SPEAKERS CONTENTS INSERTS
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JUSTICE FOR VICTIMS OF TERRORISM ACT
IMMIGRATION AND CLAIMS
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
APRIL 13, 2000
Page 2 PREV PAGE TOP OF DOCSerial No. 129
Printed for the use of the Committee on the Judiciary
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
Page 3 PREV PAGE TOP OF DOCMARY BONO, California
SPENCER BACHUS, Alabama
JOE SCARBOROUGH, Florida
DAVID VITTER, Louisiana
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
Page 4 PREV PAGE TOP OF DOCSubcommittee on Immigration and Claims
LAMAR S. SMITH, Texas, Chairman
BILL McCOLLUM, Florida
ELTON GALLEGLY, California
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
JOE SCARBOROUGH, Florida
SHEILA JACKSON LEE, Texas
HOWARD L. BERMAN, California
ZOE LOFGREN, California
BARNEY FRANK, Massachusetts
MARTIN T. MEEHAN, Massachusetts
GEORGE FISHMAN, Chief Counsel
JIM WILON, Counsel
LORA RIES, Counsel
CINDY BLACKSTON, Professional Staff
LEON BUCK, Minority Counsel
C O N T E N T S
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TEXT OF BILL
McCollum, Hon. Bill, a Representative in Congress From the State of Florida, and presiding chairman, Subcommittee on Immigration and Claims
Anderson, Terry A.
Flatow, Stephen M.
Khuly, Maggie A.
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Anderson, Terry A.: Prepared statement
Cicippio, Joseph and Elham: Prepared statement
Page 6 PREV PAGE TOP OF DOC Flatow, Stephen M.: Prepared statement
Higgins, Robin L.: Prepared statement
Jacobsen, David P.: Prepared statement
Khuly, Maggie A.: Prepared statement
McCollum, Hon. Bill, a Representative in Congress From the State of Florida: Prepared statement
Reed, Frank and Fifi: Prepared statement
Material submitted for the record
JUSTICE FOR VICTIMS OF TERRORISM ACT
THURSDAY, APRIL 13, 2000
House of Representatives,
Subcommittee on Immigration and Claims,
Committee on the Judiciary,
Page 7 PREV PAGE TOP OF DOC The subcommittee met, pursuant to call, at 1:45 p.m., in Room 2226, House Office Building, Hon. Bill McCollum presiding.
Present: Representatives Bill McCollum, Edward A. Pease, Chris Cannon, Charles Canady, Sheila Jackson Lee, and Howard Berman.
Staff present: Cindy Blackston, professional staff member; Kelly Dixon, clerk; Leon Buck, minority counsel.
OPENING STATEMENT OF PRESIDING CHAIRMAN MCCOLLUM
Mr. MCCOLLUM. This hearing of the Subcommittee on Immigration and Claims will come to order. I would like to welcome everyone here today, especially the victims of terrorism who are with us today, who are seeking justice; and that is what we are all here about today. I would also like to thank Chairman Smith, who could not be with us today, for allowing us to hold this hearing and for giving us the opportunity to get this issue addressed.
I have, as a person, been dealing with the issue of terrorism for a long time. I co-chaired the House Terrorism Task Force on Terrorism and Unconventional Warfare for a number of years. I have watched what has happened in the great tragedies of the world, and I find that some of the things that have been happening lately, without and separate and apart from the terrorist acts themselves, are very disturbing, and that is what this hearing is about today.
Today's hearing is to seek justice for the victims of state-sponsored terrorism. These victims are entitled to compensation out of frozen assets of the guilty terrorist state once the victim obtains a legitimate judgment. That is the current state of the law technically in this country. Sadly, the administration is denying these victims the justice they deserve. H.R. 3485, the Justice for Victims of Terrorism Act, which is the subject of today's hearing, will remedy this.
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[The bill, H.R. 3485, follows:]
H. R. 3485
To modify the enforcement of certain anti-terrorism judgments, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 18, 1999
Mr. MCCOLLUM (for himself, Mr. DELAY, Mr. DIAZ-BALART, Mr. SAXTON, Mr. SMITH of New Jersey, Mr. FRANKS of New Jersey, Mr. ROGAN, Mr. FOLEY, Mr. TIAHRT, and Ms. ROS-LEHTINEN) introduced the following bill; which was referred to the Committee on the Judiciary
To modify the enforcement of certain anti-terrorism judgments, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. ENFORCEMENT OF CERTAIN ANTI-TERRORISM JUDGMENTS.
(a) SHORT TITLE.This Act may be cited as the ''Justice for Victims of Terrorism Act''.
(1) IN GENERAL.Section 1603(b) of title 28, United States Code, is amended
Page 9 PREV PAGE TOP OF DOC (A) in paragraph (3) by striking the period and inserting a semicolon and ''and'';
(B) by redesignating paragraphs (1), (2), and (3) as subparagraphs (A), (B), and (C), respectively;
(C) by striking ''(b)'' through ''entity'' and inserting the following:
''(b) An 'agency or instrumentality of a foreign state' means
''(1) any entity''; and
(D) by adding at the end the following:
''(2) for purposes of sections 1605(a)(7) and 1610 (a)(7) and (f), any entity as defined under subparagraphs (A) and (B) of paragraph (1), and subparagraph (C) of paragraph (1) shall not apply.''.
(2) TECHNICAL AND CONFORMING AMENDMENT.Section 1391(f)(3) of title 28, United States Code, is amended by striking ''1603(b)'' and inserting ''1603(b)(1)''.
(c) ENFORCEMENT OF JUDGMENTS.Section 1610(f) of title 28, United States Code, is amended
(1) in paragraph (1)
(A) in subparagraph (A) by striking ''(including any agency or instrumentality or such state)'' and inserting ''(including any agency or instrumentality of such state)''; and
(B) by adding at the end the following:
''(C) Notwithstanding any other provision of law, moneys due from or payable by the United States (including any agency, subdivision or instrumentality thereof) to any state against which a judgment is pending under section 1605(a)(7) shall be subject to attachment and execution, in like manner and to the same extent as if the United States were a private person.''; and
Page 10 PREV PAGE TOP OF DOC (2) by adding at the end the following:
''(3)(A) Subject to subparagraph (B), upon determining on an asset-by-asset basis that a waiver is necessary in the national security interest, the President may waive this subsection in connection with (and prior to the enforcement of) any judicial order directing attachment in aid of execution or execution against the premises of a foreign diplomatic mission to the United States, or any funds held by or in the name of such foreign diplomatic mission determined by the President to be necessary to satisfy actual operating expenses of such foreign diplomatic mission.
''(B) A waiver under this paragraph shall not apply to
''(i) if the premises of a foreign diplomatic mission has been used for any nondiplomatic purpose (including use as rental property), the proceeds of such use; or
''(ii) if any asset of a foreign diplomatic mission is sold or otherwise transferred for value to a third party, the proceeds of such sale or transfer.
''(4) For purposes of this subsection, all assets of any agency or instrumentality of a foreign state shall be treated as assets of that foreign state.''.
(d) TECHNICAL AND CONFORMING AMENDMENT.Section 117(d) of the Treasury Department Appropriations Act, 1999 (Public Law 105277; 112 Stat. 2681492) is repealed.
(e) EFFECTIVE DATE.The amendments made by this section shall apply to any claim for which a foreign state is not immune under section 1605(a)(7) of title 28, United States Code, arising before, on, or after the date of enactment of this Act.
Mr. MCCOLLUM. Today, the subcommittee seeks to answer why the President said one thing and his administration insists upon doing another. It is my hope that our panel of witnesses will help us understand why the President and administration officials encourage victims to take terrorists to court under the 1996 Anti-terrorism Act yet now, in contradiction to the President's words, the administration refuses to allow compensation out of the frozen assets of terrorist states against whom judgments have been rendered. Rather than waging a war on terrorism, it appears the administration is fighting the victims of terrorism.
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In February 1996, two unarmed aircraft flown by the Brothers to the Rescue organization were shot down by Cuban fighter planes in international airspace over the Florida Straits. The Brothers to the Rescue mission was to search for refugees at sea, fleeing from Cuba, who had often risked their lives in inner tubes or precarious rafts to reach a free country. Four people, including three American citizens, were killed in the attack in violation of international law and apparently at the direction of Fidel Castro.
Immediately after this reprehensible incident, President Clinton called upon Congress to pass legislation ensuring that victims would have access to frozen Cuban assets to settle any claim for damages won in Federal court.
In 1996, Congress passed and the President then signed the Anti-terrorism and Effective Death Penalty Act, which allows American citizens injured in an act of terrorism to bring a private right of action against the terrorist state responsible for that act. However, the administration has prevented victims awarded damages by courts from collecting those damages from the frozen assets of the responsible government, those assets being present in the United States.
In response to an apparent reversal of policy by the administration, Congress passed section 117 of the fiscal year 1999 Treasury Department appropriations bill allowing Americans to attach the assets of terrorist states in the United States in order to collect judgments won against those states in Federal court. At the insistence of the administration, however, that legislation allowed the President to issue a waiver to block the attachment of assets if he deemed it to be in the interest of national security.
Page 12 PREV PAGE TOP OF DOC In March 1999, a Federal judge upheld a $187 million judgment against Cuba for their attack against Brothers to the Rescue. In that judgment, Federal District Court Judge Lawrence King stated, ''The court notes with great concern that the very President who in 1996 decried this terrorist action by the government of Cuba now sends the Department of Justice to argue before this court that Cuba's blocked assets ought not to be used to compensate the families of U.S. nationals murdered by Cuba. The executive branch's approach to this situation has been inconsistent at best. It now apparently believes that shielding a terrorist foreign state's assets are more important than compensating for the loss of American lives.''
Even in the face of this judgment, the President issued a waiver that prevented the families of the victims from attaching Cuban funds held by the United States for more than 37 years.
In another tragic case, the family of Alisa Flatow won a judgment against the Government of Iran for its involvement in a bus bombing in Israel, in April of 1995, that took her life. The President once again issued a waiver to prevent the Flatow family from attaching certain Iranian assets in the United States.
Another example of this horrific story is that of Terry Anderson, who, as we all recall, was barbarically held by terrorists sponsored by Iran for over 7 years. Last month, Terry Anderson won a judgment against Iran, and he now joins other former Iranian hostages, some of whom are here today, in seeking compensation and justice.
I am concerned that the President has exercised what was intended to be a narrow national security waiver too broadly, and as a consequence, those who have committed acts of terror resulting in the death of American citizens are effectively going unpunished, and Americans are not receiving just compensation after favorable court verdicts. This is contrary to the clear intention of Congress both in the 1996 Anti-terrorism Act and in the fiscal year 1999 Treasury Department appropriations bill.
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The Justice for Victims of Terrorism Act stops this abusive interpretation of the law once and for all. This bill is a companion to one introduced in the other body by Senators Mack and Lautenberg to clarify the narrow current waiver authority being used by the administration to block the families in this case and in the other cases I have mentioned. The bill would ensure compensation in such cases while clearly allowing the President to protect the diplomatic property of foreign countries in unambiguous terms.
Treasury Deputy Secretary Stuart Eizenstat informed the subcommittee yesterday that he will unfortunately be unable to attend today's hearing, but will provide testimony at a later date. The administration has used a wide variety of evolving arguments to deny these victims the justice they deserve, and while we don't have Mr. Eizenstat here today, his record in previous statements is clear. The arguments that were presented before the committee hearing in the other body demonstrates what I am talking about.
It is my intention to forward detailed questions to Secretary Eizenstat for his review and timely response in light of the fact that he is unable to be with us today. Let me take a minute, though, to address a couple of those arguments that have been proffered in the other body.
The administration asserted there that this issue falls completely within the President's national security powers, but the right to seize assets is derived from the powers granted to Congress under the Constitution to define and punish piracies and felonies committed on the high seas and defenses against the law of nations, that is, article one, section 8, clause 10, and delegated by legislation to the executive branch. In addition, the President himself requested Congress send him the legislation to allow the victims of terrorism to seek compensation from frozen assets.
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Further, the administration argues in other testimony that this bill would lead to retaliation from terrorist countries against U.S. assets abroad. However, unlike the commercial and corporate assets that terrorist countries own and control in the United States, there are no U.S. government commercial or corporate assets outside the U.S.
In addition, this bill specifically allows the President to protect diplomatic property from attachment in order to assure that U.S. properties abroad will not be at risk. Even if the President chose to allow the attachment of diplomatic property, the U.S. has always maintained a policy that we may take, ''proportional and equivalent responses,'' to violations of international law.
The administration argues, finally, that allowing these victims to attach frozen assets will either hurt so-called innocent investors or other claimants.
It is important to note in this regard that the legislation only allows the attachment of corporate assets for countries on the State Department's terrorist list prior to the terrorist acts. If we normalize relations with such a country, the President may remove the country from the list. Additionally, the foreign state must be acting as an agency or instrumentality for terrorist acts. The corporate or commercial assets in the United States these victims seek to collect against are either 100 percent owned by the terrorist country or under the actual control of the terrorist country. If there is any valid argument, it should be with the Treasury Department's freezing assets in the first place, not with the collection on those assets.
In addition, the legislation is limited to allowing victims with judgmentsnot to the thousands with claimsto attach frozen assets; and I might add, there are a number here today in this audience who are victims, who do have claims that have not yet been fully adjudicated. They do not yet have the right to seize those assets, though they may very well in the near term.
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I am pleased that today's hearing will allow the subcommittee to hear testimony from the perspective of the victims. I would like to mention a fellow Floridian, Colonel Robin Higgins, who serves as Governor Jeb Bush's head of Veterans Affairs, who has a claim against Irannot finished, not completed, as those who are here today to testify. Her husband, a U.S. Marine, was tragically killed in Beirut by Iran-sponsored terrorists, and she currently has a Federal court case pending. She asked that her testimony be submitted for the record, and it will be done today and so will that of any others who may be victims, who are here or who wish to submit their testimony into this record.
[The prepared statement of Mrs. Higgins follows:]
PREPARED STATEMENT OF ROBIN L. HIGGINS
Mr. Chairman, Members of the Subcommittee, distinguished guests:
Four years ago, I stood tall on the lawn of the White House with President Clinton, then-Senate Majority Leader Bob Dole, and other elected representatives as they signed the 1996 Anti- Terrorism law. Among other things this would finally give American victims of terrorism the right to sue foreign state sponsors of terrorism in U.S. courts.
I've learned that this Law gave the families the rights to sue, but not to collect. The Administration seems content to ensure that the rights of terrorist nations come before the rights of American victims.
Page 16 PREV PAGE TOP OF DOC In 1988, while on an official peacekeeping mission with the United Nations in southern Lebanon my Marine husband Colonel William R. ''Rich'' Higgins was kidnapped, tortured, and eventually murdered, his lifeless body paraded in media worldwide by his captors. Those captors were led, trained, financed, and armed by the Government of Iran.
Almost four years after my husband was first brutally abducted, I received his badly decomposed body to bury on American soil. Ten years later, I still do not know when he was murdered, and no one has ever been brought to justice for this crime against an American serviceman.
On February 17, 1999, eleven years to the day that my husband was taken, I brought suit in The United States District Court in the District of Columbia against the Islamic Republic of Iran, The Islamic Revolutionary Guard Corps, and several named and unnamed Iranian citizens. The suit is for $150 million in compensatory damages as well as an additional $500 million in punitive damages.
Several other victims of state-sponsored terrorism have previously been awarded judgments in American courts against terrorist nations, but they have been blocked from collecting on those judgments. While the United States holds frozen assets of Iran and the law allows the use of these assets to settle court awards, the Administration has employed a waiver of that legislation.
As the widow of a military man who served over 22 years of his life for this country, who served two tours in Vietnam, and was ordered by the country he loved and served to try to bring peace to the Middle EastI would think our country's leaders would be the very first to lead the charge against these rogue murderers. One would expect the country's leaders to ensure my husband's family receives justice from nations that refuse to join the civilized world. Instead, I see my country's leaders blocking that justice, protecting the rights of these nations that would murder with impunity our men in uniform.
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I support the efforts of Congressman McCollum and the members of this subcommittee to take action, which would give victims of state-sponsored terrorism who have legal judgments against their tormentors a small measure of American justice. Thank you for your efforts.
Mr. MCCOLLUM. This afternoon we will hear from Terry Anderson, a former Iranian hostage in Beirut, held captive for over 7 years; Stephen Flatow, who lost his daughter in a bus bombing by Iran-sponsored terrorists while in Israel; and Maggie Khuly, whose brother was killed by the Cuban Government. In light of the fact the administration has failed to present a witness to testify, Ron Kleinman, a former State Department attorney and attorney for Maggie Khuly, will be available to answer questions from members of the subcommittee, along with the first panel. And we want to thank all of you for being here today.
Before moving to the witnesses, however, I want to show a brief piece of film that is up here. I am not going to do that yet. I am going to ask if any of the other members of the committee want to make a statement.
Mr. Cannon being the only one present at the moment, would you like to?
Mr. CANNON. Very briefly, Mr. Chairman.
First of all, I would like to thank you for holding this hearing on a subject that I believe is very, very important. Let me also say that I am honored to be in front of this panel of witnesses, many of whom are well known for the kind of suffering they have gone through; and I think they are a noble expression of what is best in America and how we respond to difficulty as Americans.
