
Our litigation portfolio currently valued at about $17 billion. During the course of that period we have separated roughly
half a billion dollars from the material supporters or financiers of these attacks, and we currently hold $1.9 billion of
Iranian assets that were illicitly invested in New York in our trust account awaiting final court orders so that they can be
distributed to various clients.
I was asked to testify for a very explicit and narrow question of expertise. In my view, my opinion, will the release of
$100 billion to Iran result in an increase in Iran's funding of terrorist organizations, resulting in the future deaths and
personal injuries of United States nationals?
I think, based on Iran's behavior that I've looked at since 1979, the answer to that question is, inevitably, yes, there will
be increase -- substantial increase in funding for those organizations, and they will target U.S. nationals.
Being unable to tolerate peace in the Middle East, the Iranians sponsored a bus-bombing campaign designed to destroy
the Oslo Peace Process, intentionally targeting American students in Israel. The most famous of these is Alisa Flatow, of
New Jersey; and other students like Matt Eisenfeld, of Connecticut; and Sarah Duker, also of New Jersey. Alisa Flatow
happened to be the first American student killed in an Iranian-sponsored bus bombing intended to destroy the Oslo
Peace Process.
The last time the United States entered into this kind of agreement with the Iranians was 1981. It -- that agreement is
known as the Algiers Accords. It resolved and resulted in the release of what are -- people who are called the Tehran
And look at the result, again, through -- through my optic. That agreement was executed in 1981. Thirty-one months
later the Islamic Republic of Iran detonated the largest non-nuclear device ever -- ever exploded, resulting in the deaths
of 241 U.S. servicemen in Beirut.
client.
We separated collectively -- and I am including the work that other law firms did for Lockerbie -- roughly $3 billion -something in excess of $3 billion in reparations from -- from Mr. Gadhafi that were distributed to American victims. I
dare say, in retrospect, if Mr. Gadhafi had known in the late 1980s that his bombing campaign was going to result in his
having to cough up $3 billion to his American victims he would have found some other way to be obstreperous. He
I think that the litigation that Congress has authorized American victims of state-sponsored terrorism to engage in serves
a -- a real national security purpose. There is no amount of money that will help compensate a family for the loss of
their loved ones; the purpose of the litigation is deterrence.
Thank you.
deal.
In my testimony I will focus on the verification aspects of the Joint Plan of Action. But in my remarks I am also mindful
that the reference to the road map agreed between the IAEA and Iran -- while it's publicly available, it has secret
attachments which have not been able -- available to me when I made my testimony and statement.
Iran will retain a sizable nuclear program with its supporting nuclear infrastructure. In technical terms, Iran has not
changed its nuclear course. It will maintain substantial uranium enrichment capacity, and it's permitted to expand it after
10 years without having technical or economical needs to do so. In addition, implementation of the additional protocol
remains provisional until the time when the IAEA has reached a broader conclusion on the peaceful nature of Iran's
nuclear program.
The first one is the expanded declaration. As I have pointed in my previous testimonies, a complete declaration of all
Iran's nuclear activities, including the past ones -- for example, status of equipment and materials from dismantled
Access to undeclared and suspected sites: The JCPO (sic) provides a dispute settlement mechanism, should Iran refuse
to cooperate or challenges the IAEA request. There are (ph), however, concerns that matter. One example is the
mechanism by which information and evidence is provided that would compromise sources of intelligence and gives for
Iran opportunity to take countermeasures to buy time erase evidence.
Terms of the settlement time, 24 days do not cover credibly all plausible scenarios. It is clear that a facility of sizable
scale cannot be simple erased in three weeks without leaving traces. But likely scenarios involved here would be smallscale, which would be critical to the weapon manufacturing process, such as manufacturing of uranium components for
a nuclear weapon.
A 24-day adjudicated timeline reduces detection probabilities exactly where the system is weakest: detecting undeclared
facilities, materials, and keeping in mind the breakout times.
standards.
And then I (ph) also draw your attention to couple of other things. I think it will be very difficult to use IAEA American
staff on these inspections in next few years in Iran, which I see a deficiency (ph) because U.S. citizens will bring extra
skills which the IAEA otherwise doesn't have, and then on top of that, the IAEA has to, I think, issue a little bit more
transparent reports.

