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Jack Lew has some explaining to do.
On Oct. 18, the Senate Foreign Relations Committee will hear testimony from the former Obama administration treasury secretary, who is nominated to be U.S. ambassador to Israel at an obviously critical moment. Lew must explain why, in 2015, he promised the same committee that he would not allow Iran access to the U.S. financial system under the recently announced nuclear deal with Iran yet secretly tried to do just that -- by working to turn $5.7 billion in Iranian assets into easily convertible currency via U.S. banks.
Lew's maneuvering as treasury secretary was exposed in a 2018 report from the Senate Permanent Subcommittee on Investigations, led by then-Sen. Rob Portman (R-Ohio). The report was widely covered at the time but is now largely forgotten. Senators might want to read the report before asking Lew now about its troubling findings.
Here is what subcommittee investigators found -- just the facts:
On July 23, 2015, Lew testified before the Foreign Relations Committee that Iran "will continue to be denied access to the [U.S.] financial and commercial market." He promised that "Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks."
Yet seven months later, on Feb. 24, 2016, Lew's Treasury Department "granted a specific license that authorized a conversion of Iranian assets worth billions of U.S. dollars using the U.S. financial system," the subcommittee's report noted. Without this license, the transaction would be an illegal evasion of international sanctions.
The license would have allowed Iran to convert $5.7 billion in Omani rials, held by Iran at Bank Muscat in Oman, into euros by first turning them into highly convertible U.S. dollars through a U.S. bank. Not only that, the license further authorized Bank Muscat to use the U.S. financial system to convert unlimited additional future Iranian deposits – so-called fresh funds.
This clear effort to circumvent U.S. sanctions only fell through, investigators found, because U.S. banks declined to participate. Treasury officials contacted two banks to encourage them to convert the Omani rials but "both banks declined to complete the transaction due to compliance, reputational, and legal risks associated with doing business with Iran."
After failing in this effort to help Iran free up these funds, Lew testified on March 22, 2016, before the House Financial Services Committee -- and did not disclose that he issued the license.
With Israel fighting for its safety against terrorists backed by Iran, Lew's conduct should be disqualifying. How can we send an ambassador to Jerusalem who tried secretly to free up billions for Iran after promising not to? And how can members of the Foreign Relations Committee endorse an ambassador without confidence that his words can be trusted?
If Lew can't explain his conduct, he should not be confirmed.