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I would also like to point out that in this time of globalization, which is driven largely by the technology that we are developing in Americaoverwhelmingly, let me say, by the technology and ideas that have come from Americathat subjecting rogue states to some of the laws which have created the context for this kind of globalization of the world economy is a way to draw these countries back into the fold and away from their rogue and sometimes crazy activities, and then help them become decent members of the global community.
So I think your bill is very, very important. I appreciate your having this hearing and want to say thank you to the witnesses who have been so gracious as to come here today. Thank you.
Mr. MCCOLLUM. Thank you very much, Mr. Cannon. I would like now to show this very brief segment from President Clinton's press conference briefing on February 26, 1996, as a prelude to our witnesses being here today. If you would please roll the tape.
[Transcript of a portion of the video played follows:]
STATEMENT BY THE PRESIDENT
The Briefing Room, The White House, February 26, 1996 4:00 PM
President Clinton: ''Today, I am also ordering the following unilateral actions. First, I am asking that Congress pass legislation that will provide immediate compensation to the families, something to which they are entitled under international law, out of Cuba's blocked assets here in the United States. If Congress passes this legislation, we can provide the compensation immediately.''
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Mr. MCCOLLUM. I think that speaks pretty straightforwardly of why we have a problem here today. That was the President's statement, and we are looking forward to the testimony today.
I would like to introduce our panel of witnesses. I really, in a way, already did the opening statement, but first I want to welcome Terry Anderson to the panel. In March 1985, he was an American journalist working in Beirut. He was kidnapped by agents of the Islamic Republic of Iran. He was held captive by kidnappers in deplorable conditions until early December 1991. His story was on national television many times, and we are very grateful for your coming here today, Mr. Anderson.
In April 1995, Alisa Flatow, a 20-year-old college student from New Jersey, was on a bus on the Gaza Strip going to a Passover holiday celebration. A terrorist from the Iranian-backed Islamic Jihad rammed a car, loaded with explosives, into the bus, killing Ms. Flatow and seven others. Her father is here today to be with us, Stephen Flatow.
And we are very appreciative of you doing this; this is not an easy thing for any parent to do.
And Maggie Khuly, whom I have introduced previously, is here with us today. She lost a brother in the Brothers to the Rescue operation. She is very courageous being here today and represents, actually, a whole host of folks who are very, very involved and interested in the judgment involving the Brothers to the Rescue case in the Cuban MiG shoot-down. We want to thank you for being here today.
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And, Mr. Kleinman, thank you again for coming and being present to answer our questions.
PREPARED STATEMENT OF HON. BILL MCCOLLUM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND PRESIDING CHAIRMAN, SUBCOMMITTEE ON IMMIGRATION AND CLAIMS
I would like to welcome everyone to today's hearing, especially the victims of terrorism here with us who are still seeking justice. I would like to thank Chairman Smith for allowing us to hold this hearing. The focus of today's hearing is to seek justice for the victims of state sponsored terrorism. These victims are entitled to compensation out of the frozen assets of the guilty terrorist state once the victim obtains a legitimate judgment. Sadly, however, the Administration is denying these victims the justice they deserve. H.R. 3485, the Justice for Victims of Terrorism Act, which is the subject of today's hearing, will remedy this.
Today this Committee seeks to answer why the President said one thing and his Administration insists upon doing another. It is my hope that our panel of witnesses will help us understand why the President and Administration officials encouraged victims to take terrorists to court under the 1996 Anti-Terrorism Act, yet now in contradiction to the President's words, the Administration refuses to allow compensation out of the frozen assets of terrorist states against whom judgments have been rendered. Rather than waging a war on terrorism, it appears the Administration is fighting the victims of terrorism.
In February 1996, two unarmed aircraft flown by the ''Brothers to the Rescue'' organization were shot down by Cuban fighter planes in international airspace over the Florida Straits. The Brothers to the Rescue's mission was to search for refugees at sea fleeing from Cuba who would often risk their lives in inner tubes or precarious rafts to reach a free country. Four people, including three American citizens, were killed in the attack in violation of international law and apparently at the direction of Fidel Castro.
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Immediately after this reprehensible incident, President Clinton called upon Congress to pass legislation ensuring that the victims would have access to frozen Cuban assets to settle any claim for damages won in federal court. In 1996, Congress passed and the President signed the Antiterrorism and Effective Death Penalty Act which allowed American citizens injured in an act of terrorism to bring a private right of action against the terrorist state responsible for that act. However, the Administration has prevented victims awarded damages by courts from collecting those damages from frozen assets of the responsible government present in the U.S.
In response to an apparent reversal of policy by the Administration, Congress passed Section 117 of the Fiscal Year 1999 Treasury Department Appropriations Act, allowing Americans to attach the assets of terrorist states in the U.S. in order to collect judgements won against those states in federal court. At the insistence of the Administration, however, that legislation allowed the President to issue a waiver to block the attachment of assets, if he deemed it to be in the interest of national security.
In March 1999, a federal judge upheld a $187 million judgement against Cuba for their attack against the Brothers to the Rescue aircraft. In that judgment, Federal District Court Judge Lawrence King stated: ''The Court notes with great concern that the very President who in 1996 decried this terrorist action by the Government of Cuba now sends the Department of Justice to argue before this Court that Cuba's blocked assets ought not to be used to compensate the families of the U.S. nationals murdered by Cuba. The Executive branch's approach to this situation has been inconsistent at best. It now apparently believes that shielding a terrorist foreign state's assets are more important than compensating for the loss of American lives.'' Even in the face of this judgment, the President issued a waiver that prevented the families of the victims from attaching Cuban funds held by the U.S. for more than 37 years.
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In another tragic case, the family of Alisa Flatow won a judgment against the government of Iran for its involvement in a bus bombing in Israel in April 1995 that took her life. The President once again issued a waiver to prevent the Flatow family from attaching certain Iranian assets in the United States.
A final example is the horrific story of Terry Anderson, who as we all recall, was barbarically held by terrorists sponsored by Iran for over seven years. Last month, Terry Anderson won a judgment against Iran and he now joins other former Iranian hostages, some of whom are here with us today, in seeking compensation and justice.
I am concerned that the President has exercised what was intended to be a narrow national security waiver too broadly and, as a consequence, those who have committed acts of terror resulting in the death of American citizens are effectively going unpunished and Americans are not receiving just compensation after favorable court verdicts. This is contrary to the clear intention of Congress both in the 1996 Anti-Terrorism Act and in the FY99 Treasury Department Appropriations bill. The Justice for Victims of Terrorism Act stops this abusive interpretation of the law once and for all.
H.R. 3485 is a companion to one bill introduced in the other body by Senators Mack and Lautenberg to clarify and narrow the current waiver authority being used by the Administration to block the families of the Brothers to the Rescue victims, the Flatow family and potentially Terry Anderson from receiving justice. The bill would ensure compensation in such cases while clearly allowing the President to protect the diplomatic property of foreign countries in unambiguous terms.
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Treasury Deputy Secretary Stuart Eizenstat informed the Committee that he will unfortunately be unable to attend today's hearing, but will provide testimony at a later date. The Administration has used a variety of evolving arguments to deny these victims the justice they deserve. These arguments were presented before a Committee hearing in the other body. It is my intention to forward detailed questions to Secretary Eizenstat for his review and timely response in light of the fact that he was unable to be with the Committee today. Let me take a minute to address a few arguments proffered by the Clinton Administration.
The Administration asserts that this issue falls completely within the President's national security powers. But, the right to seize assets is derived from the powers granted to Congress under the Constitution to ''define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations'' (Art. I, Section 8, Clause 10) and delegate by legislation to the Executive Branch. In addition, the President himself requested that Congress send him legislation to allow the victims of terrorism to seek out compensation from frozen assets.
The Administration argues that this bill will lead to retaliation from terrorist countries against U.S. assets abroad. However, unlike the commercial and corporate assets that terrorist countries own and control in the U.S., there are no U.S. government commercial or corporate assets outside the U.S. In addition, this bill specifically allows the President to protect diplomatic property from attachment in order to assure that U.S. properties abroad will not be at risk. Even if the President chose to allow attachment of diplomatic property, the U.S. has always maintained a policy that we may take ''proportional and equivalent responses'' to violations of international law.
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The Administration also argues that allowing these victims to attach frozen assets will hurt either so-called innocent investors or other claimants.
It is important to note in this regard that the legislation only allows attachment of corporate assets for countries on the State Department's terrorist list prior to the terrorist acts. If we normalize relations with such a country, the President may remove that country from the list. Additionally, the foreign state must be acting as an agency or instrumentality for terrorist acts. The corporate or commercial assets in the U.S. these victims seek to collect against are either 100% owned by the terrorist country, or under the actual control of the terrorist country. If there is any valid argument, it should be with the Treasury Department freezing the assets in the first place, not with collection on those assets. In addition, this legislation is limited to allowing victims with judgments, not the thousands with claims, to attach frozen assets.
I am pleased that today's hearing will allow this Committee to hear testimony from the perspective of the victims and from the Administration. I would like to mention a fellow Floridian, Colonel Robin Higgins, who serves as Governor Jeb Bush's Head of Veteran's Affairs, who has a claim against Iran. Her husband, a U.S. Marine, was tragically killed in Beirut by Iran-sponsored terrorists and she currently has a federal court case pending. I will be submitting her testimony as a part of the Record.
This afternoon we will hear from Terry Anderson, a former Iranian hostage in Beirut held captive for over seven years; Stephen Flatow who lost his daughter in a bus bombing by Iran-sponsored terrorists while in Israel, and Maggie Khuly whose brother was killed by the Cuban government. In light of the fact the Administration has failed to present a witness to testify, Ron Kleinman, a former State Department lawyer and attorney for Maggie Khuly will be available to answer any questions from Members of the Subcommittee along with the first panel.
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Before moving on to the witnesses, I would like to show a brief segment from President Clinton's press briefing on February 26, 1996.
Mr. MCCOLLUM. With that in mind, I would like first to recognize Mr. Anderson and then go in the order of introductions. You may present your testimony. The subcommittee will take the written testimony in full for the record without objection.
Hearing none, it is so ordered, from every one of you on the panel; and you may present any or all of the testimony you desire, Mr. Anderson.
STATEMENT OF TERRY A. ANDERSON
Mr. ANDERSON. Thank you, Mr. Chairman, members of the subcommittee. Just for the record, my name is Terry Anderson. I live in Athens, Ohio, with my wife and daughter. I am a professor at the Scripps School of Journalism at the University of Ohio. As you know, I was Chief Middle East Correspondent for the Associated Press when I was taken hostage in Beirut on March 16th, 1985, by Hezbollah, a political and paramilitary terrorist organization operating in Lebanon, but sponsored, funded, directed and trained by the Islamic Republic of Iran.
Mr. Chairman, with your permission, I would like to introduce to the panel those victims of state-sponsored terrorism that you have not had a chance to meet. Of course, you know Mr. Flatow and Ms. Khuly. Also in the audience is Joe Cicippio and his wife Elham. Joe was a former Comptroller of the American Hospital in Beirut and at the American University of Beirut. He is currently a senior official with AID here in Washington. In addition to his own suffering in prison at the hands of Hezbollah, he was confined for years with Mr. Edward Tracy, who was immediately admitted to a VA hospital on his return to the United States and has never left.
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Also in the audience is Mrs. Fifi Reed, wife of Frank Reed, a civilian American hostage who I was confined with for years, who came home suffering from rat poisoning and has had mental and physical illnesses that have kept him in and out of hospitals for the past 10 years. He remains in the hospital at the moment in very serious condition and still in danger of his life.
Ms. Arlene Drucker is in the audience, whose daughter was a victim of a Hamas bombing attack in Jerusalem, funded and guided again by Iran.
You have heard, of course, from Retired Colonel Higgins, Robin Higgins, whose husband Rich, also a Marine colonel serving with the United Nations peacekeeping forces, observation forces, was murdered by his captors in Lebanon. I understand Colonel Higgins and Mr. Cicippio have submitted statements to the committee, and I beg the committee to accept them.
Mr. MCCOLLUM. They have, and we will, without objection, take those statements; they are entered in the record. As I indicated earlier, and I want to make it clear, if there are others who are here or others you know of who would like to submit statements for the record, the administration has requested we keep the record open for a brief time, and we will do that. So you may submit those statements, too.
[The prepared statement of Mr. and Mrs. Cicippio and Mr. and Mrs. Reed follows:]
PREPARED STATEMENT OF JOSEPH AND ELHAM CICIPPIO AND
Page 27 PREV PAGE TOP OF DOCFRANK AND FIFI REED
Today is an eventful day for all of the former hostages of Iran including Joseph Cicippio, Frank Reed, David Jacobsen and Terry Anderson. A hearing was held before Congress this afternoon regarding bill number 3485 which has overwhelming bipartisan support in the House and the Senate. This bill will attempt to bring closure to many years of hardship experienced by not only the former hostages, but each and every member of their families. Congressman McCollum and Senator Mack are making a coordinated effort to pass a bill which provides a direct method of recovery for victims of terrorism who have won judgments against terroristic foreign states. Although the original bill that Congressman McCollum's proposed would provide the former hostages with access to certain assets of Iran by eliminating the President's power to waive specific diplomatic assets, the former hostages strongly recommend and request that the House considers and adopts the amendments proposed by Senator Mack that are currently being coordinated with Congressman McCollum's office. These modifications provide not only a specific method of payment but also establish exact time deadlines with regard to payment. The hostages would recover 50% of their compensatory damages awarded within 30 days of signing over certain rights to the President and the remaining 50% in three years. The monies would not be paid from taxpayer funds. These modifications would facilitate payment to the hostages and avoid a potentially chaotic atmosphere with all of the former victims attempting to collect against Iranian assets. The proposed modifications also provide the President with sufficient time to continue pursuing a diplomatic relationship with Iran without jeopardizing any aspect of that relationship. These amendments have widespread support among the former hostages. We are pleased that Congressman McCollum and Senator Mack are working aggressively to secure compensation on behalf of the former hostages. Secretary of State Madeleine Albright previously testified before the Foreign Relations Committee and stated that the Administration was making this matter an utmost priority. We are hopeful that the Administration will continue to support this bill so that this regrettable chapter in the lives of the former hostages may finally be closed.
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[The prepared statement of Mr. Jacobsen follows:]
PREPARED STATEMENT OF DAVID P. JACOBSEN
While serving as the CEO of the American University of Beirut's Medical Center, I was kidnapped and held hostage by Iranian surrogates from May 28, 1985 until November 2, 1986. I was one of the ex-hostage plaintiffs in the first successful lawsuit against Iran. I have waited thirteen years for justice for my family and myself. The Clinton Administration has deliberately attempted to thwart collection of compensatory damages awarded to all victims of Iranian sponsored international terrorism.
THE ALGIERS ACCORDSTHE SOURCE OF IRANIAN TERRORISM:
The seeds of the acts of international terrorism in the 1980's were contained in the Algiers Accords that freed the American Embassy hostages from Iran. Unfortunately a condition of that agreement prevented the released hostages from suing the Iranian government for damages. The Islamic Republic of Iran and other nations that sponsor terrorism believed that U.S. foreign policy denied victims of terrorism legal rights for claiming personal damages. The Department of State's action led to a decade of terrorist acts because that agreement was interpreted by terrorist nations that they could harm U.S. citizens with impunity. And they did and continue to do so.
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Congress, in an effort to deter terrorism and punish terrorist nations, passed the Anti-Terrorism Act of 1997 to allow victims to sue nations that sponsored terrorism. The Department of State's obstruction of collecting court awarded judgments will again be interpreted by terrorist nations that the U.S. Government will deny justice to its own citizens who have been victims of terrorism. The State Department policies may unwittingly encourage continuing international terrorism against Americans. How anyone can conceive that the Presidential Waiver for National Security reasons can protect our nation boggles the mind. How could former hostages collecting court awarded damages threaten the security of our country? THE SECURITY OF OUR NATION IS THREATENED BY THE INEPTNESS OF STATE DEPARTMENT BUREAUCRATS WHOSE PAST AND PRESENT POLICIES REWARD TERRORIST NATIONS BY PREVENTING VICTIMS SEEKING JUSTICE. Isn't it strange that our government quickly paid restitution to Chinese Embassy employees and their families for the bombings in the Bosnian conflict while I have had to wait thirteen years?
As an ex-hostage of Iran, it is very discouraging that the present Administration cares more about future diplomatic relations with a terrorist nation than they do for the legal and ethical rights of U.S. citizens. The offer of a partial settlement is equally insulting and shameful. All hostages and their families were brutally harmed by the kidnapping experience. Careers were destroyed, children's education delayed, retirement plans destroyed, savings depleted, quality of life impaired, and physical and mental health devastated for some. Every one of us held hostage will always have a big ''H'' branded on our foreheads and in our hearts. We deserve fair and immediate compensation for the hell that we survived and the destruction of the quality of our lives. Perhaps Robert Pollhill and Father Martin Jenco would still be living if they had received medical attention for their illnesses while in captivity. We all lost years of freedom and time with our families. Lost time that will never be fairly and fully compensated. PLEASE DO NOT MAKE US LOSE ANYMORE TIME IN THE TWILIGHT OF OUR LIVES.
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THE ISLAMIC REPUBLIC OF IRANTHE GREAT SATAN:
The Islamic Republic of Iran is the Great Satan of International Terrorism. Read the official reports of Rep. Bill McCollum's Republican Congressional Task Force on Terrorism and Unconventional Warfare. I know first hand the accuracy of those reports by my hostage experience in Lebanon and from humanitarian aid trips to Somalia and Sudan in late 1992. Iran's role in terrorism in those countries is well documented with even a trail of evidence implicating Iran in the bombing of the World Trade Center in New York City. Iran's current supplies of chemical and bacteriological weapons constitute the greatest threat to our nation's security.