NEPHEW: Thank you, Chairman Fitzpatrick, Ranking Member Lynch, and other members of this taskforce, for inviting
me to speak today. It is an honor to speak to you in my first formal testimony before Congress.
I would like to begin by extending my personal gratitude to the members of the U.S. negotiating team. Regardless of
how one evaluates this deal, we are all most fortunate that this country produced dedicated diplomats, civil servants, and
experts, like those who worked on this deal.
In my opinion, the deal that they negotiated is a very good one, especially compared to the most realistic alternatives,
and any negative consequences can be managed.
Further, with the transparency steps that Iran has accepted, both breakout and any attempt at a covert path will be easier
to detect quickly. Some of these authorities will remain in effect for 20 to 25 years, while Iran's obligations to the IAEA
under its standard treaties will continue in perpetuity.
First, it is a blunt reality that Iran was not going to accept major restrictions and invasive monitoring on the cheap. The
administration did the right thing in leveraging sanctions relief for maximum early nuclear steps. Iran is now under
every incentive to take the steps required of it as soon as possible, which the IAEA will verify before Iran gets an extra
dollar.
Of course, the sanctions relief provided by the United States does not equate with unilateral sanctions disarmament. The
United States retains a number of sanctions authorities that will continue to exact consequences for Iranian violations of
human rights and damage Iran's ability to engage in terrorism financing, though I personally believe fears about the
extent of new Iranian spending in this regard are overblown and, according to the L.A. Times anyway, so does the CIA.
forces.
Even if the E.U. and U.N. remove some of these from their lists, these bad actors in Iran generally will find business
stymied until they correct their own behavior in the eyes of the United States. This is both due to the direct risk of U.S.
sanctions and the improvement in international banking practices since 9/11, a bipartisan effort begun under George
Bush and continued under Barack Obama.
Even just one JCPOA participant can trigger UNSC review and a vote on a U.N. Security Council resolution to continue
with relief. U.S. veto power in the UNSC gives us the ultimate free hand to reimpose these sanctions.
This could come with political costs, and many skeptics point to these costs as likely, meaning that no such snapback
would ever be triggered. But international reaction to U.S. actions will always depend on the context. If the rationale for
doing so is credible then chances for success will always be higher.
Iran, too, would have much to lose if snapback were to be triggered. The description of the deal as a Marshall Plan is an
exaggeration, except that Iran needs the sort of domestic investment that it would provide due to damage from
sanctions.
Iran's leaders would therefore have to carefully evaluate the costs and benefits of any course of action that threatens the
integrity of the nuclear deal. These costs will grow as Iran's economy grows.
Thank you.
FITZPATRICK: We thank the witnesses for their testimony. And each of the members of the taskforce will be given five
minutes now to -- to question the witnesses. I'll recognize myself for five minutes, and I'll first ask Mr. Berman and Mr.
Dubowitz if you could respond to the statement recently of National Security Advisor Susan Rice, who suggested -admitted, I guess -- that some portion of the $150 billion that will accrue back to the Islamic Republic of Iran as part of
the sanctions relief could be or would be spent to support international terrorism. So the question is to what extent you
believe that these -- and -- and again, $150 billion is an estimate, but -- but to what extent do you believe that any of
these funds would be used to enhance the capabilities of their terrorist proxies, including Hezbollah, including the
Houthi rebels that were mentioned earlier today in Yemen, to bring terror not just to the region but to American citizens?
I think the same concern is germane here. The sanctions relief -- and the scope is, indeed, enormous. It's certainly not a
Marshall Plan of the 1940s, which was $800 billion for all of Europe, but $100 billion for one individual country is still
an awfully large sum of money.
There is that concern that that money will -- even if it's spent overwhelmingly on domestic affairs -- will free up other
dollars that will be spent on terror, perhaps significantly so.
I think we also need to talk about economic relief. It's much more than $100 billion; it's much more than $150 billion.
We're talking about economic relief that will allow Iran to sell 2.5 million barrels a day, which will increase its -- its
revenues about $15 billion to $20 billion a year; opens up its auto sector, which is -- represents about 10 percent of the
GDP of Iran; its petrochemical sector. We're talking about hundreds and hundreds of billions of dollars over time.
You know, I agree with Mr. Berman and I agree with Mr. Nephew. I don't think Iran is going to spend all of its money
on terrorism. Iran will spend some of its money on terrorism.
organizations.
But picking up on a point that Mr. Nephew made, the problem is Iran is also going to spend its money on its economy
-- and not just on growth and diminishing unemployment, but on economic resiliency. See, the -- the Iranians learned
from 2012-2013, when we were hitting them with asymmetric shocks to their economy that plunged them into a severe
recession. They don't want to be in a situation again where their economy is fragile.
So they will keep substantial foreign exchange reserves in place and build up the kind of resilience they need down the
line, so then when we try to snap back our sanctions it will not have the kind of asymmetric impact that it had on Iran at
that time.
Economic resiliency is their rainy-day fund. That's what they're thinking of down the line when they have an industrialsized nuclear program with near-zero breakout and we try to use economic leverage in the future to peacefully enforce
the deal.
I believe we will diminish our peaceful enforcement of this deal and we will leave the future president with two options:
accept an Iranian nuclear weapon, or use military force to forestall that possibility, which is why this deal makes war
more likely, and when that war comes, Iran will be stronger and the consequences will be more severe.
underlying statute that Congress passed to help us get at those funds. The statute is facially constitutional. If the
committee could assure that the solicitor general promptly issues its statement of interest to the court affirming the
constitutionality of that statute we should be able to proceed with releasing those funds this fall.
PERLES: Second issue, and -- and one that is far more serious from the -- from its implications, are what are referred to
as movement of funds by book entry. That process can -- can simply be described as if you have a billion dollars in a
avoid sanctions.
FITZPATRICK: Mr. Perles, I'm -- I'm out of time. Maybe we can get back to this in the second round of questioning if
that's possible.

