Samsung releases its S6 before Apple begins its process of hyping up its most recent Smartphone releaseMarch 23, 2015 2:24
New US sanctions hamper Iran bid to recover $1.75B
New law requires a second freeze on Iranian assets in US; Iran central bank seeks to get at funds in US account
January 15, 2012 5:33 by Reuters
Iran’s effort to recover some $1.75 billion frozen in a US bank faces a new obstacle due to a law President Barack Obama signed last month, potentially further squeezing Tehran’s economy and exacerbating tensions between the two countries.
When Obama signed the National Defense Authorization Act on Dec. 31, a provision required him to freeze any money held by or for Iranian financial institutions in the United States and to prohibit any future transactions.
The $1.75 billion was uncovered in 2008 in a New York branch of Citibank, part of Citigroup, having been deposited by a Luxembourg-based bank.
A US court froze the funds when survivors and victims’ families from the 1983 Beirut bombing of barracks housing US and French soldiers in a multilateral peacekeeping force argued it should help pay a $2.65 billion judgment against Iran for its alleged role in that attack.
If the administration does impose its own freeze and seizes the money, that could set off a frenzy by Americans who have won default financial judgments against Iran in US courts as they try to get a slice of the cash.
Obama and his team will have to decide whether they want to distribute that money or use it as a lever in negotiations with Tehran, which has been at loggerheads with the West over its nuclear programmeme.
“You’ll see the funds frozen or remain frozen, but that Washington would be reluctant to see a payout at this particular moment in time,” said Suzanne Maloney, a former State Department adviser and now a senior fellow at the Brookings Institution.
There have been hundreds of billions of dollars in default judgments against Iran levied by US courts in favor of Americans, but there are broader foreign policy issues that will likely give the Obama administration pause, she said.
With such a large sum on the line and with Iran beset by economic sanctions from Western countries skeptical of its assertion that it does not seek to develop atomic bombs, Iran’s central bank plans to file a motion for the funds next month.
The central bank, known as Bank Markazi, will argue the funds, because they were being used as currency reserves, are protected from seizure under the US Foreign Sovereign Immunities Act, according to a New York-based lawyer for the central bank.
“My view is that the funds will not be distributed for the benefits of the plaintiffs (suing to get the Iranian money) as this was not the purpose” of the new law, said Ingrid Wuerth, a law professor at Vanderbilt University.
A judge in Washington ruled in 2007 that Tehran supported the militant group Hezbollah with the 1983 attack that killed 241 service members.
“There are now two reasons why those assets would be frozen in the United States,” said Juan Zarate, a counterterrorism official during the Bush administration now with the Center for Strategic and International Studies.
“Any challenge to the freezing of those assets will have to take on both of those legal frameworks and arguments,” he said.
Tehran says its nuclear programmeme, which includes a push to enrich uranium, is for commercial uses and not nuclear weapons.
Now lawyers in the United States are scrambling to figure out what will be the impact of the new law and whether it could ultimately lead to the forfeiture of the money held in New York.
“It is unclear at present whether, once (the new law) is implemented, the $1.75 billion would remain frozen at Citibank in New York until further action is taken by Congress or the president, or if those assets would be distributed to specific default-judgment creditors and their lawyers,” said David Lindsey, a lawyer representing the Iranian central bank.
Pages: 1 2