Iranian surrogates murdered 241 U.S. Marines in West Beirut, bombed our embassies in West and East Beirut, murdered Bill Buckley, Peter Kilburn, Alex Collett, Col. William Higgins and Robert Stethem. Iran was responsible for kidnapping sixteen American citizens. There is evidence to implicate the Iranians in the murder of Ian Spiro and his family in San Diego, California on November 8, 1992. As a private citizen, I had worked with Ian Spiro on a project to free all of the hostages. If I had not moved from my residence, maybe I too would have been executed because a death threat had been made against another member of our group.
THE STATE DEPARTMENTWHOSE SIDE ARE THEY ON?
Families were also victims of Iranian terrorism. Iran and its surrogates have brutalized several thousand U.S. citizens. The role of Iran in international terrorism is proven beyond all doubt. What has the Department of State done on behalf of the victimized Americans? NOTHING, ABSOLUTELY NOTHING. THEY HAVE OBSTRUCTED OUR SEEKING JUSTICE IN FEDERAL COURTS; THEY HAVE DELAYED THE VICTIM'S RIGHTS TO A SPEEDY TRIAL; AND NOW THEY ARE DELAYING AND PREVENTING COLLECTION OF COURT AWARDS.
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THE ALGIERS ACCORDS PROVIDED A MECHANISM FOR THE RETURN OF THE FROZEN IRANIAN ASSETS. NOT INCLUDED IN THE TERMS OF THE ALGIERS ACCORDS WAS THE INTEREST THAT ACCRUED ON SIX BILLION DOLLARS OF CASH DEPOSITS. THERE SHOULD BE A MINIMUM OF SIX TO TWELVE BILLION DOLLARS IN ACCRUED INTEREST. WHERE IS IT? IF NOT THERE, HOW WAS IT SPENT?
It is possible with patience and determination to obtain justice through the legislative and judicial branches of government. It is extremely difficult to get bureaucrats in the executive branch to do what is right and to carry out the will of Congress and the Courts.
Political reality may force ex-hostages to accept a partial advance payment with little or no hope of ever collecting the full amount awarded by the court. Due to the fact that the United States Government is the only party capable of collecting from Iran, the plaintiff's private legal counsel should be limited to a portion of their contingency contract percentage agreement. It is my understanding that the policy of Judiciary Chairman Henry Hyde is to limit legal counsel fees to ten percent. This reduction in contingency fees is fair because the attorney is being compensated for the trial portion and not for collections which he could never accomplish. If former hostages do not net a fair and adequate payment, then they are being victimized again, this time by their attorney.
THE WILL OF CONGRESS AND THE COURTS MUST NO LONGER BE IGNORED BY THE ADMINISTRATION. IT IS RELATIVELY EASY TO OBTAIN JUSTICE, BUT VIRTUALLY IMPOSSIBLE FOR THE BUREAUCRACY TO WILLINGLY DO WHAT IS RIGHT. YOUR DECISION MUST BE FOR FULL COMPENSATION FOR THE PUNITIVE DAMAGES PORTION OF THE COURT AWARD.
Page 32 PREV PAGE TOP OF DOC Mr. ANDERSON. Thank you, Mr. Chairman. I welcome the chance to provide some background and a context which the committee members may find useful in their deliberations on this bill, this pending enforcement legislation. I believe that the experiences of my 7 years in captivity reflect those of my fellow hostages, who for years were beaten, tortured, physically, mentally and emotionally, by our captors.
We are very grateful to Congress for passing the 1998 legislation that allowed us to bring action against the Republic of Iran. Our Federal courts have confirmed Congress' judgment by finding that state directly responsible for what Judge Jackson in my case termed ''acts savage and cruel by any civilized standard.'' those courts awarded us substantial amounts of compensatory damages, and to emphasize their abhorrence of Iran's state-sponsored terrorism, added hundreds of millions of dollars in punitive judgments. These decisions are in themselves a victory in our effort to force Iran to take responsibility for its acts.
However, the absence of any effective mechanism for enforcement of those judgments undermines the strong actions of both the Congress and the courts. In addition, some of my fellow hostages find themselves in very difficult personal circumstances, direct consequences of their imprisonment and suffering. They need relief, and they need it as soon as possible.
Mr. Chairman, I will not relate again here the details of my 7-year imprisonment or the suffering of my family then and during the years we worked to heal the damage from that time. I will simply note that Judge Jackson commented at the end of my hearing that he had never heard such a compelling case in all his years on the bench. Instead and with your permission, Mr. Chairman, I would like to submit a copy of the entire transcript of my hearing into the record to document the level of physical and mental cruelty and torture to which we were subjected.
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Mr. MCCOLLUM. Without objection, so ordered.
Mr. ANDERSON. Mr. Chairman, as I understand the pending legislation, Congress would provide a way for victims of state-sponsored terrorism and their families who have obtained a Federal court judgment to attach property of the state responsible for their suffering, including money due from or payable by the United States. This includes commercial property, rents from seized buildings and other assets.
Our primary aim in requesting this legislation is the same as yours in passing the 1998 law. It is to make sure that Iran pays for what it has done. Until Iranian money is actually seized and distributed to that country's victims there is no reason for Iran or any other state sponsor of terrorism to think twice about doing it again and again. Terrorism is a cheap way for outlaw states to engage in war. Both the law you passed 3 years ago and this one are aimed at making that expensive.
Mr. Chairman, like our leaders and most of our Nation, I am encouraged by the protests in Iran against the repressive regime that has ruled since the 1979 revolution. I am happy to see movement toward a more open and just society there. I have no objection to normalization of relations between the United States and Iran. I think it would be a very good thing indeed. But my fellow hostages and I agree completely that such a step should not come until Iran has acknowledged its past sponsorship of terrorism, compensated its victims and publicly vowed not to do it again.
That doesn't seem likely at the moment. Therefore, it is up to the U.S. Congress and courts to see that the Iranian Government understands there is a substantial penalty, a real penalty, for such acts.
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We have tried to work with the administration to identify a procedure and a possible source of Iranian funds for payments. While the administration has been sympathetic in principle to our plight and both Under Secretary of the Treasury Eizenstat and Secretary of State Albright have testified that they want to work with us and the Congress to identify funds to help the victims of terrorism, the sad reality is that little has been done. Suggestions to draw on taxpayer dollars belie the purpose of our efforts, namely, to make the Iranians pay for their terrorist acts.
Unfortunately, the administration has objected to the distribution to victims of any portion of the hundreds of millions of dollars of Iranian funds it has held for the past 20 years. No serious proposals or discussions are pending with the Congress as far as I know.
Frankly, Mr. Chairman, even this new bill before you would only give us the right to go into court, to file the appropriate papers, to attach Iranian property and execute the court's order. We are very grateful for your consideration of this bill. You will understand, however, that after years of litigation for some of us we would have liked to have had the administration help us avoid further court action and further delay.
We have offered substantial concessions to the Clinton administration. We have offered to accept a payout of Iranian assets over time. We have agreed that there is a need for the President to be flexible in the application of this and the previous law in case of substantial national security risks to be applied on an asset-by-asset basis and with respect to specifically identified diplomatic property and the upkeep of such property.
Page 35 PREV PAGE TOP OF DOC Mr. Chairman, there is more than enough nondiplomatic Iranian money in U.S. hands to satisfy every conceivable compensatory judgment obtained or likely to be obtained. However, the Clinton administration has continued to object to every practical proposal we have made. It has put no pragmatic, workable alternative of its own on the table. It seems intent on returning the Iranian money it holds to that country eventually, as part of its efforts to support the newly elected reformers in the Iranian legislature.
We do not believe such a transfer is right without enforcing either the court's or the Congress' will, or without insisting on justice for the victims of Iranian attacks or without even insisting that Iran cease sponsoring terrorism.
Mr. Chairman, I will continue to pursue a dialogue with the administration, and I hope the Congress will too. Secretary Eizenstat has agreed to meet with me later today. In this meeting, I will continue to seek a practical means to satisfy the judgments held by me and other victims of terrorism.
Mr. Chairman, I understand that money held by our government for the benefit of the state of Iran is substantial. Once we received our judgment, I instructed my lawyers to file the necessary papers to initiate a legal attachment process, which they have done. I request that a copy of those documents also be included in the record.
Mr. MCCOLLUM. Without objection, so ordered.
Mr. ANDERSON. We intend, if this legislation is passed by both Houses and signed by the President, to move immediately to obtain payment on our judgments.
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Mr. Chairman, thank you for the opportunity to testify before the committee today. I would be happy to respond to any questions that you or other members of the committee may have.
Mr. MCCOLLUM. Thank you very much, Mr. Anderson. We will have some in a few moments, but we want to have our other panelists.
[The prepared statement of Mr. Anderson follows:]
PREPARED STATEMENT OF TERRY A. ANDERSON
MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE, GOOD MORNING. MY NAME IS TERRY ANDERSON. I CURRENTLY LIVE IN ATHENS, OHIO WITH MY WIFE AND DAUGHTER. I AM A PROFESSOR IN THE SCRIPPS SCHOOL OF JOURNALISM AT THE UNIVERSITY OF OHIO. AS YOU KNOW, I WAS CHIEF MIDDLE EAST CORRESPONDENT FOR THE ASSOCIATED PRESS WHEN I WAS TAKEN HOSTAGE IN BEIRUT ON MARCH 16, 1985, BY HEZBOLLAH, A POLITICAL AND PARAMILITARY TERRORIST ORGANIZATION OPERATING IN LEBANON, SPONSORED, FUNDED, DIRECTED AND TRAINED BY THE ISLAMIC REPUBLIC OF IRAN.
MR. CHAIRMAN, WITH YOUR PERMISSION, I WOULD LIKE TO INTRODUCE TO THE PANEL SEVERAL FORMER HOSTAGES, THEIR FAMILIES AND FAMILIES OF NOW DECEASED HOSTAGES WHO ARE HERE TODAY TO EXPRESS THEIR SUPPORT FOR YOUR LEGISLATION.MR. CHAIRMAN, I WELCOME THE CHANCE TO PROVIDE SOME BACKGROUND AND A CONTEXT WHICH THE COMMITTEE MEMBERS MAY FIND USEFUL IN THEIR DELIBERATIONS ON H.R. 3485, THE PENDING ENFORCEMENT LEGISLATION. I BELIEVE THAT THE EXPERIENCES OF MY SEVEN YEARS IN CAPTIVITY REFLECT THOSE OF MY FELLOW HOSTAGES, WHO FOR YEARS WERE BRUTALLY TORTUREDPHYSICALLY, MENTALLY AND EMOTIONALLYBY OUR CAPTORS.
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WE ARE ALL GRATEFUL TO THE CONGRESS FOR PASSING THE 1998 LEGISLATION ALLOWING US TO BRING ACTION AGAINST THE REPUBLIC OF IRAN. OUR FEDERAL COURTS HAVE CONFIRMED THE CONGRESS' JUDGMENT BY FINDING THAT STATE DIRECTLY RESPONSIBLE FOR WHAT JUDGE JACKSON TERMED ACTS ''SAVAGE AND CRUEL BY ANY CIVILIZED STANDARD.'' THOSE COURTS AWARDED US SUBSTANTIAL AMOUNTS OF COMPENSATORY DAMAGES, AND TO EMPHASIZE THEIR ABHORRENCE OF IRAN'S STATE-SPONSORED TERRORISM, ADDED HUNDREDS OF MILLIONS OF DOLLARS IN PUNITIVE JUDGMENTS. THESE DECISIONS ARE IN THEMSELVES A VICTORY IN OUR EFFORT TO FORCE IRAN TO TAKE RESPONSIBILITY FOR ITS ACTS.
HOWEVER, THE ABSENCE OF ANY EFFECTIVE MECHANISM FOR ENFORCEMENT OF THOSE JUDGMENTS UNDERMINES THE STRONG ACTIONS OF BOTH THE CONGRESS AND THE COURTS. IN ADDITION, SOME OF MY FELLOW HOSTAGES FIND THEMSELVES IN VERY DIFFICULT PERSONAL CIRCUMSTANCES, DIRECT CONSEQUENCES OF THEIR IMPRISONMENT AND SUFFERING. THEY NEED RELIEF, AND THEY NEED IT AS SOON AS POSSIBLE.
MR. CHAIRMAN, I WILL NOT RELATE AGAIN HERE THE TERRIBLE DETAILS OF MY SEVEN-YEAR IMPRISONMENT, OR THE SUFFERING OF MY FAMILY THEN AND DURING THE YEARS WE WORKED TO HEAL THE DAMAGE. I WILL SIMPLY NOTE THAT JUDGE JACKSON COMMENTED AT THE END OF MY HEARING THAT HE HAD NEVER HEARD SUCH A COMPELLING CASE IN ALL HIS YEARS ON THE BENCH. INSTEAD, AND WITH YOUR PERMISSION, MR. CHAIRMAN, I WOULD LIKE TO SUBMIT A COPY OF THE ENTIRE TRANSCRIPT OF MY HEARING INTO THE RECORD TO DOCUMENT THE LEVEL OF PHYSICAL AND MENTAL CRUELTY AND TORTURE TO WHICH WE WERE SUBJECTED.
MR. CHAIRMAN, AS I UNDERSTAND THE PENDING LEGISLATION, CONGRESS WOULD PROVIDE A WAY FOR VICTIMS OF STATE- SPONSORED TERRORISM, AND THEIR FAMILIES, WHO HAVE OBTAINED A FEDERAL COURT JUDGEMENT TO ATTACH PROPERTY OF THE STATE RESPONSIBLE FOR THEIR SUFFERING, INCLUDING MONEY DUE FROM OR PAYABLE BY THE UNITED STATES. THIS INCLUDES COMMERCIAL PROPERTY, RENTS FROM SEIZED BUILDINGS, AND OTHER ASSETS.
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OUR PRIMARY AIM IN REQUESTING THIS LEGISLATION IS THE SAME AS YOURS IN PASSING THE 1998 LAW. IT IS TO MAKE SURE THAT IRAN PAYS FOR WHAT IT HAS DONE. UNTIL IRANIAN MONEY IS ACTUALLY SEIZED AND DISTRIBUTED TO THAT COUNTRY'S VICTIMS, THERE IS NO REASON FOR IRAN OR ANY OTHER STATE SPONSOR OF TERRORISM TO THINK TWICE ABOUT DOING IT AGAIN, AND AGAIN. TERRORISM IS A CHEAP WAY FOR OUTLAW STATES TO ENGAGE IN WAR. BOTH THE LAW YOU PASSED THREE YEARS AGO AND THIS ONE ARE AIMED AT MAKING THAT EXPENSIVE.
MR. CHAIRMAN, LIKE OUR LEADERS AND MOST OF OUR NATION, I AM ENCOURAGED BY THE PROTESTS IN IRAN AGAINST THE REPRESSIVE REGIME THAT HAS RULED SINCE THE 1979 REVOLUTION. I AM HAPPY TO SEE MOVEMENT TOWARD A MORE OPEN AND JUST SOCIETY. I HAVE NO OBJECTION TO THE NORMALIZATION OF RELATIONS BETWEEN THE UNITED STATES AND IRAN. I THINK IT WOULD BE A VERY GOOD THING INDEED.
BUT MY FELLOW HOSTAGES AND I AGREE COMPLETELY THAT SUCH A STEP SHOULD NOT COME UNTIL IRAN HAS ACKNOWLEDGED ITS PAST SPONSORSHIP OF TERRORISM, COMPENSATED ITS VICTIMS, AND PUBLICLY VOWED NOT TO DO IT AGAIN. THAT DOES NOT SEEM LIKELY AT THE MOMENT. THEREFORE, IT IS UP TO THE U.S. CONGRESS AND COURTS TO SEE THAT THE IRANIAN GOVERNMENT UNDERSTANDS THERE IS A SUBSTANTIAL PENALTY, A REAL PENALTY, FOR SUCH ACTS.
WE HAVE TRIED TO WORK WITH THE ADMINISTRATION TO IDENTIFY A PROCEDURE AND POSSIBLE SOURCE OF IRANIAN FUNDS FOR SUCH PAYMENTS. WHILE THE ADMINISTRATION HAS BEEN SYMPATHETIC IN PRINCIPLE TO OUR PLIGHT AND BOTH UNDER SECRETARY OF THE TREASURY EIZENSTAT AND SECRETARY OF STATE ALBRIGHT HAVE TESTIFIED THAT THEY WANT TO WORK WITH US AND THE CONGRESS TO IDENTIFY FUNDS TO HELP THE VICTIMS OF TERRORISM, THE SAD REALITY IS THAT LITTLE HAS BEEN DONE. SUGGESTIONS TO DRAW ON TAXPAYER DOLLARS BELIE THE PURPOSE OF OUR EFFORTS, NAMELY TO MAKE THE IRANIANS PAY FOR THEIR TERRORIST ACTS.
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UNFORTUNATELY, THE ADMINISTRATION HAS OBJECTED ON DIPLOMATIC AND NATIONAL SECURITY GROUNDS TO THE DISTRIBUTION TO VICTIMS OF ANY PORTION OF THE HUNDREDS OF MILLIONS OF DOLLARS OF IRANIAN FUNDS IT HAS HELD FOR THE PAST 20 YEARS. NO SERIOUS PROPOSALS OR DISCUSSIONS ARE PENDING WITH THE CONGRESS.