LYNCH: OK.
HEINONEN: 2009. LYNCH: OK. So you had a chance to see how the -- the -- the inspection protocols work, and I
guess to try to simplify it for -- for people, on a scale of one to 10 -- let's say one is -- is -- is that the agreement is
worthless, OK, and -- and -- and 10 means the agreement provides absolute security -- where along the spectrum -you've had a chance to read this agreement now and -- and -- and sift through this and try to figure out what the -- what
the inspection protocols and monitoring would provide. Where along that spectrum do you think you would -- you
would -- on a scale of one to 10, what's the value of this agreement, in your estimation?
HEINONEN: Yeah. It's a little bit difficult to give the rating yet because there are few aspects of this agreement which I
don't know, like, you know, what is the real agreement between Iran and IAEA on this possible military dimension.
LYNCH: The PDM?
monitoring (ph).
LYNCH: Right.
LYNCH: Right.
Mr. Nephew, I noticed that in the agreement that there -- there are carve-outs here. If you look at the -- if you look at the
sanctions that are provided with relief, they're almost exclusively regarding nuclear activity. There are sanctions that
were put in place because of past nuclear activity and nuclear research, uranium enrichment, things like that, that
I don't see any lifting of sanctions regarding terrorism or -- or -- or funding. And -- and look, no question about it, Iran
has -- has funded Hezbollah, has funded -- not Al Qaida -- they're -- they're Shia -- they're Sunni, rather -- but has
correct?
I -- I think the big issue at that point will be what the Iranian response would be to that. I mean, they have the ability to
say that they think that that kind of sanction would violate the terms of the deal because it would imperil the rest of their
relief. But we have not ceded any ability whatsoever to impose sanctions with respect to our terrorism, human rights, or
other related authorities that are outside of the nuclear arena.
PERLES: Yes, sir.
PITTENGER: You know, given that, you said that that would be a deterrent toward future actions, considering Gadhafi
and the bombings of Lockerbie and La Belle, that perhaps he would be thinking about future efforts. With that in mind,
with the -- with this agreement it appears what we've done on these cases with these victims, it would basically wipe out
this agreement, resulting that these funds would no longer be accessible.
Is -- is that of concern to you, that -- that they would not be able to receive the judgments repatriated back to them and
have it be accessible?
PERLES: Future funds could be a -- future funds could be a very serious problem. There are no future funds currently in
the United States. Were we to go out and try and reach funds outside the United States -- and we are trying to do that
In our enforcement activities for the Flatow, Eisenfeld, and Duker case in Italy, where I suspect a lot of this $100 billion
will go, as they're Iran's largest trading partner in the E.U., the Italian foreign ministry has formally entered our
Now they're going to have access to substantially more money than that. It will be an enormous challenge for FATF and
our Treasury, working with other governments, to track these funds as they go through the financial system -- through
the 47 financial institutions there in -- in Iran, and -- and -- and their capacity through money- laundering.
Because here's the problem that Mr. Nephew is not telling you about: The problem is the Central Bank of Iran is going
to go back onto SWIFT. So are dozens of Iranian banks. It will be virtually impossible for us to de-SWIFT those banks
again because the -- the head of VTB Bank in Russia, when the British were talking about de- SWIFTing Russian
But the problem is that the Iranians will then intimidate the Europeans and they'll say that, "We will walk away from the
agreement. We'll engage in nuclear escalation, because a de-SWIFTing of our banks is an act of war."
We will never get the Iranian banks off SWIFT again. It took an act of God to get them off in the first place. We'll never
get them off again.
And, by the way, it wasn't just nuclear. It was ballistic missiles; it was terror financing; it was money-laundering; it was
sanctions evasion. That's the reason the Central Bank got designated in the first place -- designated by Treasury in a 311
finding.
It wasn't just nuclear, Ranking Member Lynch. It was actually a range of illicit financial activities that constituted the
basis for that designation in the first place.
SHERMAN: Thank you.
So the question, at -- at a minimum, is how do we put ourselves in a position where we force a renegotiation of this deal
before we get to the ugly?
pundits trying to say whether the president did a good job or not. And that's a wonderful use of time, but we don't have a
time machine to go back to June 2015. And pundits get to do that, but we have to decide how to vote.
We've got three possible votes coming up. One is a vote to approve the deal. It's got 0.0 percent chance of passing. If it
did pass, it might morally bind future administrations to the deal, so we're not going to -- to do that.
The deal is an executive agreement, which is below an executive legislative agreement, which is below a real treaty. So
this is the weakest possible exchange of notes among the executive branch, and if, God forbid, we were to vote to
But the real issues before us is whether we vote to disapprove and whether we override. And one of the reasons not to
vote to disapprove is because we'll probably fail to override, and then we're going to be in a circumstance where we're
telling the world Congress has not ratified or endorsed the agreement and the proponents are showing a picture of
That's confusing to the world, so I'm hoping that instead we just vote on a resolution to approve (ph) and vote it down.
But if we do override, that has real legal binding effects. But we were in the classified hearings, and now I'm here trying
to figure out what those effects would be.
Legally, what it does is it restores the sanctions and deprives the president of his authority to waive the sanctions. Those
sanctions are not sanctions on Iran. Those are sanctions on British and French and Japanese and Indian banks. Those
are sanctions against Italian and Russian and Chinese oil companies.
So the question is, how will other countries react if we try to sanction their businesses for doing something our president
says is a reasonable thing to do, which is do business with Iran as long as they're following the agreement that Congress
may very well repudiate.
SHERMAN: Could they kowtow? Politically, could they kowtow? Could they say, "Look, we're announcing that we're
going to prevent our banks from doing these transactions, prevent our companies from doing these transactions"?
BERMAN: Yes.
SHERMAN: "The president of the United States thinks they're reasonable. We think they're reasonable. We think they're
profitable. But Congress is so powerful that we're going to prohibit our companies from engaging in reasonable and
profitable businesses."
BERMAN: Sir...
And I yield back.

Mr. Berman, you spoke in your opening statements about the -- the use of funds to be funneled, as they have been, for
such things as building Iranian regime contacts. For example, I think you said that they put $6 billion annually into
Hamas, the Houthis.
We had some witnesses testify before this -- this taskforce some time ago that essentially stated that -- that Iran was the
central bank of terrorism. And so what we are now about ready to do, if this deal is effectuated, is to allow for an
Are we to expect that now those missiles that were funneled down into Gaza are going to be more sophisticated? What
are we going to expect with regard to the missile defense system that now will be sold from Russia to Iran? Are we
here just basically saying that we have licensed the management of nuclear capabilities in Iran totally at the expense of
expanding terrorism throughout this world?
concern.
happened.
And now let's look at history with our relationship with Iran. OK, the only thing that we have to rely on to make sure
that this deal is effectuated as it is written, quite frankly, is the trust of Iran. And so let's look at the history with Iran.
Let's see, since 1979 on every November 4th they proclaim "death to America" day. Just recently, within the last year,
they've put a mock battleship out in the Persian Gulf and had that attacked and sank in the name of destroying the
United States.
BERMAN: I -- I don't believe we have. And in my opening remarks I made the point that although the premise that the
White House has put forward for the deal is transactional in nature -- that this is limited, it's limited to the Iranian
bad consequences...
ROSS: Exactly.

