Iran hearing Wed May 6th, curious witness list

ENGAGING IRAN:
OBSTACLES AND
OPPORTUNITIES

HEARING
before the

COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
Wednesday, May 6, 2009
Time: 9:30 A.M.
Place: 419 Dirksen Senate Building
Presiding: Senator Kerry


Witnesses:

Panel 1:
+The Honorable Robert M. Morgenthau
District Attorney,
New York County Former United States Attorney
for the Southern District of New York
New York, NY

+Mr. Adam Kaufman
Bureau Chief,
Investigation Division Central Office
of the District Attorney, New York County
New York, NY

Panel 2:

+The Honorable R. Nicholas Burns
Professor in the Practice of
Diplomacy and International Politics,
Harvard Kennedy School
Former Undersecretary of State for Political Affairs
Cambridge, MA

The rest of the bounty forked over to the city came from an even bigger score that the D.A.'s office made when it nailed a major British bank sneaking billions of dollars in Iranian funds into the U.S. in violation of federal prohibitions. The bank was helping its Iranian customers pay vendors with American dollars for such big-ticket items as oil field equipment. Some $321 million was routed this way to New York banks, while several billion more passed through city institutions on its way to other recipients.

Lloyds TSB Bank in London became so adept at this procedure that it even issued a manual to its clerks on how to do it. "What Lloyds was doing was physically stripping the identifiers of the originator off the wire transfers," said Dan Castleman, chief assistant district attorney. The bank would replace a name such as Bank Melli—the government-owned bank based in Tehran—with a neutral name that wouldn't trigger screening software used by New York banks.

Probers were unable to track most of what the Iranians were buying with the wire transfers, but some of what they could see raised other questions. In addition to heavy machinery for its oil industry, which is the world's fourth largest, Iran was also ordering centrifuges, according to Morgenthau. While these devices have innocent uses, they are also employed in the enrichment of uranium for nuclear weapons. Then there was an e-mail message that popped up during the probe that showed that an Iranian firm was buying some 30,000 tons of tungsten, a material with many applications, including the construction of missiles.

"It was enough to make all the refrigerators in the Middle East, or enough to build a heck of a lot of rockets," said Morgenthau.

The wire-transfer scheme emerged from yet another probe. This one was looking into suspicious money transfers between the Iranian government and the Iranian-run Alavi Foundation, which is based in an office building at 650 Fifth Avenue. The foundation owns the building together with another Iranian company, the Assa Corporation, which was the target of a federal forfeiture lawsuit filed last year. Just before Christmas, the FBI arrested the foundation's president for shredding documents that a grand jury wanted to look at.