FRANKLY, MR. CHAIRMAN, EVEN THIS NEW BILL BEFORE YOU WOULD ONLY GIVE US THE RIGHT TO GO INTO COURT, FILE THE APPROPRIATE PAPERS TO ATTACH IRANIAN PROPERTY AND EXECUTE THE COURT'S ORDER. WE ARE VERY GRATEFUL FOR YOUR CONSIDERATION OF THIS BILL, BUT YOU WILL UNDERSTAND THAT AFTER YEARS OF LITIGATION, WE WOULD HAVE LIKED TO HAVE HAD THE ADMINISTRATION HELP US AVOID FURTHER COURT ACTION, AND FURTHER DELAY.
WE HAVE OFFERED SUBSTANTIAL CONCESSIONS TO THE CLINTON ADMINISTRATION. WE HAVE OFFERED TO ACCEPT A PAYOUT OF IRANIAN ASSETS OVER TIME. WE HAVE AGREED THAT THERE IS A NEED FOR THE PRESIDENT TO BE FLEXIBLE IN THE APPLICATION OF THIS AND THE PREVIOUS LAW IN CASE OF SUBSTANTIAL NATIONAL SECURITY RISKSTO BE APPLIED ON AN ASSET-BY-ASSET BASIS AND WITH RESPECT TO SPECIFICALLY IDENTIFIED DIPLOMATIC PROPERTY AND THE UPKEEP OF SUCH PROPERTY.
HOWEVER, THE CLINTON ADMINISTRATION HAS CONTINUED TO OBJECT TO EVERY PRACTICAL PROPOSAL WE HAVE MADE. IT HAS PUT NO PRAGMATIC, WORKABLE ALTERNATIVE OF ITS OWN ON THE TABLE. IT SEEMS INTENT ON RETURNING THE IRANIAN MONEY IT HOLDS TO THAT COUNTRY, AS PART OF ITS EFFORTS TO SUPPORT THE NEWLY ELECTED REFORMERS IN THE IRANIAN LEGISLATURE. WE DO NOT BELIEVE SUCH A TRANSFER IS RIGHT WITHOUT ENFORCING EITHER THE COURT'S OR THE CONGRESS' WILL OR WITHOUT INSISTING ON JUSTICE FOR THE VICTIMS OF IRANIAN ATTACKS, OR WITHOUT EVEN INSISTING THAT IRAN CEASE SPONSORING TERRORISM.
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MR. CHAIRMAN, I WILL CONTINUE TO PURSUE A DIALOGUE WITH THE ADMINISTRATION, AND I HOPE THE CONGRESS WILL TOO. SECRETARY EIZENSTAT HAS AGREED TO MEET WITH ME LATER TODAY. IN THIS MEETING I WILL CONTINUE TO SEEK A PRACTICAL MEANS TO SATISFY THE JUDGMENTS HELD BY ME AND OTHER VICTIMS OF TERRORISM.
MR. CHAIRMAN, I UNDERSTAND THAT MONEY HELD BY OUR GOVERNMENT FOR THE BENEFIT OF THE STATE OF IRAN IS SUBSTANTIAL. ONCE WE RECEIVED OUR JUDGMENT, I INSTRUCTED MY LAWYERS TO FILE THE NECESSARY PAPERS TO INITIATE THE LEGAL ATTACHMENT PROCESS. I REQUEST THAT A COPY OF THOSE DOCUMENTS BE INCLUDED IN THE RECORD.
WE INTEND, IF THIS LEGISLATION IS PASSED BY BOTH HOUSES AND SIGNED BY THE PRESIDENT, TO MOVE IMMEDIATELY TO PERFECT OUR ATTACHMENT OF THAT MONEY AND OBTAIN PAYMENT ON OUR JUDGMENTS.
MR. CHAIRMAN, THANK YOU FOR THE OPPORTUNITY TO TESTIFY BEFORE THE COMMITTEE TODAY. I WOULD BE HAPPY TO RESPOND TO ANY QUESTIONS THAT YOU OR OTHER MEMBERS OF THE COMMITTEE MAY HAVE.
The attachment applies to Foreign Miliarty Sales Trust Account. Identification Code 11824207155. The account was establishes as a repositoryfor funds from foregin customers fpr the military sales pursuant to the Foreign Military Sales Act, 22 U.S.C. 2762 (formerly 31 U.S.C. 725S).
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Certificate of Mailing
I hereby certify that a copy of the foregoing was mailed this 10th day of April 2000, by Federal Express to:
Stuart H. Newberger, Esquire
Crowell & Moring LLP
1001 Pennsylvania Avenuce N.W.
Washington D.C. 200042595
The attachment applies to Foreign Miliarty Sales Trust Account. Identification Code 11824207155. The account was establishes as a repositoryfor funds from foregin customers fpr the military sales pursuant to the Foreign Military Sales Act, 22 U.S.C. 2762 (formerly 31 U.S.C. 725S).
Certificate of Mailing
I hereby certify that a copy of the foregoing was mailed this 10th day of April 2000, by Federal Express to:
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Stuart H. Newberger, Esquire
Crowell & Moring LLP
1001 Pennsylvania Avenuce N.W.
Washington D.C. 200042595
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
TERRY A. ANDERSON, et al.,
THE ISLAMIC REPUBLIC OF IRAN, et. al.,
DECISION AND ORDER
Terry Alan Anderson, an American journalist working in Beirut, Lebanon, was kidnapped at gunpoint from his parked automobile in West Beirut on March 16, 1985. He was imprisoned and held hostage in various dungeons in Beirut and vicinity, under execrable conditions, for nearly seven years. Released in early December, 1991, Anderson, his wife Madeleine (''Maddy'') Bassil (a Lebanese citizen), and their daughter, Sulome (who was born in New York State in June, 1985, while her father was a hostage) now bring this action against the Islamic Republic of Iran and its Ministry of Information and Security (''MOIS'') as the principals allegedly responsible for the multiple tortious injuries done to them by the terrorist organization they employed to that purpose. Jurisdiction is predicated upon 28 U.S.C. §1330(b) and 1605(a)(7), the latter a 1996 amendment to the Foreign Sovereign Immunities Act, 28 U.S.C. §16021611.
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Upon the evidence adduced at the ex parte non-jury trial before this Court February 1516, 2000, from which the facts set forth below are found pursuant to Fed. R. Civ. P. 52(a), the Court concludes that judgments shall be given for plaintiffs.(see footnote 1)
As in Cicippio, where the sole defendant was the Islamic Republic of Iran, the defendants in the instant case were properly served with process pursuant to 28 U.S.C. §608(a)(4) as of August 11, 1999, and were declared in default on October 29, 1999, having failed to answer or otherwise respond to the complaint.
The evidence presented at the trial establishes that in March of 1985, Terry Anderson, a thirty-eight year-old ex-Marine and seasoned combat veteran, was chief correspondent for the Associated Press (''A.P.'') for the Middle East. He had been in Beirut since the Israeli invasion of Lebanon in 1982, and had acquired a considerable understanding of the country and its myriad warring factions. Anderson was highly respected by his professional peers as a knowledgeable, resourceful, and extraordinarily well-connected reporter. Major news organizations regarded his by- line stories for the A.P. as a primary source for their coverage of the region. Anderson's next assignment for the A.P. would likely have been as chief of a major bureau or an editor in New York.
While returning by automobile from an early Saturday morning tennis game on March 1985, to the West Beirut apartment where he and Madeleine were living, Anderson stopped briefly to drop off his tennis partner. Anderson was quickly accosted by several young men, forced out of his car at gunpoint, and thrust onto the back-seat floor of his assailants' vehicle. They covered him with a blanket, drove him at high speeds through the streets of Beirut to the first of many places of confinement where he was shackled and blindfolded. Anderson was to remain in chains for all but the last two weeks of his captivity.
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Anderson's ordeal was typical of that of his fellow hostages described in Cicippio v. Islamic Republic of Iran, supra, n.1. At first, Anderson was roughed-up regularly, threatened with death if he tampered with his blindfold to look at his captors, and was fed only bread, occasionally a fragment of cheese, and water. Although chained and blindfolded, Anderson became aware over the ensuing weeks that other captives were being brought in to the same enclosure, but then walled off from one another with wooden partitions. (Anderson later learned that among his new companionsthere were ultimately five altogetherwere Father William Jenco and William Buckley.) All of the captives became ill as a result of the unsanitary conditions in which they were confined, and Buckley, untreated despite the gravity of his condition, eventually died of his illness.
After several months, Anderson was moved to another location and chained to a bolt in the floor, still blindfolded. Eventually, he became aware that his fellow prisoners nearby now included David Jacobsen, Rev. Ben Weir, and Tom Sutherland (Dean of Agriculture at the American University). Over the next year, Rev. Weir and Fr. Jenco were released, Anderson surmises, as a result of covert arms-for-hostages negotiations between the United States and Iran. In the meantime, the hostages were acutely aware that this particular place of captivity was in the midst of a war zone. Ordnance exploded frequently in close proximity to the structure.
In time, the remaining hostages were transported by truckwrapped from head to toe in plastic tape each time they were movedto yet another prison, this time a filthy dungeon with darkened cells for each prisoner, equipped only with a mattress, a water bottle, and a second container to collect urine. All the prisoners developed diarrhea; yet, being chained to the floor, they were unable to escape their own excrement.
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All told, Anderson estimates that he and his fellow captives were moved from cell to cell some twenty-five times. They were bound with tape each time, leaving only their nostrils exposed, then laid prone in the narrow compartments under the beds of trucks and driven around for hours while being forced to inhale the vehicles' exhaust fumes. With each transfer they were fearful that this time their destination might be the place of their executions. Once hostages arrived at a new prison, sometimes several of them would be confined together. On other occasions they would be alone or with new cellmates. Anderson recalls that only he and Tom Sutherland were confined together throughout.
For reasons he does not know, Anderson was rarely beaten, but other prisoners were, on a regular basis. Sutherland, in particular, was brutally and frequently beaten by the guards, and at one point attempted suicide. Anderson could only listen and observe, helpless to assist the victim. The guards were, however, uniformly anti- American and extremely hostile to all of the hostages, as well as indifferent to their prisoners' discomforts: chains, blindfolds, lack of sanitation, diet, or illness. They repeatedly taunted the hostages with assurances that they would be released shortly, which the hostages soon learned were lies.
As were his fellow hostages, Anderson was subject to periodic depressions which lasted many weeks. Deprived for most of the time of any knowledge of the outside world, given minimal information about his family (he was occasionally allowed to watch their broadcast appeals for his release), and fearful that the ordeal would never end, or would end only by his death, Anderson survived day-to-day.
Over the last year-and a-half of his captivity, Anderson's fellow hostages were being released one or two at a time; their captors were becoming increasingly aware that, whatever had been exchanged for hostages in the past when negotiations had been clandestine, they were no longer of significant value in trade, at least publicly, to anyone. Anderson was told from the outset that he would be the last to be released, as proved to be the case. He was, as he described it, a ''poster child'' for his captorsa prominent American journalist, helpless at the hands of the ''Islamic jihad''and they had ascribed a barter value to him far higher than anyone was willing to pay.
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At the end, Anderson was confined to a cell with three others, including Sutherland, for about a year. One by one, at intervals of several months, they were released, Anderson last of all. During the final two weeks, Anderson's captors struck off his chains for the first time. The day of his release, he was driven, after dark but still blindfolded, to a roadside rendezvous with a Syrian army team. He removed his blindfold, he recalled, and saw the stars for the first time since his capture. The Syrians drove him to Damascus where he was reunited with his wife and daughter. Altogether, they had been apart 2,454 daysover six years and seven months. After a period of medical treatment for Terry Anderson at the U.S. Air Force hospital in Wiesbaden, Germany, and a period of rest and recuperation in the Caribbean, the Anderson family returned to the United States.
As Terry Anderson was being seized from his car on the morning of March 16, 1985, Madeleine (''Maddy'') Bassil, lay asleep in their apartment in West Beirut. She was thirty-five years old and seven months pregnant with their first child. She became aware that something was wrong when she awoke late in the morning to find that Terry had not returned from his tennis game. Knowing that the practice of hostage- taking had become commonplace in Beirut in recent months, her first thought was to pray that Terry had had ''an accident''anything but kidnapped. A neighbor reluctantly told her otherwise, and it was confirmed the following night by a press release from Hezbollah.
Several weeks later, Maddy flew to Batavia, New York, to give birth to their daughter, in Terry's hometown with his family nearby. Sulome Theresa Anderson was born June 7, 1985. Four months later Maddy and her baby went to England to live with a sister for a time, and then she and the child took up residence in Cyprus, where they remained until Anderson was released. While in Cyprus, Maddy and Sulome, visited the A.P. office in Nicosia often, sometimes to view photographs and videotapes of Anderson and the other hostages that his captors published from time to time, or to read the propaganda messages he was forced to send, and sometimes just to remind Sulome that she had a father, hopefully still alive somewhere, who might come home some day.(see footnote 2)
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Maddy was deeply depressed, but tried (unsuccessfully) to conceal it from Sulome. From time to time she would receive telephone calls from extortionistsnone connected with Anderson's captorswho offered to procure Anderson's release for money, or in one case for a truckload of blue-jeans. On Sulome's birthdays she made videotapes of the child for broadcast on Lebanese television in hopes that Anderson would be allowed to watch. (He was.) As other hostages were released, the A.P. arranged for Maddy to meet with them, and from them she learned what life was like for Terry. The appearance of one former hostage, however, terrified Maddy and Sulome that Terry would be similarly debilitated when released.
Anderson, Madeleine and Sulome all testified to their difficulty adjusting to life together once they reunited in December of 1991. Ultimately, according to Anderson, it took five years for them to become a relatively normal family. Anderson discovered that the psychological damage he had sustained was far greater than he had suspected. Stoic endurance and concealment of all of his emotions had become a survival technique for him during his captivity, and he found the habit hard to break; intimate communication with his reunited family came slowly. Madeleine was, at first, terrified of this stranger from whom she had been parted so long ago, and, having been both parents to Sulome for so many years, she found also it difficult to step aside from a paternal role.
Sulome, now a fourteen year-old ninth-grader, remembers her mother's loneliness and melancholy, and her own envy of friends who had fathers in residence during the period of her father's captivity. She also recalls her total dependence on her mother while young, and her anger and resentment at her father's assertions of parental authority once the family was reunited.
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Anderson never returned to the Associated Press, although he would have been welcomed back. He began a new career as a teacher of journalism, first at Columbia University in New York, and presently at the Scripps School of Journalism at Ohio University. The Anderson family now live in Athens, Ohio.
The evidence is conclusive that Terry Anderson was kidnappedand imprisoned under deplorable, inhumane conditionsby agents of the Islamic Republic of Iran, known by many names but most commonly as Hezbollah, or the ''party of God.'' Anderson himself could identify them as such, based upon his intimate familiarity with the warring factions in Lebanon during the 1980s. He had observed, prior to his captivity, Iranian troops in uniform training Hezbollah recruits in the Bekaa Valley. The mullahs who directed Hezbollah operations, Anderson knew, had received their religious instruction in Iran. While imprisoned, Anderson was once visited by an Iranian national who formally identified himself to Anderson as the liaison between Hezbollah and Iran. Anderson also became aware, at one point, that his place of confinement at the moment was a sub-basement of barracks occupied by troops of the Iranian Revolutionary Guard.
Ambassador Robert Oakley, a career U.S. Foreign Service officer now retired, who served in Beirut in the 1970s and went on to become Director of the State Department Office of Terrorism and a leading National Security Council adviser on issues of terrorism, positively identified the Iranian Ministry of Information and Security as responsible for causing the seizure of the hostages in Lebanon by Hezbollah. He was personally aware when, in exchange for a delivery of Hawk missiles to Teheran arranged by Col. Oliver North of the U.S. National Security Council, one hostage was released. Iran, he testified, has been officially designated as a state supporter of terrorism. It financed, organized, armed, and planned Hezbollah operations in Lebanon and elsewhere.
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Dr. Patrick Clawson, director of research at a private public policy institute in Washington, D.C., who has studied and written about Iran for many years, testified that Hezbollah originated with Iranian sponsorship in 1982 following the Israeli invasion of Lebanon. Approximately 2000 Iranian troops from the Revolutionary Guard opened a training camp in the Bekaa Valley, armed and trained Shiite recruits, and financed both its terrorist operations and the various charitable activities that attracted the Lebanese Shia population to Hezbollah and retained its loyalty.
Hostage-taking, particularly of foreigners, was a principal activity of Hezbollah, he said. The motives were, among others, to secure release of its own operatives who were being held as terrorists by other governments; to discredit American and Israeli influence in the Middle East; and to dramatize to the world its willingness to take radical action in pursuit of its political objectives.
According to Dr. Clawson, the Iranian Ministry of Information and Security. is an Iranian government agency, a reincarnation of a pre-revolutionary organization of similar name and function under the Shah, roughly comparable to the K.G.B. of the former Soviet Union. Together with the Revolutionary Guards, MOIS coordinates multiple terrorist activities throughout the Middle East, including those of Hezbollah, With approximately 30,000 employees, it is also the largest spy service in the Middle East. Dr. Clawson testified that the Ministry's expertise in finding sites for, and operating prisons in, undetectable locations was instrumental in enabling Hezbollah to conceal the hostages' places of confinement in and near Beirut so effectively as to thwart any rescue attempts. Dr. Clawson estimates MOIS' annual budget at between $100 million and $500 million, of which between $50 million to $ 100 million is expended in support of terrorist activities.