BERMAN: Right.
at the outset.
Mr. Perles, one real quickly: What did the administration use to determine what were considered sanctions for nuclear
violations and terrorist violations? If you have -- I've just run out of time, I think.
Mr. Nephew, I noticed that you were making notes and your name has been mentioned on more than one occasion and
you have not had an opportunity to respond. Do you have something that you would like to say in response to some of
the things that have been said and directed toward you?
First off, I -- I -- I think there are some distinctions about the way in which sanctions were applied against the Central
Bank of Iran that are relevant here. The United States did not impose a designation on the Central Bank of Iran in the
traditional sense in part because we recognized the dramatic economic implications that could result from that.
Instead, we took sanctions decisions that were intended to clamp off their ability to get access to oil revenues, and it's a
very unique way of doing business. We also imposed sanctions that dealt with -- basically stigmatizing the Iranian
So far as I'm aware, none of those implications are lifted as a result of this deal. Now, there are people out there who
will still sell oil or buy oil from Iran and transact with the Central Bank of Iran, but we have not given a green light to
believe that the Central Bank of Iran is a good institution or an institution that's not involved with respect to terrorism,
or money-laundering, or any of these other things that they're involved with.
The reality is, though, if you're going to get a nuclear deal with Iran they are not going to do it without real sanctions
relief -- without real economic sanctions relief. And the decision that was made by the administration -- and again, I
think it was a good decision -- was that getting 10 to 15 years of real distance from Iranian nuclear weapons breakout
was worth dealing with a future consequence of Iranian economic revival.
I should also not, too, on this issue of $100 billion to $150 billion, I think there is an impression that it's a savings bank
that was opened up for the Iranians and that was -- it's money that's just pouring in that we can't wait to give back to the
Iranians. We should bear in mind that this is Iranian money that we have been restricting from them that they have not
been able to use. It's for this reason that they had the economic downturn that Secretary Lew spoke about earlier.
So I think the bottom line is the Iranians do have a lot of things they need to do with this money. It is not a gift from the
U.S. taxpayers and it's not manna from heaven for them.
December of 2014.
I -- I think there's an alternative because President Obama always said there was an alternative. He said that no deal was
better than a bad deal, and the president is a responsible commander in chief and a responsible executive, and he went
into these negotiations knowing that he had an alternative to this deal.
And I believe that we agree with that Mr. -- with the president. He has an alternative. The alternative is to use coercive
American power, including U.S. secondary sanctions, in the context of the U.S. Congress asking this president to
negotiate a better deal, particularly around snapbacks and sunset provisions.
Now, if the president doesn't believe in the power of U.S. secondary sanctions, if his argument is that if you vote down
this deal the sanctions regime will crumble, then unfortunately there is no power in the economic snapback because the
economic snapback actually depends on the power of the U.S. secondary sanctions to send a message of fear to the
marketplace so that financial institutions and energy companies in seven, eight, nine, 10 years, when they've sunk in
hundreds of billions of dollars back into the Iranian economy -- by the way, contracts that are grandfathered -- that they
will respond by -- by moving out of the Iranian economy.
So the president can't have it both ways. Either there was an alternative to this deal, in which case he was a responsible
negotiator who went in with the best alternative to negotiate an agreement; or there's no alternative to this agreement, in
which case he negotiated with the Iranians without an alternative.
I -- and I want to thank the panel for -- for being here today. I have to say that I find all of your comments much more
enlightening and information than the classified briefing that we just attended by 1,000-fold.
It would seem logical to say that if Iran could find the resources to support terrorism and regional turmoil while under
the intense pressures of economic sanctions, as they have been, they will continue to do so under this deal, if not to a
greater extent due to their increased accents -- access to financial resources. In fact, this -- it was National Security
I don't think anybody disagrees with that. However, there are some in the administration that have indicated that they
believe Iran will steer this additional funding into its own economy.
Now, Dr. Heinonen has spoken about verification and inspection, but verification and inspection is -- is only as good as
enforcement. And the IAEA does not enforce; the United States of America enforces.
So it'll be the United States of America that will enforce this deal against Iranian stonewalling and cheating. And if we
have lost our ability to use peaceful economic leverage to enforce this deal, the Iranians will therefore cheat
bomb.
What I think -- where I think we enter the zone of danger with regard to increased Iranian sponsorship of terrorism as a
result of the JCPOA is precisely the fact that under the current structure of the deal, and under the current mechanisms
in the hands of the U.S. Treasury Department, the Financial Action Taskforce, and other bodies that are tasked with
overseeing this, we simply don't have mechanisms that allow us to provide responses that are short of walking away
from the table. In other words, there is no scalable responses to Iranian cheating.
And as Mr. Dubowitz said, Iran is far more likely to inch out of its obligations with regard to the deal than to break out
and make a sprint for the bomb. And as a result, what we have is we have a scale problem. Currently we don't have the
ability, short of abandoning the process all together, to exact tactical punishments from the Iranians for instances of
malfeasance, including additional funding for terrorism.
And let me just say this: Mr. Dubowitz, I am very interested in your -- in your discussion about the rehab plan and the
Central Bank of Iran. I spent four years as the United States ambassador to Luxembourg, from 2005 to 2009. I am very,
very familiar with the Central Bank of Iran, and I would consider one of the most important things that I've ever done
in my entire life was to stop terrorist financing from being laundered and -- and sent through the Grand Duchy of
Luxembourg.
So I'm very interested in your -- your thoughts on -- on SWIFT and the rehab plan, and I would love to pursue that with
you in the future.
Mr. Himes?