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Plaintiffs Terry A. Anderson and Madeleine Bassil individually, and as the parents and natural guardians of Sulome T. Anderson, pray for an award of compensatory damages against the Islamic Republic of Iran and its Ministry of Information and Security.
Section 1605(a)(7) of the Foreign Sovereign Immunities Act of 1976 (''FSIA''), as amended, 28 U.S.C. §1602 et. seq., provides a cause of action against a foreign state for anyone who suffered personal injury ''that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources . . . for such an act . . . 28 U.S.C. §1605(a)(7) (emphasis added). Thus, the FSIA authorizes personal injury claims against a foreign state that provides material support or resources for acts of hostage-taking.
This Court has previously found Iran to be a state sponsor of terrorism under §1605(a)(7). See Flatow v. The Islamic Republic of Iran, 999 F. Supp. 18 (D.D.C. 1998). In Cicippio v. The Islamic Republic of Iran, 18 F. Supp.2d 62 (D.D.C. 1998), the Court concluded that Iran had ''openly provided 'material support or resources' to Hizbollah, [as the kidnappers of Joseph Cicippio, Frank Reed, and David Jacobsen] and that is sufficient grounds to impose liability under §1605(a)(7).'' Id. at 68. In the instant case the evidence once again discloses that Iran provided Hezbollah with funding, direction and training for its terrorist activities in Lebanon, including the kidnapping and torture of Terry Anderson, and his imprisonment as a hostage for 2,454 days. Iran falls within FSIA's definition of a state sponsor of terrorism and is thus liable for the injuries suffered by plaintiffs as a result of Hezbollah's terrorist acts.
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Plaintiff Terry A. Anderson seeks compensatory damages for the following causes of action: battery, assault, false imprisonment, intentional infliction of emotional distress, and loss of consortium. Each of these causes of action is authorized under §1605(a)(7) of the FSIA.
Plaintiff Madeleine Bassil, Terry Anderson's wife, seeks compensatory damages based on causes of action of intentional infliction of emotional distress, and loss of consortium and solatium. Ms. Bassil is a Lebanese national. Although Ms. Bassil is not a U.S. citizen, the FSIA confers subject matter jurisdiction over a claim under 28 U.S.C. §1605 (a)(7) if ''either the plaintiff or the victim [is] a United States national at the time of the incident.'' Flatow, 999 F. Supp. at 16 (emphasis added). Terry Anderson was a U.S. citizen at the time of his abduction. Thus, this Court has subject matter jurisdiction over his wife's claims.
Plaintiff Sulome Anderson, who is the minor daughter of Terry Anderson and Madeleine Bassil, seeks compensatory damages for loss of solatium(see footnote 3). Employing essentially the same calculus as it did in Cicippio, supra, the Court will award compensatory damages to Terry Anderson in the amount of $24,540,000; to Madeleine Bassil in the amount of $ 10,000,000; and to Sulome Anderson in the amount of $6,700,000.
The plaintiffs also pray for an award of punitive damages against the defendant Ministry of Information and Security. The tortious conduct with which both defendants are charged, savage and cruet by any civilized standards, would surely merit such an award. The FSIA, however, expressly exempts a foreign state from liability for punitive damages, 28 U.S.C. §1606; see Cicippio, 18 F. Supp. 2d at 69. An ''agency or instrumentality'' of a foreign state may, however, be liable for punitive damages. The term ''agency or instrumentality'' includes a separate legal person or entity, which is ''an organ of a foreign state,'' or is owned by it. 28 U.S.C. §1603(b). The MOIS is thus vulnerable to an award of punitive damages.
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The purpose of punitive damages, as the name implies, is to punish wrongful conductto prevent its repetition by the offender and to deter others who might choose to emulate it. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974). The victim to whom the award is made thus stands as a surrogate for civilized society in general; the victim is made more than whole in order that others may be spared a similar injury.
Yet another reason to award punitive damages in this particular case is to vindicate the interest of society at-large in the collection and dissemination of complete and accurate information about world conflicts. Two eminent journalistsDan Rather, anchor and managing editor of CBS Evening News, and Eugene Roberts, former managing editor and foreign correspondent of the New York Times and executive editor of the Philadelphia Inquirer -testified with respect to the extent to which acts of terrorism, and in particular the kidnapping and hostage-taking of foreign correspondents, inhibit the gathering and reporting of news. Other journalists, even those such as Terry Anderson, who are accustomed to working in war zones and are undaunted by transient physical danger, are forced to exercise uncustomary caution in the presence of the threat of potential kidnapping. Newsgathering becomes at once more difficult and more costly. News organizations reduce their staffs to a minimum when their personnel are exposed to such a threat. Those who remain are intimidated. As time passes, news coverage inevitably tends to become superficial, no matter the importance of the story.
It is never a simple task to calibrate an award of punitive damages to the gravity of the offense; at once sufficient to produce the desired effect, yet leaving the wrongdoer the wherewithal to continue its lawful pursuits. It is still more difficult in a case such as this, in which the likelihood that any award will ever be paid is minimal. Nevertheless, the Court concludes, on the basis of the testimony of Dr. Clawson, that an award of thrice the MOIS' maximum annual budget for terrorist activities, or $300 million, is the closest approximation that it can make to an appropriate award and will cause judgment in that amount to be entered accordingly against MOIS in favor of the Anderson family.
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It is, therefore, this 24th day of March, 2000,
ORDERED, that judgment be entered in favor of the plaintiffs against the Islamic Republic of Iran and its Ministry of Information and Security, jointly and severally, for compensatory damages as follows:
Terry A. Anderson: $24,540,000
Madeleine Bassil: $10,000,000
Sulome Anderson: $6,700,000
IT IS FURTHER ORDERED, that judgment be entered in favor of plaintiffs, jointly and severally, against the defendant Iranian Ministry of Information and Security for punitive damages in the amount of $300,000,000; and it is
FURTHER ORDERED, that the Clerk of Court forthwith enter judgments in accordance with the foregoing.
|Thomas Penfield Jackson, U.S. District Judge|
Mr. MCCOLLUM. Mr. Flatow, you are recognized
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STATEMENT OF STEPHEN M. FLATOW
Mr. FLATOW. Mr. Chairman, I would also like to note the presence here today of Len and Vicky Eisenfeld, whose son Matt was also killed in February 1996 in a bus bombing in Israel.
My name is Stephen Flatow. My 20-year-old daughter Alisa was murdered by Iranian-sponsored terrorists in April of 1995 while she was a student in Israel. I buried Alisa 5 years ago yesterday.
Mr. Chairman, I will not sit here and tell you that on Sunday morning, April 9th, 1995, I heard the sound that a bomb makes when it goes off. I will not tell you that I heard the sound made by glass from the bus's windows as it shattered into passengers' eyes and their faces. I will not tell you I heard the sound that metal makes when it is ripped off the frame of a bus by the force of 70 kilograms of dynamite.
I will not tell you that I heard the sound that shrapnel makes as it flies through the bus's interior, and I will not tell you I heard the screams and the sounds that the dying and injured make, and I will not tell you that I have not wondered every day what Alisa's last moments on Earth were like, but every day since that day I have worked to make it so those sounds would not be heard again by the victims of terrorist attacks and their families who go to bed each night wondering what those moments were like.
Page 55 PREV PAGE TOP OF DOC I was especially encouraged by the passage of the Anti-terrorism Act of 1996 that we believe would allow us to bring Alisa's killers to justice in the United States and thereby demonstrate to the world that the United States does not stand by idly while despots and demagogues order death and destruction around the world.
When I began our lawsuit against Iran in 1997, my intention was the same as that of Congress when it enacted the law. You and I wanted to put the Iranian Government and other sponsors of terrorism out of business.
Sadly, in the almost 4 years since the law was put into effect and the 2 years that our family has had our judgment, the Iranians are still in the terror business, and our own government has the dubious distinction of keeping them in it through the exercise of a confusing policy that effectively blocks us from collecting on our court-ordered awards.
Mr. Chairman, there is no doubt that my country stood with me on the day of Alisa's death and for months thereafter until one day it was determined that it was not in the best interest of the United States to have American citizens use American law to defeat terrorists and their sponsors. Having used the Federal statute, the law of the land, I can only feel double-crossed when the administration embarks on a course that makes it more difficult to enforce our claims. Our story is detailed in an opinion piece appearing in the Outlook section of the Washington Post of November 7, 1999, and which is included in my formal testimony.
H.R. 3485 is not an Earth-shaking piece of legislation that will upset American foreign policy as its opponents are bound to allege. To the contrary, the bill fine tunes provisions of existing Federal law. It makes real the provisions of the Anti-terrorism Act. At the same time, it addresses administration concerns about protecting diplomatic property of state sponsors by permitting the President to block seizure of such property in the interest of national security.
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Mr. Chairman, the Congress and the administration have spoken time and again of the Nation's commitment to use all available tools to defeat terrorists and their sponsors. The bill before you, I believe, would give victims of terror the tools that we need to complete the job we were invited to do by your passage of the Anti-terrorism Act.
In today's USA Today, Michael Sheehan, the U.S. Coordinator for counterterrorism said, ''What works against terrorism is sustained diplomatic pressure, political will and courage.'' H.R. 3485 embodies Mr. Sheehan's call because all those elements are found in the bill.
Mr. Chairman, my testimony could be longer, but it has been a trying week for our family, and I ask, if you have any questions, to please let me know.
Mr. MCCOLLUM. Thank you very much, Mr. Flatow, and thank you for being here, all things considered.
[The prepared statement of Mr. Flatow follows:]
PREPARED STATEMENT OF STEPHEN M. FLATOW
Mr. Chairman, thank you for inviting me here today to testify about the Justice for Victims of Terrorism Act. My name is Stephen Flatow. My 20-year-old daughter Alisa was murdered by Iranian sponsored terrorists in April 1995 while Alisa was a student in Israel.
Page 57 PREV PAGE TOP OF DOC Mr. Chairman, I will not sit here and tell you that on Sunday morning April 9, 1995 I heard the deafening sound one hears when a bomb laden van explodes.
I will not tell you that I heard the sound made by glass as the bus's windows shattered and flew inward at the passengers as a result of the bomb blast.
I will not tell you I heard the screaming sound made when metal is ripped from the frame of a bus.
I will not tell you that I heard the whistling sound that shrapnel makes as it flies through the air from the force of 70 kilograms of explosive, and I will not tell you I heard the screams of the injured and dying that morning.
But I will tell you that every day since the day my daughter was killed five years ago this week I have worked to make it so those sounds would not be heard again by the victims of terror attacks and their families who go to bed each night wondering what the last moments of their child were like.
I was especially encouraged in my work by passage of the Anti-Terrorism and Effective Death Penalty Act of 1996 that we believed would allow me to bring Alisa's killers to justice in the United States and thereby demonstrate to the world that the United States does not standby idly while despots and demagogues order death and destruction around the world.
When I began my lawsuit against the Iranian government in February 1997, my intention was the same as that of the Congress when it enacted the Anti-Terrorism Act. You and I want to put the Iranian government and other sponsors of terrorism out of business.
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Sadly, in the almost four years after the Anti-Terrorism Act was put into law and the two years after our family obtained a judgment, the Iranians are still in the terror business and our own government has the dubious distinction of keeping them in it through the exercise of a confusing policy that effectively blocks us from collecting on our Court ordered award.
Mr. Chairman, my country stood with me on the day of Alisa's death and for months thereafter until one day when it was determined that it was not in the best interests of the US to have American citizens use American law to defeat terrorists and their sponsors.
Having used a Federal statutethe law of the landI can only feel double crossed when the Administration embarks on a course that makes it more difficult to enforce our claims. Our story is detailed in an opinion piece appearing in the Outlook Section of the Washington Post of November 7, 1999 and which is appended to my testimony.
Mr. Chairman, H.R. 3485 is not an earthshaking piece of legislation that will upset American foreign policy as its opponents are bound to allege. To the contrary, the bill fine tunes provisions of existing Federal law. It makes real the potential of the Anti-Terrorism Act. At the same time it addresses Administration concerns about protecting diplomatic property of state sponsors of terrorism by permitting the president to block seizure of such property in the interests of national security.
Mr. Chairman, the Congress and the Clinton Administration has spoken time and time again of the nation's commitment to use all available tools to defeat terrorists and their sponsors. The bill before you would give victims of terror the tools they need to complete the job we were invited to do by your passage of the Anti-Terrorism Act.
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Thank you, Mr. Chairman. If there are any questions, I would be pleased to answer them.
Mr. MCCOLLUM. Ms. Khuly, you are recognized to give your testimony.
STATEMENT OF MAGGIE A. KHULY
Ms. KHULY. Thank you. I am Maggie Alejandre Khuly speaking today for the Costa, de la Pena, Morales and Alejandre families. I have two members of the families here, Ms. Dominguez and Maria de la Pena in the audience.
The Cuban Government murdered Carlos Costa, Mario de la Pena, and my brother Armando Alejandre on February 24th 1996. They were killed over international waters by air-to-air missiles shot from Cuban MiGs. The missiles pulverized the two small, unarmed, civilian aircraft while they were flying, searching for fleeing Cuban rafters. Cuba has publicly stated that the murders were premeditated and accepts responsibility for the killings.
In the immediate aftermath of the shoot-down, the United States Congress strongly condemned the deaths as a, ''act of terrorism by the Castro regime,'' President Clinton asked Congress to pass legislation to provide compensation for the families out of Cuba's blocked assets in the U.S., and then-U.N. Ambassador Albright before the U.N. General Assembly denounced the fact that Cuba had not offered compensation to the families.
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Numerous international organizations condemned the shoot-down. The killings were in such flagrant violation of human rights and of international law that we were confident of our country's support in our search for justice. When, on April 24th of 1996, Congress passed the Anti-terrorism and Effective Death Penalty Act, we believed our government had empowered us to seek redress in U.S. courts.
But did it, really?
The same administration which promised us justice, the same President Clinton who personally restated his unwavering commitment to punishment for the terrorists responsible for these murders, the same Department of State which encouraged us to pursue civil action under the Anti-terrorism Act have obstructed us every step of the way.
It is cruel to entice Americans with promises of justice that fail to materialize at collection time. Our hopes were initially fulfilled when a Federal judgment of December 1997 called the shoot-down a murder, ''in outrageous contempt for international law and basic human rights,'' The problems began when we tried to collect from a terrorist country and the United States tried to prevent us.
The Department of State publishes a yearly report called Patterns of Global Terrorism. It is prepared to give Congress a full and complete factual report on terrorism, yet surprisingly the last one available, that for 1998, doesn't mention the Anti-terrorism Act. Why isn't it covered if Congress designed it to play a vital part in the fight against terrorism?
Page 61 PREV PAGE TOP OF DOC The report does present a four-point counterterrorism policy that includes, first, ''make no concessions to terrorists and strike no deals,'' and second, ''bring terrorists to justice for their crimes,''
But is our country complying with this policy?
The Clinton administration is not. It is making concessions to and striking deals with terrorists when it refuses to turn over to their victims the U.S. frozen and other assets belonging to terrorist countries. It is not bringing the terrorists to justice in criminal courts either. It is frustrating Congress' intent in enacting the Anti-terrorism Act and is denying American victims of terrorism their legal rights. It is actively taking an adversarial position in court, safeguarding the interests of terrorists at the expense of their victims.
Civil action under the Anti-terrorism Act is our legal right. It is the only way to justice that we can pursue on our own. Much as we might anticipate criminal indictments, they depend on the U.S. Government's ability and willingness to prosecute. Meanwhile, parents have lost their sons; a wife, her husband; a daughter, her father; siblings, their brothers. And our country has lost three Americans to terrorism, Carlos Costa, an airport administrator born in Florida; Mario de la Pena, an honors aviation student born in New Jersey; and Armando Alejandre, who came to the U.S. as a child, later became a Marine, and volunteered and served in Vietnam.
It is hard to explain our family's despair and frustration throughout this process. We had counted on one enemy, Cuba, not on the two we are faced with when we include the Clinton administration, and we have to include it. U.S. attorneys sit down in court next to Cuba's attorneys and against mothers who have lost their sons. They argue that the frozen assets are needed to promote civil society and democracy in Cuba and ignore the fact that it is at the expense of the rights of a wife who has lost her husband and a daughter who has lost her father. We find ourselves unprotected by our own government while the murderers of our loved ones remain unpunished.
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There can be no justice through the Anti-terrorism Act without due compensation since it is precisely compensation what is stipulated as retribution under this law. I am here today to ask Congress to reaffirm its commitment to justice for victims of terrorism and to punish those responsible for the murders of Americans.
Mr. MCCOLLUM. Thank you very much, Ms. Khuly.
[The prepared statement of Ms. Khuly follows:]
PREPARED STATEMENT OF MAGGIE A. KHULY
I'm Maggie Alejandre Khuly speaking today for the Costa, de la Pea and Alejandre families.
The Cuban government murdered Carlos Costa, Mario de la Pea, Pablo Morales and my brother, Armando Alejandre, on February 24, 1996. They were killed over international waters by air-to-air missiles shot from Cuban MiGs. The missiles pulverized the two small unarmed civilian aircraft they were flying while searching for fleeing Cuban rafters. Cuba has publicly stated that the murders were premeditated and accepts responsibility for the killings.
In the immediate aftermath of the shoot down the United States Congress strongly condemned it as an ''act of terrorism by the Castro regime'' (Libertad, 22 §6061 No. 1). President Clinton asked Congress to pass legislation to provide compensation for the families out of Cuba's blocked assets in the U.S. and then-U.N. Ambassador Albright, before the U.N. General Assembly, denounced the fact that Cuba had not offered compensation to the families. Numerous other organizations also condemned the shoot down including the U.N. Commission on Human Rights, the European Union, the International Civil Aviation Organization and the Inter-American Commission on Human Rights of the Organization of American States (Report No. 86/99, 1999).
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The killings were in such flagrant violation of human rights and of international law that we were confident of our country's support in our search for justice. When on April 24 of 1996 Congress passed the Anti-Terrorism and Effective Death Penalty Act we believed our government had empowered us to seek redress in U.S. courts. But did it really?
The same Administration which promised us justice, the same President Clinton who personally restated his unwavering commitment to punishment for the terrorists responsible for these murders, the same Department of State which encouraged us to pursue civil action under the Anti-Terrorism Act have obstructed us every step of the way.
It is cruel to entice Americans with promises of justice that fail to materialize at collection time. Our hopes were initially fulfilled when a federal judgment of December, 1997, called the shoot down a murder ''. . . in outrageous contempt for international law and basic human rights'' (Alejandre v. Republic of Cuba, 996 F. Supp. 1239, S.D. Fla.1997) and there was no reaction from either the Cuban or US governments. The problems began when we tried to collect from a terrorist country and the United States tried to prevent us.
The United States Department of State publishes a yearly report on terrorism called ''Patterns of Global Terrorism'' (PGT). This report is prepared to give Congress a ''full and complete actual report on terrorism'' (PGT 1998, pg. vi). Yet surprisingly the last one available, that for 1998, doesn't mention the Anti-Terrorism Act. Why isn't it covered if Congress designed it to play a vital part in the fight against terrorism? The report does, however, present a four-point counter- terrorism policy that includes, first, ''make no concessions to terrorists and strike no deals'', and second, ''bring terrorists to justice for their crimes'' (PGT 1998, pg. iii). But is our country complying with this policy?
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The Clinton administration is not. It is making concessions to, and striking deals with terrorists when it refuses to turn over to their victims the U.S.-frozen and other assets belonging to terrorist countries. It is not bringing the terrorists to justice in criminal courts either. It is frustrating Congress' intent in enacting the Anti-Terrorism Act and is denying American victims of terrorism their legal rights. It is actively taking an adversarial position in court against the victims of terrorism, safeguarding the interests of terrorists at the expense of the rights of Americans.
Civil action under the Anti-Terrorist Act is our legal right. It is the only way to achieve justice that we can pursue on our own as Americans. Much as we might anticipate criminal indictments they depend on the U.S. government's ability and willingness to prosecute. Meanwhile, parents have lost their sons, a wife her husband, a daughter her father, siblings their brothers. And our country has lost three Americans to terrorism: Carlos Costa, an airport administrator born in Florida; Mario de la Pea, an honors aviation college student born in New Jersey, and Armando Alejandre, who came to the US as a child, later became a Marine, and volunteered and served in Vietnam.
It's hard to explain our families' despair and frustration throughout this process. We had counted on one enemy, Cuba, not on the two we are faced with when we include the Clinton administration. And we have to include it. U.S. attorneys sit down in court next to Cuba's attorneys and against mothers who have lost their sons. They argue that the frozen assets are needed to promote civil society and democracy in Cuba and ignore the fact that it's at the expense of the rights of a wife who has lost her husband and a daughter who has lost her father.
Page 65 PREV PAGE TOP OF DOC We find ourselves unprotected by our own government while the murders of our loved ones remain unpunished.
There can be no justice through the Anti-Terrorism Act without due compensation, since it is precisely compensation what is stipulated as retribution in this law. I'm here today to ask Congress to reaffirm its commitment to justice for victims of terrorism and to punish those responsible for the murders of Americans.
Mr. MCCOLLUM. And Mr. Kleinman is here to answer questions not to give a statement today. We appreciate you being here. Having done that, I will recognize myself for 5 minutes, and then we will have other members of the panel who also will be able to ask questions.
I want to ask you something, Ms. Khuly. After watching that tape up there a minute ago that I showed of the President giving his press conference statement regarding this matter in February of 1996, did you have any doubts at that time when the President gave that statement that you, your family and the other victims' families would be compensated if you got a court judgment out of frozen Cuban assets?
Ms. KHULY. We had no doubts at the time, but we had questions. We met with President Clinton personally, and he reiterated the very same statement. We met with Cuba officials, the Cuba desk at the Department of State and we specifically asked whether we should proceed with the civil action. They did not only say, yes, they actively encouraged. They said they wanted this legislation to be taken to court and encouraged us you know to pursue it. So we certainly were extremely surprised when we found the U.S. Government in court against us after the judgment.
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Mr. MCCOLLUM. When did you find outright after the judgment? What triggered your knowledge that the President and the administration where going to oppose your being able to collect against these assets?
Ms. KHULY. After we had the judgment, which was in December of 1997, our attorney started exploring ways to collect and we started getting conflicting statements on this. This is a question that the attorneys would better answer.
The first time we went to court after that, in order to establish a collection process, the attorneys for the U.S. Government showed up. We were shocked, to say the least, to find them sitting at the same table as the Cuban Government, and this was, you know, the first real inkling that we had that this was not just a rumor, this was not just minor objection that they had, but that they meant business and they were going to act against us.
Mr. MCCOLLUM. Mr. Flatow, how many times have you personally talked to President Clinton? I believe that you have, if I recall.
Mr. FLATOW. I have met with the President three times.
Mr. MCCOLLUM. And what did he tell you?
Mr. FLATOW. Well, the first time was that he was going to get justice for Alisa.
Page 67 PREV PAGE TOP OF DOC The second time, I told him that we were getting ready to move under the new law, and I would need the assistance of the State Department and that seemed to have happened.
And then the final time, I told him I needed answers from the State Department on a couple of legal issues which then came to us shortly thereafter.
Mr. MCCOLLUM. And in any event, when did you first learn they weren't going to honor your judgment?
Mr. FLATOW. Well, we should have seen the handwriting on the wall the day we got our judgment from Judge Lamberth. The State Department put out an official statement saying the State Department does not believe in judgments, it believes in negotiations. That should have been a signal there. We got hit over the head with a hammer when we asked the Treasury Department for information on Iranian assets frozen in this country in April of 1998, and they didn't respond to our request for information.
We then resorted to serving a subpoena on then-Secretary of the Treasury Rubin, who responded with a five- or six-page letter telling them it was too hard for the United States of America to put this information together. So at that point in time, things started to crystallize.
Mr. MCCOLLUM. Mr. Anderson, from your personal experience as a former hostage and victim of terrorism, how important is it for us to punish in the way that this would monetarily a country like Iran or Cuba that commits these kind of terrorist acts? How important is it for the money part judgments to be actually collected upon?
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Mr. ANDERSON. Mr. Chairman, failing any other way to discourage states like Iran from engaging in these kinds of acts, it is the only practical way to get them to cease engaging in terrorism. We are not going to bomb Tehran. We are not going to invade Iran. Economic sanctions don't seem to have very much effect on them. The only thing that is going to make them pay attention is to remove the incentive. The incentive is, terrorism is cheap. It doesn't cost you much to wage war against your perceived enemies if you are willing to attack innocent victims. So by taking large amounts of their money, we are removing that incentive. It is not cheap anymore. It is expensive, and aside from any moral issue, it is a practical way to punish them.
Mr. MCCOLLUM. Thank you very much, Mr. Anderson. I don't think the clock started running on time, so I am going to yield and recognize Ms. Jackson Lee for 5 minutes to ask any questions you have.
Ms. JACKSON LEE. Thank you very much.
I thank Chairman Smith and I thank Mr. McCollum for holding this hearing; and let me first of all offer my sadness to Mr. Anderson. You are back here, but we obviously know the very long journey you had to take to restore your rights as a citizen of these United States, and may I belatedly welcome you back home.
Let me say to Mr. Flatow, there is nothing that one can say when we lose our family members. My deepest sympathy to you, and Ms. Khuly as well. My position is one of great empathy and a great sense of concern and interest in the legislation that we have before us.
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Frankly, Mr. McCollum, I think there are problems here that need to be fixed, and I am disappointed that we were not able to hear from the administration. Might I ask unanimous consent before I proceed with any questions to submit a letter from Stewart Eizenstat, who is, as you well know, the Deputy Secretary of Treasury, who because of a conflict could not be here, and I would ask unanimous consent to have this put in the record.
Mr. MCCOLLUM. Without objection, it is so admitted.
[The information referred to follows:]
Hon. LAMAR SMITH, Chairman,
|The Department of the Treasury,|
|Deputy Secretary of the Treasury,|
|Washington, DC, April 12, 2000.|
Subcommittee on Immigration and Claims,
Committee on the Judiciary,
House of Representatives, Washington, DC.
DEAR CHAIRMAN SMITH: This letter is to inform you that I will not be available to testify before the Subcommittee on Immigration and Claims concerning the legislation sponsored by Representative Bill McCollum, H.R. 3485, the ''Justice for Victims of Terrorism Act,'' on Thursday, April 13, 2000, at 1:00 p.m.
As you may know, I have worked extensively on this issue for the Administration over the past 18 months, and I share your goal that the victims of terrorism and their families receive justice and compensation for their suffering. Unfortunately, I am unable to appear before the Subcommittee on April 13 because of a long-standing commitment to appear on that day at the same time to testify on S. 1361, the ''Natural Disaster-Protection and Insurance Act of 1999,'' before the Senate Committee on Commerce, Science and Transportation.
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On April 12, 1 spoke with you and Representative McCollum about my scheduling conflict. I appreciate your understanding of my scheduling situation. You indicated the Subcommittee would keep the record open to accept a written statement.
While we want to see the victims receive compensation, the Administration has very serious concerns about the effects of H.R. 3485, and similar legislation, S. 1796, which has been introduced in the Senate by Senators Mack and Lautenberg. Last October, I testified before the Senate Judiciary Committee about these concerns. As I noted in October, we believe this legislation would seriously undermine the President's ability to use blocked assets to fight terrorism, cause the United States to violate international obligations, expose U.S. diplomatic facilities and other assets abroad to similar treatment by other countries, undercut an important national security program, undermine the long-standing principle of respect for the separate status of government-owned entities and subject U.S. taxpayers to liability for the amounts collected.
We have consulted since last October with Senators Mack, Lautenberg, Hatch and others about these concerns. In these consultations, we have demonstrated our commitment to finding an approach that would achieve the goals of this legislation in a manner that protects other key U.S. interests.
The issues we have raised are of great concern to the Departments of State and Defense, as well as the Department of Treasury. Accordingly, I would be pleased to join these Departments in appearing before the Subcommittee, at the Subcommittee's earliest convenience, to testify about these issues at your next suitable opportunity. If this is not possible, we would be willing to submit written testimony. I regret that I cannot personally be with you and your colleagues.
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Again, I appreciate the request to-participate in the hearing. I look forward to presenting the Administration's views to the Subcommittee as soon as possible, whether in person or in written testimony.
Ms. JACKSON LEE. Let me read from this and let me also say that I expect to hold the administration both accountable and responsible for these words. ''we have consulted''and I am reading from the Deputy Secretary of the Treasury letter, Mr. Eizenstat. ''We have consulted since last October with senators Mack, Lautenberg, Hatch and others about these concerns. In these consultations we have demonstrated our commitment to finding an approach that would achieve the goals of this legislation in a manner that protects other key U.S. interests.''
What I want them to do is to find a way to answer your concerns and to make you whole as it relates to the compensation, certainly not to the loss of your loved one. I am concerned that we are raising the issues that have been raised and we have not tried to address them and to immediately give response to your claims.
Mr. Flatow, if you could give me a brief scenario as to where you are. You now have a pending or standing judgment; is that my understanding? Could you just for the record restate that for me?
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Mr. FLATOW. Yes, ma'am.
I obtained a judgment of approximately $250 million in March of 1998. If I may comment on the Secretary's letter, we are not looking for compensation. We are looking to put the Iranian Government out of the terrorism business.
Our experts have testified over and over again that terrorist-sponsored states pay attention to a financial attack on their pocketbook. The idea behind the Anti-terrorism Act, and what we have been trying to pursue, is to make it expensive for them to send $2 million to Islamic Jihad, to send $2 million to Hamas, to Hezbollah. If they were to forfeit Iranian assets here, they would pay attention to it.
Ms. JACKSON LEE. So you have this judgment from a Federal court?
Mr. FLATOW. From a Federal court here in Washington, D.C., since March of 1999.
Ms. JACKSON LEE. All right. And the administration's response to you specifically has been?
Mr. FLATOW. Has been to block us at every turn that we have made to seize Iranian assets in this country.
Page 73 PREV PAGE TOP OF DOC Ms. JACKSON LEE. And has the Iranian Government attempted to appeal in our court.
Mr. FLATOW. They have never stepped 1 inch into a courtroom in this country.
Ms. JACKSON LEE. So you have a standing judgment. What have experts determined are Iranian assets in this country? How much?
Mr. FLATOW. It is very confusing. We believe that there are billions of dollars here. We have recently located $280 million sitting in a Department of Defense account that goes back to the former Shah of Iran. The Iranians claim that there is between $10 and $12 billion in the United States seized by the United States. So the numbers are somewhere
Ms. JACKSON LEE. Fluctuating?
Mr. FLATOW. Yes.
Ms. JACKSON LEE. Well, I am glad that you corrected me.
The point I do want to make is that the administration has indicated in this letter their interest in working this through. That is my responsibility to assess in what manner they are willing to work it through, but I wanted to ensure at least that comment was on the record.
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The lights are getting sort of funny, Mr. Chairman, but let me say to Mr. Anderson, do you have a present and standing judgment at this time?
Mr. ANDERSON. Yes, ma'am, we have a judgment for $341 million against the State of Iran and the ministry of information and security, the old SAVAK, which the present government continues to use.
Ms. JACKSON LEE. And yours should be longer than 1998. When did you get your judgment?
Mr. ANDERSON. We just got it recently, a few months ago.
Ms. JACKSON LEE. Thank you.
Mr. ANDERSON. We have met, by the way, with Secretary Eizenstat, and he has verbally indicated his desire to work out an agreement, but in practical terms has failed to put forth anything that we could accept or that would be approved by Congress.
Ms. JACKSON LEE. Well, I thank you for clarifying that, and I was going to ask Mr. Kleinman, who may have been in negotiations with both the Defense Department or the State Department, what opportunities do you see for resolution in any discussions that you have had to date? And I know you represent Ms. Khuly, and obviously you will share with me what you can share with me.
Page 75 PREV PAGE TOP OF DOC I hope you will be as forthright as you can.
Mr. KLEINMAN. Ms. Jackson Lee, I don't believe there is any likelihood of resolution through negotiation with the administration. The discussions have been principally led by Senator Mack and Senator Lautenberg. We met with both of them yesterday. They have given a starting point for negotiations and the administration has refused to respond.
To the extent that the letter suggests that the administration is seeking on some sort of good-faith basis to find a resolution, there is no evidence of that; and I think we can't anticipate anywhere in the near future any likelihood that, without congressional action, there will be a resolution on this issue. We have waited 4 years for that resolution. There is no reason to expect that this week or next week or anytime in the future.
Ms. JACKSON LEE. Mr. McCollum, let me just say, you will note the concerns the administration has raised concerning security and availability of assets. I know that there is probably an interest on your part to move this legislation, but let me just offer to say that I would like to see the representatives of the Department of State, Defense and Treasury here before us in a hearing on this bill sooner rather than later.
If there is an opportunity to do so, I would encourage you to do so, and I thank you for yielding me the time. And again, let me say to you that I am particularly concerned at the injustices that you face and look forward to working this through.
Thank you very much.
Page 76 PREV PAGE TOP OF DOC Mr. MCCOLLUM. Before I yieldand I will to Mr. Canady, who was here earlierI want to make the comment that Mr. Eizenstat and the administration have all been on notice for this hearing for more than 5 weeks prior to yesterday and today. I realize he does have a conflict personally, which he expressed to me on the telephone yesterday with a hearing ongoing in the Senate where he is testifying, that he felt took priority; but we were not informed of that prior to yesterday, and in reality, there could have been other witnesses that the administration submitted. There was no requirement on our part that it be Mr. Eizenstat.
So for our information, just so the record is clear, this subcommittee has made every effort to have the administration present its side of the case today.
Ms. JACKSON LEE. Would you just yield on that?
We don't have a quarrel. What I am being told is that Mr. Eizenstat apparently had moved from State to Treasury, and the notice may have gone there, but we don't have an issue that I am quarreling with you on.
What I would raise with you is the opportunityand I am not even so much interested in their position as their resolution effortsto have high-ranking individuals fromand I have noted the three departmentsState, Defense and Treasury; and I am making that request. And I appreciate your consideration and the chairman's consideration for that hearing.
Mr. MCCOLLUM. We understand it, and I respect it.