And to illustrate that, this hearing -- the undercurrent of this hearing is how shocked we are to learn that as a result of
this deal Iran my get some money. There's a little controversy over how much money. The figure of $100 billion to
$150 billion keeps being bandied about. The Treasury secretary -- and I'll let those of you who are saying $100 billion to
$150 billion work this out with the Treasury secretary -- he estimates the money at $56 billion.
We voted for the sanctions for the express purpose of taking away the money to force them to the table to negotiate the
deal -- now, we may agree that the deal is good or bad -- but to negotiate the deal whereby they would get that money
back. And now we are shocked -- shocked to learn that this bad regime is getting the money back. Now, bad regime. We
get it. We know that. I'm on the Intelligence Committee. I see that day in and day out.
You do these deals with bad regimes. In the '70s and the '80s we did these deals, these similar nuclear deals, with China
and with Russia at a time where I could dare say they were both committing probably things that would qualify as
crimes against humanity. But we do these deals not with our friends but with our enemies.
But what about the history of deals? Yes, there was the -- the Algiers Agreement, whereby we -- we -- we freed some
hostages.
We haven't mentioned, by the way, the deal that was struck by the Reagan administration in 1985, two years after the
Marine bombing killed over 200 Marines, whereby the Reagan administration provided conventional arms to Iran so
that hostages would be released so that U.S. law could be violated to fund the Contras, violating the Boland
Amendment.
So the question I have -- and the idea is that context is important. This isn't a great deal. You don't get a great deal in
situations like this.
I personally believe that the idea that we can just shut it all down -- and the president's coming under a lot of criticism
here. The Russians, the Chinese, the U.K., French, the E.U. -- this was a P5+1 deal.
My question is -- and I haven't gotten a good answer on this. I don't have -- I have two minutes left -- if we unilaterally
say no to something that the world negotiated, that the Security Council has endorsed, that the E.U. has endorsed, what
scenario results in us being in a better position than the position of having 15 years -- and I understand they may cheat -but 15 years in -- in which we have some confidence, unless they cheat, that they're not building a bomb? What happens
that puts us into a better place than we are in if we accept this deal? I just open that up for a scenario that is better than
accepting the deal.
The Iranians have negotiated agreement that, in terms of their deal structure, is frontloaded. HIMES: But -- but you do
agree, this is a nuclear deal. I -- I get that they...