Page 77 PREV PAGE TOP OF DOC So the record is clear, since you have submitted hisI would like to ask unanimous consent to put letters in, sent to the Honorable Lawrence Summers February 9, 2000, and the Honorable Madeline Albright, requesting attendance at this hearing signed by Chairman Hyde, February 9, 2000. Without objection, I will so enter those into the record.
[The information referred to follows:]
Hon. MADELEINE K. ALBRIGHT, Secretary,
|House of Representatives,|
|Washington, DC, February 9, 2000.|
U.S. Department of State, Washington, DC.
DEAR SECRETARY ALBRIGHT: The Subcommittee on Immigration and Claims will be holding a legislative hearing on H.R. 3485, the ''Justice for Victims of Terrorism Act,'' on Thursday, February 17, 2000, at 9:30 a.m. in Room 2237 of the Rayburn House Office Building. On behalf of the Committee, I would like to invite you or your designee to appear and testify.
Your appearance before the Subcommittee will be limited to an oral presentation of five minutes with the assurance that your prepared statement will be made pan. of the hearing record in its entirety. Please forward one hundred (100) copies of your prepared statement to the Subcommittee at B370B Rayburn House Office Building no later than the close of business on Tuesday, February 15, 2000. The Committee puts prepared statements for hearings on the Internet to allow access to the public. To that end, please provide a diskette with your summary and prepared statement (and any exhibits, attachments or appendix materials) in any standard word processing format. Please fax a copy of your biography as soon as you receive this letter to 2022253672.
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If the Subcommittee can provide you with any additional information, please do not hesitate to contact Cindy Blackston by fax at (202) 225-3672. I appreciate your participation in our hearing.
Hon. LAWRENCE H. SUMMERS, Secretary,
|House of Representatives,|
|Washington, DC, February 9, 2000.|
U.S. Department of the Treasury, Washington, DC.
DEAR SECRETARY SUMMERS: The Subcommittee on Immigration and Claims will be holding a legislative hearing on H.R. 3485, the ''Justice for Victims of Terrorism Act,'' on Thursday, February 17, 2000, at 9:30 a.m. in Room 2237 of the Rayburn House Office Building. On behalf of the Committee, I would like to invite you or your designee to appear and testify.
Your appearance before the Subcommittee will be limited to an oral presentation of five minutes with the assurance that your prepared statement will be made part of the hearing record in its entirety. Please forward one hundred (100) copies of your prepared statement to the Subcommittee at B370B Rayburn House Office Building no later than the close of business on Tuesday, February 15, 2000. The Committee puts prepared statements for hearings on the Internet to allow access to the public. To that end, please provide a diskette with your summary and prepared statement (and any exhibits, attachments or appendix materials) in any standard word processing format. Please fax a copy of your biography as soon as you receive this letter to 2022253672.
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If the Subcommittee can provide you with any additional information, please do not hesitate to contact Cindy Blackston by fax at (202) 2253672. 1 appreciate your participation in our hearing.
Mr. MCCOLLUM. With that in mind, I will recognize Mr. Canady for five minutes.
Mr. CANADY. Thank you, Mr. Chairman. I want to begin by thanking you for your leadership on this important issue. I apologize for not being here for all of the testimony, but as I have reviewed the testimony and heard the witnesses today, I am embarrassed the Government of the United Statesthat we would see such conduct by our government and such callous disregard for the rights of American citizens.
It is something that makes me angry, and I can understand why the administration would be reluctant to send someone to this hearing today, because they have a lot of explaining to do, and quite frankly I don't know what they would say to explain themselves. And apparently, from the time they received these letters, they couldn't think of much to explain themselves, and therefore they are absent today. So I just think that this is not right.
Now let me ask you, Mr. Kleinman, what do you think the President meant in 1996 when he said he was asking Congress to pass the 1996 Anti-terrorism Act to, quote, ''provide immediate compensation to the Brothers to the Rescue families out of Cuba's blocked assets here in the United States,'' close quote?
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Mr. KLEINMAN. Well, I think we know exactly what he meant, and as Ms. Khuly said, they actually met with the President afterward to make certain they knew what he meant. He meant that we would be compensated at international law standards, at the standard that a court would apply for the loss that they suffered by the loss of their family members.
These were breadwinners and husbands and children and heI have no doubt that the President meant at that time a judgment to be awarded by a court, an Article III court of the United States would be fully honored.
Mr. CANADY. Well, based on your experience since that time, would you conclude that he meant that or simply said that?
Mr. KLEINMAN. I don't know. I know that at some point something changed, and we don't know when that happened. I metMs. Khuly said that the lawyers went to the Treasury Department. It is I; I was one of the three lawyers who went there. We went there and showed them the President's statement and asked them for a license to execute against $154 million in blocked assets of Cuba that werethey knew exactly where it was, and they said absolutely not.
We met with the Treasury Department's Office of Foreign Assets Control Director Richard Newcomb. Instead, they pointed us to another body of money that was then flowing. It was licensed for payment to Cuba and, in particular, to a company called ETECSA, the Cuban telephone company. Since 1996, the United States has paidthe U.S. companies have paid approximately $1 billion to ETECSA. They told us we could execute against that money that was available. Then we executed against it, and the United States intervened in our case to block us from executing against that money.
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When did we know that we were confronting a government committed to making sure we didn't execute against anything? It was aroundit was in February 1998 and shortly thereafter. But I don't know whenif there was a policy that the President accurately described on the video and when it changed. We can't identify that.
Mr. CANADY. I have no further questions of the witnesses.
If there are any of you who would like to make an additional comment, we have a little time here. Well, again, I want to thank you for being here. I very much regret not only the suffering that you endured because of the crimes committed against you, but the additional suffering that you endured because of this mistreatment by the Government of the United States.
Mr. MCCOLLUM. Thank you, Mr. Canady.
Mr. Berman, you are recognized for 5 minutes.
Mr. BERMAN. Thank you, Mr. Chairman. I hope the importance of this cause doesn't get caught up in efforts to make rhetorical partisan points, which only set back the cause. It would really be good if we had the administration here to develop some of the arguments that we have been provided; there is no question about that.
If Stewart Eizenstat says that he had a conflict today and couldn't make it, that meant he had a conflict today and couldn't make it. This is a man who has spent hundreds of hours negotiating on behalf of American victims from abuses of foreign governments, in some cases with great success, and I don't think we should leave an implication here that in any way he was setting up an effort to evade responsibility for the position that he is taking on this issuenot that I totally understand the position at this particular point.
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We are getting down to the issue of the blocked assets. Isn't that what this is really about? Because how else do you execute a U.S. judgment on Iran? I mean, we can seize pistachio nuts at the port, maybe, if we can get them before the Customs official with the 386 percent duties gets them, but the blocked assets are the pot of money.
In the memo I have in front of me, it says the Congress has recognized the need for the President to be able to regulate the assets of foreign states to meet threats to U.S. national security and, essentially, to block foreign assets, for the same reason I think Mr. Flatow or Mr. Anderson mentioned. For countries that choose to sponsor terrorism, hurting them in the pocketbook may not be an automatically effective remedy, but it is certainly one of a series of possible remedies. So releasing some portion of those blocked assets to people who were the victims of crimes, terrorist crimes that they proved in a court, which the other side had a chance to be represented on and chose not to be represented on, and where they were still required, as I assume you were, to prove up your case, both as to liability and the relationship between the terrorist country and the conduct that resulted in the death or the injury.
I don't quite understand how releasing those blocked assets to these people undermines the President's tactics or ammunition in being able to block Iranian assets.
There is a bit of poetic justice in releasing some portion of those blocked assets to compensate the victims of the terrorism sponsored by their countries.
I had some experience with this because I introduced legislation to amend the Foreign Sovereign Immunities Act 15 years ago because many of us and many others were convinced that Pinochet ordered the assassination of the former Chilean Ambassador to the United States in Washington, D.C.
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Now, this was action in the United States which killed both the Ambassador and his American citizen employee at the time; and what, of course, happened was the State Department, under a Republican administrationI mean, there is a State Department mind-set here that supersedes whatever political party controls the White House, fought it like mad. We passed it in the House; we had it in the Senatewe had a very good chance of passing it there and then, lo and behold, the administration found an old treaty where they could assert a claim on behalf of the victims of the terrorism against the Chilean Government, which was no longer Pinochet, and the government agreed to that arbitration and there was an arbitration and a different award than the one that was obtained in the Federal court.
And here we are now almost 25 years later, and the Justice Department has reopened the criminal investigation of that case.
But my only point is, the administration does have a particular problem here in that there are no avenues to negotiate settlement of this claim with the Iranian Government or with the Cuban Government, because we have no diplomatic relationships with them. But in and of itself, the blocked assets have become potentially appropriate remedy, and the only thing I am wondering aboutand maybe, Mr. Kleinman, you can answer this questionis, would their position be that, in the end, in a change of regime, whether it is in Cuba or in Iran, a government that had no direct responsibility for terrorism, supporting acts of the previous government, would want to get their citizens' money back for the military equipment that they bought, but never received, or that their companies had and didn't come back; and that if these blocked assets in some substantial part are released, they would no longer be available for that particular purpose?
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I would be interested in your response to that.
And finally to something that I think Mr. Anderson said. He referred to ''we want compensatory damages.'' does that mean in the context of this effort, the punitive damage awards are not being sought, or was this just a different term?
Those are my questions.
Mr. KLEINMAN. I will comment on the second one first and then Mr. Anderson can complete it.
This bill would allow execution of both compensatory and punitive damage awards and there is no international law distinction to be made. The administration has
Mr. BERMAN. I just hear you say
Mr. KLEINMAN. I want to come to it in one second.
The administration in the past has argued that punitive damages are not recognized in international law and should be treated differently. The case law is clearly inconsistent with that, and in fact, in arbitral awards, the United States has paid punitive damages when it has violated international law.
Page 85 PREV PAGE TOP OF DOC I believeand I will leave the rest of this to Mr. Andersonthat he was referring to the fact that in our efforts to reach out to the administration, we have proposed modifications of this. And I believe Senator Mack and Senator Lautenberg and others have proposed modifications where differences in categories of damages could be discussed, to which the administration has never responded; but I believe that is the point.
Mr. ANDERSON. That is almost correct. To my knowledge, Senator Mack and Senator Lautenberg have not in fact indicated any wish to negotiate. Their attitude is, this is a court judgment, this is a court order, the amount was settled with great difficulty by Federal judges, and we are not going to quarrel with it. In our discussions with the administration, in our efforts to achieve some sort of movement by them, we have simply acknowledged their position, that there is a difference between compensatory and punitive damages. We understand that is what you say.
At present, as noted in our writ of attachment, we have directed ourselves at the foreign military sales fund which we believe has somewhere between $300 and $400 million in it. This is another issue I would like to mention.
By the way, I don't understand how the administration, an elected administration, has managed to avoid Congress' and the court's demands that it account for the Iranian money that it has. It has never told anybody how much it has or where it is. It took us great difficulty to locate and identify the account which is listed on our writ of attachment and to find out how much money was in it. My naive assumption was that this is all public matter, and they should have done this years ago; but then, you know, I am just a journalist.
Page 86 PREV PAGE TOP OF DOC At any rate, we have simply indicated, okay, you said there is a difference between punitive and compensatory, you have got $400 million in here. There is more than enough to settle all the compensatory damages. So why don't we do that, and each one of us can do what we feel is necessary about the punitive damages? To that, we have had no adequate response.
Mr. KLEINMAN. Mr. Anderson is at something of an advantage over us because in repeated efforts to even discuss anything with the administration, the administration has refused to meet at all with us. So at least Mr. Anderson has had an opportunity to meet with them, but they have refused across the board to meet since we have attempted to enforce the judgments. They simply refuse.
Mr. BERMAN. Mr. Chairman, I am curious about the answer, your response to another question, but what I am just wondering is, why wasn't it anticipated this problem could come up in the context of a 1996 bill; and why wasn't it dealt with when the administration was in the mood to say, I support it?
Mr. MCCOLLUM. You may answer, Mr. Kleinman.
Mr. KLEINMAN. The testimony in the Senate was absolutely unqualified that it was anticipatedthat the 1996 bill was a compromise that the State Department signed off on and committed not to try to interfere with enforcement, in exchange for which it was limited to countries that were on the terrorism list; and that testimony was by a number of the witnesses and they were very clear that that was the deal.
Page 87 PREV PAGE TOP OF DOC If I could have one more sentence, the question that you asked me was, does the administration want to hold the money so it can negotiate to pay it back in some way to a subsequent regime. I suspect that is their, at least a theoretical idea. First of all, that subsequent regime is a successor regime and would be responsible; but here is what the NSC staff said as they were briefing the press immediately after the President spoke. It said, the point of this is that this is Cuban Government money that will never go to Cuba. It was never going to be seen by the Cuban Government. It is not this government, it is not any future government; it was supposed to come to these families.
Mr. BERMAN. So it is sort of the State Department wanted to get you a right, but not a remedy?
Mr. KLEINMAN. Exactly.
Mr. MCCOLLUM. It sounds like they didn't like it back in 1996 when we passed the terrorism bill, Mr. Berman. That is what it boils down to, and they don't want to live up to it.
Mr. Anderson, I have got to go to Mr. Pease, but go ahead.
Mr. ANDERSON. If I may make one brief addition in the case of the Iranian money, the foreign military sales money we have researched this deeply, legally. It is very clear that this money has nothing to do with diplomatic funds. It is commercial money paid by the Government of Iran. It is imminently payable by the U.S. Government. There is no reason why they shouldn't, if they choose to, and we don't understand the quibbles that the Clinton administration is making about this money.
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Mr. MCCOLLUM. Thank you.
Mr. Pease, you are recognized.
Mr. PEASE. Thank you, Mr. Chairman, and thank you to those who have appeared before us today. I regret my tardiness. I was detained on the floor, and so if I ask some questions that you have already addressed, please tell me and we will save each other some time.
Ms. Khuly, I think I understand that you and others with whom you have been associated in this matter were encouraged by the President, or other representatives of the administration, to pursue your litigation. Is that correct, and if so, how did that happen?
Ms. KHULY. We specifically went to the State Department. We met several times with Mr. Michael Randenberg who was head of the Cuba desk at the time and several other State officials. We laid out the fact that this law had been passed, that we wanted to file, we wanted to make sure that this in no way would, you know, impede criminal prosecution from the part of the United States Governmentthat they were in agreement that this was even an honorable thing to do. We were so concerned because we were the first ones to, you know, use this law to go to court. We just wanted to make sure that it was correct.
At that time, we were not even sure that compensation was the right thing to do, you know, for the death of a loved one. As time has gone on and we have learned a little bit more about international law and about human rights law. We understand this is the only punishment that terrorists understand. Again, when we got our judgment Cuba was not concerned at all. They couldn't care that they were called murderers. It is when we started the collection process that then they started getting involved in the action.
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So apparently it is a real punishment, and it happens to be the only punishment that we, as families, can mete.
Mr. PEASE. I appreciate your explanation. Let me back up a little bit, though.
You were encouraged by the State Department to bring this litigation?
Ms. KHULY. We were. We were told that they were actively encouraging us, that they would very much like to see this law in action, and that they certainly wanted us to go and proceed with it; and there were like six or seven family members present at these meetings.
Mr. PEASE. And then do I understand, also, that after you were encouraged by the State Department, then the Department of State apparently opposed your efforts or at least did not give support to your efforts? Is that correct, or am I misunderstanding?
Ms. KHULY. At the time of the trial we really needed no support in terms of presenting evidence, as they did, because Cuba had admitted we had all sorts of proofs, including interviews, specifically saying how the crime was committed. We had transcripts from the international civil aviation organization that also proved premeditation, so we had a lot of documentation; and we really did not need State Department help on evidential proof.
Again, after we had the judgment is when the problems started.
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Mr. PEASE. Thank you.
Mr. Flatow, do I understand that the administration, or perhaps even the President personally, has advised you or others that he supports compensation so long as it does not come from diplomatic property?
Mr. FLATOW. I never discussed dollars and cents with the President of the United States. I discussed with him the need for the administration's assistance in bringing our case and enforcing our judgment, and I got that twice. That was enough for me. The money aspect would be my headache, not his. Then our fingers were slammed in the drawer.
Mr. PEASE. Okay. Thank you.
And, Mr. Anderson, in your case, what was your experience with the administration in terms of encouragement for you to bring your litigation? Is it similar to Ms. Khuly, what we have heard from her?
Mr. ANDERSON. No, sir. I never asked or discussed with the administration whether or not I should file a lawsuit; I simply did so. After we did file, we met with Secretary Eizenstat about a month or so ago to discuss whether or not there was a way that we could achieve actual settlement; and he indicated in our first meeting that he was very sympathetic, that the administration wanted to work out a way to see us actually get some settlement money.
Page 91 PREV PAGE TOP OF DOC It was very clear on our side, the bounds of any such agreementit had to be Iranian money, otherwise, it would not settle the purpose of the law; it could not be taxpayer money, we didn't want any taxpayer money and would not accept any if it were offeredand that I was not negotiating on behalf of the other victims; it was simply trying to set out the terms by which we could achieve settlement of these judgments.
I was very satisfied and encouraged by that meeting. I thought, my goodness, they are really going to work something out, and we met several times. My lawyers met several times with Treasury and State Department officials up until not quite a month ago, when all of a sudden they stopped. Shortly before Secretary Albright's statement on Iran, phone calls were not returned, meetings were not given. And Secretary Eizenstat, I believe in a meeting with Senator Mack, put forward a proposal that would offer a small portion of the settlement from taxpayer funds to which Senator Mack and we said, what are you talking about, we have already made this clear that Congress would not accept and we would not accept a settlement out of taxpayer money; why were you putting this on the tableto which we didn't get any answer.