HIMES: Why not?
DUBOWITZ: No. So what they've done is they've -- they've phased this so that they can start introducing on a industrial
scale advanced centrifuges. So right at year 15 they can actually enrich not to 3.67 percent, not to 20 percent, but to 60
percent, because they will use that as justification that they're going to have a -- a nuclear- powered navy.
hands.
Now, the problem on our hands at that point is we have no other peaceful way to stop them, which is why this deal, in
my opinion, is going to lead to war, and it'll make war more likely.
Your taskforce is about illicit financial conduct. Your taskforce should be very concerned that we are lifting sanctions on
the Central Bank of Iran and letting all these banks back onto SWIFT despite the fact none of these banks have been
rehabilitated from an illicit financial perspective.
I ask unanimous consent -- I know we -- we said we were going to go to recess. The House Foreign Affairs Committee
chairman is here, Mr. Royce, who would like to be recognized.
Without objection?
Once inside the base the vehicle occupants, who were wearing U.S. uniforms provided to them and speaking English,
by the way, fatally shot one soldier. They kidnapped four other U.S. soldiers.
With U.S. and Iraqi forces in pursuit, these Iranian-supported militias executed our four soldiers in cold blood. One was
the father of two small children from Southern California.
And the point is this: There are many amongst the IRGC who have had to operate under the restrictions that sanctions
have placed on them, and the sanctions are being lifted, but they remain committed to harming the U.S. And I don't take
their chants of "death to America" as an idle threat.
And I'll add one other question to you, Steve. Clearstream, a known money-launderer for Iran, is still moving Iranian
money out of New York to Luxembourg through an illegal book entry system to keep the Beirut Marines -- the families
of those Marines -- from enforcing their judgment. In your experience, what is OFAC doing about this kind of book
entry-based laundering for Iran?
economic free zone.
The Europeans are lifting sanctions on the Revolutionary Guards and the Quds Force. Iran's Revolutionary Guards and
Quds Force can now operate much more freely in Europe.
financing.
Steve?
I promise you, sir, I will see that case through to the end. It is -- the conduct there is patently offensive by any standard.
(RECESS)
And again, thank the panel for sticking with us through that series of votes, and apologize for your inconvenience, but
thank you for being here.
I want to talk a little bit about the -- the idea of the intermingling of the types of sanctions -- nuclear, non-nuclear, ones
that were directed towards terror. I'm looking at a report that the Bipartisan Policy Center put out last week, and they
noted that throughout negotiations with Iran the position of the United States has consistently been that we would only
lift nuclear-related sanctions as part of a final agreement.
Given the complexity of the U.S. sanctions regime and numerous overlapping reasons for which sanctions have been
placed on Iran, distinguishing between those measures which are and are not nuclear- related will pose a significant
challenge to the deal's implementation. They -- they continue with their analysis and they say out of more than 800
entities listed for sanctions relief under the JCPOA, their -- the Bipartisan Policy Center analysis finds a total of at least
81 agencies, companies, and persons that were sanctioned for reasons that are either explicitly non-nuclear or could be
contested as non-nuclear. These include entities that have been involved in developing ballistic missile systems, weapon
smuggling, supporting terrorism, and violating human rights. Under a strict interpretation of what constitutes nuclearrelated sanctions, these entities should not be subject to sanctions relief.
issue this is.
DUBOWITZ: Thank you, Congressman. I -- I think it's a big issue, and I think what the administration has done is that
they've started to try and recharacterize non-nuclear sanctions as nuclear sanctions so that they could provide sanctions
relief under the JCPOA. Let me give you an example.
Ballistic missile financing, right, was considered to be a separate example of illicit conduct. And so there are a number
of designations of Iranian banks, the designation of the Central Bank of Iran included in its -- on its predicate, the
financing of ballistic missiles.
But the administration had a problem, which is that the Iranians were demanding in negotiations that a number of these
entities be -- be de-designated, including the Central Bank of Iran. And so what they've done is they've taken ballistic
missile financing and they've recharacterized that as nuclear financing...
DUBOWITZ: Well, that -- that's true, but I -- I think what we've got to be careful of here is -- because the administration
is saying we retain the right to designate on terrorism and human rights grounds, but the fact of the matter is is that
terrorism and human rights sanctions for the most part are not economic sanctions. And -- and as a result, what we're
effectively doing is we're dismantling the economic sanctions regime while still retaining the right to go after Iran for
terrorism and human rights purposes.
ROTHFUS: Exactly.
agreement.
I want to direct this one to Mr. Berman. Earlier this year the G-20, whose 34 member countries constitute the world's
major financial centers, met in Istanbul and committed to take action to more aggressively combat terrorism financing
around the world. The G-20 enlisted the assistance of the Financial Action Taskforce, which will hopefully issue a
report later this year on how to prevent terrorist organizations from using the global financial system for fund-raising.
And what we've effectively done under this sanctions regime is we've dismantled the E.U. sanctions. The E.U.s are -they're lifting all of their sanctions because the majority of them are nuclear sanctions.
And so as the Europeans go back to business, and the Chinese, and the Russians, and everybody else, it is going to be
much more difficult to seek the kind of consensus that we need at FATF in order to actually crack down on Iranian illicit
financial flows because our very partners are going to be so deeply invested in the Iranian economy that it'll be more
difficult than it has been in the past to persuade them to -- to enforce these regulations on their financial institutions.
SCHWEIKERT: Thank you, Mr. Chairman. And with -- I'd like to ask a U.C. to put some documents into the record in
regards to the charter of SWIFT.
Mr. Dubowitz, you're the only one up there who has actually talked about SWIFT, and I -- this is something I've been
trying to get my head around and wanted to focus on just for a couple moments. First, in 30 seconds -- 20 seconds -describe what -- the backbone of what SWIFT is.
around the world.
SCHWEIKERT: OK. And the -- the secure international backbone of electronic movement of money. Simple enough,
and Belgium-chartered (ph).
So walk -- walk me through a -- a conceptual idea. Let's say this agreement moves forward and all of a sudden Iranian
institutions, banks, others that actually would be -- have had a SWIFT membership would be able to move money -except for the fact that if I'm here reading the SWIFT charter, both a country and an institution that's -- have been
involved in bad acts don't have rights to access that system.
So what happens here? I have here where we're obligating ourselves and countries to this agreement. The same time I
have a private electronic backbone moving money that's not allowed to do this.
And there, by the way, there are a lot of bad banks on the SWIFT system. There are Russian banks, as I mentioned, who
are still there.
DUBOWITZ: Correct.
DUBOWITZ: Correct.
Now, we made this mistake before with North Korea and Banco Delta Asia. The North Koreans got all their sanctions
relief and they got a nuclear weapon, and we lost our economic leverage on North Korea.
My fear is we're going to do the same thing again, and this has deep consequences for our sanctions programs writ large,
including against Russia and other targets.
SCHWEIKERT: Mr. Chairman, I appreciate your patience. I'm just waiting for the day that we're going to owe a family
or many families an apology because we allowed this backbone to finance some horrible act and we allowed them to
use our own systems.
I'm one of those that really wants to take care of America first and not Iran first. I think a lot of us here on the taskforce
are concerned about trusting Iran.
Obviously, historically speaking, many of us find it hard to believe that Iran will actually allow for an open and honest
process when inspecting their nuclear sites. Determining how the JCPA (sic) will treat military site inspections is
And I'm a small business owner myself. I make deals all the time. And I'm still concerned why we negotiation with -when "death to Americans" and the "death to the Israelis" is a common theme among the people we say we can trust.
Now, my question to you, Mr. Heinonen, is the following: I've heard you say that the 24-day window will allow Iran to
-- to cheat, that Iran has not changed its nuclear course, it's keeping all the options open for building nuclear arms. Can
you explain your comment?
He asked me to rate the deal with a scale from one to 10. And as you see from my testimony, I actually have divided this
testimony three parts. One part is the declared facilities with declared materials; one is the rights and provisions to
When I look the rating from -- for each of those I think it's better (ph) to look each of those and you'll make your own
risk assessment on that.
The first one, when I said a rating seven to eight, this is for declared facilities, the way I see. And why it is not higher is
because there is this dispute settlement process, which you miss (ph) in 24 -- after 24 days or even more.
And then if you ask my opinion with other (ph) possibilities to find these computer codes and someone using them, and
there is actually even not really an inspection procedure for that, I think it's a zero. It's not even one.
And we need to keep also in our mind that the time is here of essence. This problem also traces (ph) with a time when
Iran's capabilities increase, and just as an example -- I'm not a sanctions expert, but yet, when you come to year 15,
many Iran can have any number of enrichment facilities any place, perhaps a little bit deeper in ground than in Fordow.
They can produce all enrichments they want, then the breakout time goes down -- goes to the weeks or even smaller.
And then if you add this manufacturing of weapon components and others they have prepared, that -- that adds two or
three weeks to this whole picture.
I don't think that the sanctions have any meaning at that point of time because Iran already achieved what it needed in
the worst case.

So by disclosing these names, these places, we achieve two things: we engage the other states to the process, and this
reinforces the system and makes any concealment by Iran much more difficult. It also makes the verification system
much more transparent when the names are known.
Dr. Heinonen, I was interested in talking about, for a minute, the IAEA annexes to the agreement. Secretary Kerry really
was quite dismissive of those in the briefing of Congress earlier this afternoon. What amount of importance should we
put on the Iranian document with IAEA in terms of studying that as a part of fully understanding the verification regime
-- inspection regime?
And as I said in my statement earlier today, I think at the time from mid-August to mid-December is much, much too
short to solve this PMD problem. And then I also pointed out that this IAEA is looking only information which is in the
annex of November 2011 report. But Mr. Amano himself has said that there is some other information which came
other information.
program.
So, therefore, I see essence (ph) (inaudible) that the governments and the (inaudible) parts will see those (inaudible) so
that they can do a full assessment what we can achieve, what we cannot achieve. Because after all, these are the
HILL: Right.
A question for Mr. Berman: You were talking about the GDP in your written testimony, and potential amounts of money
that are being released. Give me some feel for the flow, in addition to any near- frozen money that's released, but what
kind of monthly flow you think their revenue would be.
And also, tell me what you think the actual amount of foreign reserve -- reserves should be for their belt-and-suspenders
approach of -- of having adequate cash on hand were snapback sanctions to come back. How much money would you
estimate? Ten percent of GDP? More? What would you say?
BERMAN: I -- I think that's a good question, and -- and sort of it comes down to a -- sort of a -- a term of our calculus. I
think the numbers that we heard earlier from other members of the committee -- of the taskforce -- when we talked
HILL: Too high?
At -- at the point where we could have actually accelerated the sanctions and brought them to severe crisis we let up. We
gave them $12 billion, which took their foreign exchange reserves, increased it by 60 percent to $32 billion.
billion.
And they're effectively gone from 6 percent of their GDP to almost about 40 percent of their GDP, so that what we've
done is we've built up their foreign exchange reserves, which now increases their economic resilience. And with that
kind of foreign exchange reserve rainy-day fund, over time it's going to make it very difficult for us to snap back
And Dr. Heinonen is right. When they're an industrial-sized, near-zero breakout, days away from actually breaking out
to a nuclear weapon, our ability to actually impose that kind of economic coercive force at that time will be significantly
diminished because it will take much longer to have any kind of impact, never mind the impact we had in 2012.
If these numbers are anywhere near accurate, if we are, indeed, looking at $100 billion to $150 billion, we are actually
providing or facilitating the expansion of Iranian -- of the Iranian economy by a significant portion. We are wiping clean
the constriction that occurred as a result of sanctions, and we're actually forcing an expansion. And I think that should
be noted because, as I said before, money is fungible and this expanded revenue is likely to trickle in various ways to
Iranian regional activities as well as to terrorism.
SHERMAN: I have heard reports that Iran really has as little as $28 billion or as much as $150 billion. I'd like to know
how much money they have on deposit, and then what are the obligations that the host bank or the host country is going
to extract from that, because obviously nobody's going to give Iran its money if it owes it to a domestic vendor or if it
owes it to a -- to the bank where -- where -- where they have the deposit.
I mean, my last information suggested, again, that they've got someplace between $100 billion and $150 billion in total
reserves worldwide. Some of that is in Iran, and some of that is in...
SHERMAN: OK.
SHERMAN: OK.
in India?
SHERMAN: OK.
NEPHEW: Right. There -- there is some that is in Europe, but again, if we're talking percentages, you're probably in the
-- the single-digit percentages.
SHERMAN: OK.
OK, Mr. Heinonen, this picks up on earlier questioning. We're being told that 24 days is enough because whatever Iran
does is going to have this signature and you're going to be able to tell that something radioactive was there.
What I'm most concerned about is can they perfect and create arrays of their IR-8 centrifuges. Now, in order to build
these centrifuges they're going to have to test them and calibrate them. Do they need to use gasified uranium to
process.
The first step is that you do what is called a mechanical testing. You just get them to spin and see that they survive long
enough under this very severe conditions where they are running.
SHERMAN: Like what?
SHERMAN: Yeah, OK.
corrosion or...
designed. So one...
HEINONEN: I don't think -- sir, I don't think that this 24 days has much to do with that, because this -- first of all, these
things happen in different places. And when you go to this test -- the last step of the test, you don't need to test so many
machines. You test...
what you need.
And then if you have three weeks' time to sanitize it, sir, Mr. Albright (ph) also agrees with me, it's a doable if you do
the planning in advance. And this is, I think, that we also to recognize that when people talk about the reception (ph)
HEINONEN: Yes.
SHERMAN: I -- I would hope that you would issue a -- a paper or something on this to get it the kind of definitive press
coverage, because we're being told and the American people are being told that the 24 days is not too long because if
they're doing anything with uranium involved it can be detected, and you're saying not if you -- not if you plan it in
advance.
HEINONEN: Yes. There were cases in 2003 that the IAEA did find in certain places enriched uranium even though they
-- there should have been.
I yield back.
Mr. Heinonen, 20 years ago when we negotiated with the North Koreans we had the support of allies over there, and the
Japanese who supported it, South Korea. Is the world safer because of that agreement? Is the world safer because of the
agreement that we have with North Korea that was negotiated 20 years ago?
I think that the vision of the people who designed the Agreed Framework at that point of time was that the North Korean
regime will not live very long time, so this agreement, which was supposed -- has been now lasted two decades, was not
supposed to last two decades. And that's why the provisions were like they were.
HEINONEN: No.

HEINONEN: Yes...
PITTENGER: But if I could, just for time's sake -- is that clarified to just be the approved sites, those 17 sites? Can they
say, "We want to go to another part of the country"?
PITTENGER: OK.
Since the Iranians can stall through the ICPA (ph) for at least a month or -- or more, and in reality several months, how
will we know if Iran is removing compromising material during this time, and how significant is this lead time? Does it
compromise the inspection process?
Mr. Dubowitz, the administration has stated that all sanctions relief is from the nuclear sanctions regime only. And after
reviewing the list of entities and individual de-designated, which I think you referred to in your opening statement -- I
think that was the list you referred to, and if it was we want to include it as part of the record.
There are ways to actually allow the CBI back partially. There are ways to actually put down specific benchmarks and
say to the Iranians, "Once you have established and met those benchmarks then we will rehabilitate your Central Bank
of Iran, but we are not going to wipe away all of these illicit financial activities just because we have a nuclear
agreement."
That could have been -- that could have been proposed and won in a negotiation. It is not good enough to say that the
Iranians would have rejected it and therefore we took it off the table.
And that's the construct. The construct is we'll take them away and then we'll reimpose them if we need to, instead of
saying, "How are we going to defend the sanctions architecture in key ways so that we maintain the economic leverage,
particularly on the full range of Iran's illicit financial activities?" and have said to the Iranians, "We'll give you relief
here but we're not giving you relief there until you establish that your banks are no longer engaged in the full range of
illicit financial activities."
That could have been a separate construct. I think we could have defended that. I think we would have had international
support for that.
But at the end of the day, the administration had a very different construct: Take it all away and reimpose it if they cheat.
FITZPATRICK: My concern is that some of those de-designations may affect the rights of American citizens who have
judgments against Iran.
And Mr. Perles and I, in my first round of questioning, we -- we talked about the -- the Beirut barracks bombing case
that I -- I believe you were involved in. We spoke off the record before the hearing about after September 11th the
Any -- any of you.
facility. We sit at the knife's edge today not knowing what the impact of this agreement will be on all of those
enforcement activities. We don't know what instruction the administration will give to the Justice Department with
respect to this joint seizure that we've done with the -- the -- the Havlish plaintiffs. We're -- we're simply stuck in stasis
in this wait-and-see attitude.
What we do know is, at least in the case of this bookkeeping entry system that we touched upon earlier, which is really
the world's largest Hawala banking system, that all it -- that's all it is at the end of the day is -- is the world's largest
Hawala banking system. Federal judge in Manhattan last year asked OFAC to comment on the lawfulness of this
Hawala system.
This is Clearstream S.A., a Luxembourg company owned by Deutsche Borse, running one -- well, we tracked -- I have
no idea how much money really went through the account. We were able to track $1.67 billion of Iranian money going
in and out of JPMorgan Chase by this bookkeeping system. And OFAC, frankly, declined to opine upon the lawfulness
of that sort of transaction.
From a practitioner's perspective, that's very frightening because if you can -- if a Clearstream can move Iranian money
in and out of New York by book entry without it being a violation of law, the entire sanctions regime -- and I'm not
talking about Iranian sanctions; I'm talking about sanctions across the board -- collapses. It means that any drug cartel,
for example, could move their money to Luxembourg in a -- in a Gulfstream and have a Luxembourg-based bank move
it into the U.S. system by book entry. It's unreportable and untraceable.
PERLES: Yes.
PERLES: Correct.
FITZPATRICK: My concern is Assa Corporation is on the list of organizations to be de-designated, which goes back to
Mr. Dubowitz's concern, what does this have to do with nuclear sanctions, and what is really happening here, and what
is the impact. But perhaps a -- a subject for -- for another hearing.
FITZPATRICK: My time is well expired, and the vice chairman of the committee is recognized for the final question of
the hearing.
Mr. Perles, in representation of your clients you made contact with OFAC, DOJ, the solicitor general, as I understand it,
on behalf of your clients.
PITTENGER: Seeking assistance on their behalf. Could you tell us the nature of that? We understand that your request
was denied on one occasion at least, and you didn't -- you were rebuffed by them. Could you give us some context for
that?
And is this consistent with your previous work with the government? Have they been cooperative in the past, and why
were they not this time?
You know, we just talked about the fact that a federal judge asked OFAC to opine upon the lawfulness of this gigantic
Hawala banking system. We were in touch with OFAC after that request was made and OFAC simply failed to respond.
They advised the federal judge that they were not going to respond.
We had hoped to be finishing up our activities at the Supreme Court last spring. We're waiting for the solicitor general to
opine upon the constitutionality of statutes that you gentlemen passed to assist victims of terror. We're still waiting.
I certainly hope that the solicitor general will opine upon the constitutionality of those statutes this fall, but we have no
schedule. We -- we really don't know where we are.
That is in very different contrast to where we were at the conclusion of the Bush administration. Stuart Levey, who I
have enormous respect for, turned intelligence data over to us so that we could seize the $1.9 billion that was transiting
New York.
PITTENGER: So you've seen a reluctance on behalf of those who represent our government to assist American citizens
in their claims against Iran?
PERLES: Yes, sir.
I yield back.
END
LANGUAGE: ENGLISH
PUBLICATION-TYPE: Transcript
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the IAEA under its standard treaties will continue in perpetuity.

five minutes now to -- to question the witnesses.

enforce the deal.

Thank you, Mr. Chairman.

GREEN: Thank you, Mr. Chairman.

no schedule. We -- we really don't know where we are.

Thank you, Mr. Chairman.

Thank you. I yield back.

only lift nuclear-related sanctions as part of a final agreement.

system to fund its terrorist proxies under this agreement?

Mr. Chairman, I yield back.

BERMAN: My colleagues might -- might disagree, might have a different estimate.

NEPHEW: So again, my estimate would only be preliminary. I have to defer to Treasury.

SHERMAN: So you don't need to calibrate each one. You...

House Financial Services Committee Hearing on Task Force to Investigate

Mr. Nephew, you're now recognized for five minutes.

HEINONEN: That's true.

ROSS: Thank you, Mr. Chairman.

BERMAN: ... are actually...

HIMES: Thank you, Mr. Chairman.

high visibility that they're not building a bomb, right?

States of America government doesn't have.

PITTENGER: Thank you.

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