I am encouragedagain, I am an eternal optimist; you know, I am always looking for the bestthat Secretary Eizenstat has agreed to meet this afternoon to again see if we can define the administration's position on this and see if we can clarify what exactly it is that they want to do or think is possible to do.
I must say, I am a little bit more cautious about what the result of this meeting will be, but I am happy to have it, at any rate.
Mr. PEASE. I appreciate that. Thank you all.
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Thank you, Mr. Chairman.
Mr. MCCOLLUM. Thank you, Mr. Pease.
Let me ask, is it Mr. Anderson or any others?
Mr. ANDERSON. The Secretary has agreed to meet with me and my lawyers, and of course, anything that is said there will be immediately shared with all the others. I am not, in any case, acting in any way on my own. We are a group and we want a settlement or agreement that applies to all the people in our situation and all the people who might be in our situation in the future.
We are not, in any case, competing against each other or trying to reach separate agreements. None of us want that.
Mr. MCCOLLUM. I want to see if I can't clarify some things that have been brought up here today so we can have a complete record. Unfortunately, we don't have Mr. Eizenstat or the administration here, but we do have some people who obviously have expertiseand Mr. Kleinman, all of you.
My understanding is that one of the argumentsand we have discussed it here a little bit todayis that the enforcement of the Anti-terrorism Act judgments against frozen assets could lead to retaliation against American property, U.S. Government property abroad. I would ask this of each of you, if you could:
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To your knowledge, Mr. Kleinman, has any country ever retaliated against blocking orders when imposed by the United States in connection with designation of a government on the State Department's terrorism list?
Mr. KLEINMAN. I believe the answer is no.
Mr. MCCOLLUM. I assume that is Ms. Khuly's answer, too, since you are her attorney.
Mr. Flatow, do you know of any?
Mr. FLATOW. The last time an American asset was seized was in 1979 in Tehran by the Iranian Government.
Mr. MCCOLLUM. I remember that rather distinctly.
Mr. Anderson, do you remember anything else other than that?
Mr. ANDERSON. No, sir, I don't.
Mr. MCCOLLUM. It is also my understanding that 20 years ago the Iranian assets were frozen and 35 years ago the Cuban assets were frozen. Is there any sort of evidence that this freezing of the assets all that period of time has gained any leverage in and of itself, other than we froze them, obviously?
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Do you see anything there, Mr. Anderson?
Mr. ANDERSON. No, sir. The only effect on Iranian acts of terrorism that I have ever seen from government action came on the day of my release from my captors who told me, This has not been a useful tactic. We didn't get what we want and we are not going to do it anymore, and in fact they have not kidnapped Americans for political purposes. They are elsewhere. So in that sense, the United States Government was effective. In no case, do I know of where seizing assets or economic sanctions has been effective.
Mr. MCCOLLUM. It is the whole idea of not giving them what they want, because if you give the terrorist what they want, they are going to do more of it. I think that is the bottom line, and sadly, you and others in your situation experienced that, in particular. That is, of course, distinctly different from the experience of some of the victims' families, here for other reasons.
One last thing I wanted to bring out and ask; I think Mr. Kleinman is probably the best one to ask this of: It is my understanding that there are other claimants against Cuba beyond the Brothers to the Rescue families, and I do want to acknowledge the fact that they are here. And I know that you, Ms. Khuly, did acknowledge them, but we do have the other families present today, and I want to thank you again for coming. I see both of you back in the room and it is a very difficult thing for all of us.
But it is my understanding that other than the Brothers to the Rescue, there are some 5,911 claimants under the Foreign Claims Settlement Commission program. Mr. Kleinman, am I correct that none of these claimants against Cuba has obtained any judgment, none has any enforceable claim against blocked assets held by the Treasury under its Cuba assets program?
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Mr. KLEINMAN. To the best we can determine from the public record, that is correct.
Mr. MCCOLLUM. So the bottom line of any argument that somehow all those claimants' concerns have to be taken into account here is premature, to say the least, if not otherwise actually irrelevant?
Mr. KLEINMAN. The blocked assets in the United States have nothing to do with the claims and the property about which they are claiming. Those properties are foralmost all of them were expropriated in Cuba. They are located in Cuba. The Helms-Burton Act was supposed to provide them with a cause of action to pursue their claim. These are assets that came into existence after their assets were expropriated, most of them between 1976 and 1992.
Mr. MCCOLLUM. So any mixing of apples and oranges here would just be more confusion on the part of somebody to try to create the ambiguity to avoid paying or allowing the claim to be made against these blocked assets?
Mr. KLEINMAN. The metaphor that this is mixing apples and oranges is exactly correct.
Mr. MCCOLLUM. Thank you.
Well, I could sit here for a lot longer and ask you a lot more questions, but let me assure that my purpose isn't to make you stay here a long time today. I am not here to do that. We are here to establish a record for moving forward with this legislation.
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Again, I want to do two things. One, I want to express regrets that the administration is not here today. I accept on its face the excuse and reason for Mr. Eizenstat not being here. I do not, however, accept the administration's excuse for not presenting a witness of some sort here today, given the long lead time and notice that they had.
I also, on the other hand, want to personally thank each of you for coming today and not just the witnessesMr. Anderson, Mr. Flatow, Ms. Khulybut to all the family members who have come a long way, in some cases, to be here, who have endured so much in your lives for the suffering of your loved ones and yourselves, of course.
And so you are doing a service, in my judgment, not just for the collection remedies that are there, but for the reasons that have been so eloquently expressed by the panel today that we need to send a message, a very strong message to these terrorist states and that the strongest message we can send today against their kind of abhorrent activity is to allow their assets here in the United States to be taken as compensation, however small and never as fulfilling as it should be, for the losses that each of your family members and you have suffered.
So, again, thank you for taking the time to share again some painful moments with us for a cause that is beyond any one of you individually. We thank you for that commitment to our government, to our cause, and to the freedom this Nation holds so dear.
This hearing is adjourned.
Page 97 PREV PAGE TOP OF DOC [Whereupon, at 3 p.m., the subcommittee was adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
PREPARED STATEMENT OF HON. LINCOLN DIAZ-BALART, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA
Mr. Chairman, your hearing today comes at a critical time in the ongoing saga of the Clinton Administration's foreign policy. You should be commended for identifying yet another shocking reality about this administration's failure to effectively fight the bloodshed and murder perpetrated by governments, such as the Castro dictatorship, who do not share our aversion to brutality and the use of terrorism against civilians as a matter of state policy.
Your hearing comes at a time when the Clinton Administration has initiated an unprecedented amount of direct, government-to-government contact with Terrorist ListNations. In fact, this Administration has lifted existing sanctions and is considering further lifting sanctions against each of the governments currently listed by the Department of State as state-sponsors of terrorism. Currently, this Administration is engaged in direct negotiations designed to normalize relations with several of the Terrorist List Nations, and is sending food aid and economic assistance to others.
During the seven years he has been in office, President Clinton has attempted to unilaterally and without preconditions, normalize relations with the Castro dictatorship. In February 1996, the Castro dictatorship carried out a premeditated attack against American civilian aircraft flying in international airspace. Castro admitted that it was no mistake and publicly announced that he had personally given the order to Cuban MIG fighter aircraft to destroy the aircraft flown by Brothers to the Rescue. President Clinton promised to the American people that he would bring the murderers to justice, but there has been no action.
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Efforts to normalize relations with Castro are ongoing. The families of the dead American pilots have grown impatient, gone to court and won rulings on their own and without Clinton Administration assistance. In fact, Clinton Administration lawyers opposed these court rulings and have blocked the collection of court ordered damages. When the Congress of the United States stepped in to assist the fulfillment of these court ordered damages, the Clinton Administration used a so-called ''national security waiver'' to further thwart effort to collect these damages from frozen Cuban accounts in the United States.
The Clinton Administration's efforts are nothing short of appalling. Castro kills Americans and Clinton takes no action. Grieving families go to court and the Administration opposes them. Courts order damages and the Administration refugee to allow the families to collect those damages. The effort to cooperate with Castro is increasing. The effort to normalize relations with out a single political concession from Castro to the Cuban people is ongoing. And now we hear, from an article in today's USA Today that President Clinton's point man on counter terrorism, Michael Sheehan, that they want to take the Castro dictatorship off the Terrorist List, and that they are considering dropping other state sponsors of terrorism, such as Iran and North Korea, off the Terrorist List as well. Mr. Chairman, we must ask, what is the real motivation behind these actions?
Mr. Chairman, worldwide terrorism is increasing. Americans are every year the victims of cowardly acts of state-sponsored brutality against innocent civilian targets. Given this Administration's unwillingness to effectively combat terrorism, and given this administration's abdication of its role in fighting terrorism as evidenced by its moving to normalize political and economic relations with these nations, I think the Justice for Victims of Terrorism Act is more important than ever.
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PREPARED STATEMENT OF TREASURY DEPUTY SECRETARY STUART E. EIZENSTAT, DEFENSE DEPARTMENT UNDER SECRETARY FOR POLICY WALTER SLOCOMBE, AND STATE DEPARTMENT UNDER SECRETARY FOR POLICY THOMAS PICKERING
Mr. Chairman and Members of the Committee:
We are submitting this joint testimony as envisaged by the letters of Deputy Secretary Eizenstat of April 12 to Committee Chairman Hyde and Subcommittee Chairman Smith in response to letters to Secretary Summers and Secretary Albright from Chairman Hyde, inviting them or their designees to testify before this subcommittee on April 13 concerning H.R. 3 )485, the ''Justice for Victims of Terrorism Act.'' Deputy Secretary Eizenstat has worked extensively on this issue for the Administration over the past 18 months, and we, on behalf of our Departments, join him in presenting our views on this proposed leaf station. We share your goal that U.S. victims of terrorism and their families receive Justice and compensation for their suffering. Where actively engaged with the Congress in ongoing discussions to resolve the complex issues identified and to address the needs of victims of terrorism. We also appreciate the opportunity to submit this statement into the record.
Let us begin by expressing the Administration's and our own genuine and personal sympathy to victims of international terrorisman evil that this administration has led the world in combating. It is the responsibility of the United States Government to do everything possible to protect American lives from international terrorism and other heinous acts. People like Mr. Flatow, Mr. Anderson, Mr. Cicippio, Mr. Jacobsen, and Mr. Reed and their families, and the families of the Brothers to the Rescue pilots, deserve support in their goal of finding fair and just compensation for their grievous losses and unimaginable experiences. Those of us who have met with them have been touched by their suffering and impressed with their strength and determination to seek justice. We understand their frustrations and the frustrations that have led the sponsors of this legislation to introduce it. We are dedicated to working with the Congress to achieve the goal of obtaining compensation for the victims and their families. But we feel strongly that this must be done in a way that is consistent with the broad national interests and international obligations of the United States. LS721
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It is obvious that the states involved herestates that we have publicly branded as sponsors of terrorismdo not view the United States as a friendly environment in which to conduct financial transactions. As part of our efforts to combat terrorism, we impose a wide range of economic sanctions against state sponsors of terrorism in order to deprive them of the resources to fund acts of terrorism and to affect.their conduct. Because of these measures, terrorism-list states engage in minimal economic activity in the United States. In many cases, the only assets that states which sponsor terrorism have in the United States are either blocked or diplomatic property. Such property should not be available for attachment and execution of judgments, for very good reasons involving the interests of the entire nation, which are described in detail below. As much as we join the sponsors of this bill in desiring to have victims of, international terrorism and the heinous acts of the Cuban Air Force compensated, it would be unwise to ignore these reasons and prejudice the interests of all our citizens for this purpose.
This question is complex and fraught with difficulties. For this reason, last year, we proposed, among other things, that a commission be established to review all aspects of the problems presented by acts of international terrorism. Such a commission would have specifically studied the issue of compensation with the goal of recommending proposals to the President and to the Congress to help the victims and their families receive compensation in a manner that would not impinge upon important U.S. national interests. While this proposal was not taken up, we believe this approach still has merit.
H.R. 3485, though born of good intentions, is fundamentally flawed. The legislation would have five principal negative effects, all of which would be seriously damaging to important U.S. interests, and would, at the end of the day, result in substantial U.S. taxpayer liability.
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First, blocking of assets of terrorist states is one of the most significant economic sanctions tools available to the President. The proposed legislation would undermine the President's ability to combat 'International terrorism and other threats to national security by permitting the wholesale attachment of blocked property, thereby depleting the pool of blocked assets and depriving the U.S. of a source of leverage in ongoing and office sanctions programs, such as was used to gain the release of our citizens held hostage in Iran in 1981 or in gaining information about POW's and MIA's as part of the normalization process with Vietnam.
Second, it would cause the U.S. to violate its international treaty obligations to protect and respect the immunity of diplomatic and consular property of other nations, and would put our own diplomatic and consular-property around the world at risk of copycat attachment, with all that such implies for the ability of the United States to conduct diplomatic and consular relations and protect personnel and facilities.
Third, it would create a race to the courthouse benefiting one small, though deserving, group of Americans over a far larger group of deserving Americans. For example, in the case of Cuba, many Americans have waited decades to be compensated for both the loss of property and the loss of the lives of their loved ones. This would leave no assets for their claims and others that may follow. Even with regard to current judgment holders, it would result in their competing for the same limited pool of assets, which would be exhausted very quickly and might not be sufficient to satisfy all judgments.
Fourth, it would breach the long-standing principle that the United States Government has sovereign immunity from attachment, thereby preventing the U.S. Government from making good on its debts and international obligations and potentially causing the U.S. taxpayer to incur substantial financial liability, rather than achieving the stated goal of forcing Iran to bear the burden of paying these judgments. The Congressional Budget Office (''CBO'') has recognized this by scoring the legislation at $420 million, the bulk of which is associated with the Foreign Military Sales (''FMS'') Trust Fund. Such a waiver of sovereign immunity would expose the Trust Fund to writs of attachment, which would inject an unprecedented and major element of uncertainty and unreliability into the FMS program by creating an exception to the processes and principles under which the program operates.
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Fifth, it would direct courts to ignore the separate legal status of states and their agencies and instrumentalities, overturning Supreme Court precedent and basic principles of corporate law and international practice by making state majority-owned corporations liable for the debts of the state and establishing a dangerous precedent for government owned enterprises like the U.S. Overseas Private Investment Corporation (''OPIC'').
As the Washington Post observed in a fall 1999 editorial, ''Victims of terrorism certainly should be compensated, but a mechanism that permits individual recovery to take precedence over significant foreign policy interests is flawed.'' The proposed legislation would indeed seriously compromise important national security, foreign policy, and other clear national interests, and discriminate among and between past and future U.S. claimants.
For all these reasons, explained in more detail below, the Administration strongly opposes the proposed legislation.
1) Attachment of Blocked and Diplomatic Property and the Elimination of the Effectiveness of Our Blocking Program
The Administration has grave concerns with the provisions of the proposed legislation that seek to nullify the President's waiver of the 1998 FSIA amendments and thereby permit attachment of blocked and diplomatic property.
The ability to block assets represents one of the primary tools available to the United States to deter aggression and discourage or end hostile actions against U.S. citizens abroad. Our efforts to combat threats to our national security posed by terrorism-list countries such as Iraq, Libya, Cuba, and Sudan rely in significant part upon our ability to block the assets of those countries.
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Blocking assets permits the United States to deprive those countries of resources that they could use to harm our interests, and to disrupt their ability to carry out international financial transactions. By placing the assets of such countries in the sole control of the President, blocking program Is permit the President at any time to withhold substantial benefits from countries whose conduct we abhor, and to offer a potential incentive to such countries to reform their conduct. Our blocking programs thus provide the United States with a unique and flexible form of leverage over countries that engage in threatening conduct.
The Congress has recognized the need for the President to be able to regulate the assets of foreign states to meet threats to the U.S. national security, foreign policy, and economy. In both the International Emergency Economic Powers Act and the Trading with the Enemy Act, the Congress has provided the President with statutory authority for regulating foreign assets. On the basis of this authority and foreign policy powers under the Constitution, Presidents have blocked property and interests in property of foreign states and foreign nationals that today amount to over $3.5 billion.
The Supreme Court has also recognized the importance of the President's blocking authority, stating that such blocking orders ''permit the President to maintain the foreign assets at his disposal for use in negotiating the resolution of a declared national emergency. The frozen assets serve as a 'bargaining chip' to be used by the President when dealing with a hostile country.'' Dames & Moore v. Regan, 453 U.S. 654, 673 (1981).
The leverage provided by blocked assets has proved central to our ability to protect important U.S. national security and foreign policy interests. The most striking example is the Iran Hostage Crisis. The critical bargaining chip the United States had to bring to the table in an effort to resolve the crisis was the almost $10 billion in Iranian Government assets that the President had blocked shortly after the taking of our embassy. Because the return of the blocked assets was one of Iran's principal conditions for the release of the hostages, we would not have. been able to secure the safe release of the hostages and to settle thousands of claims of U.S. nationals if those blocked assets had not been available. This settlement with Iran also resulted in the eventual payment of $7.5 billion in claims to or for the benefit of U.S. nationals against Iran.
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In the case of Vietnam, the leverage provided by approximately $350 million in blocked assets, combined with Vietnam's inability to gain access to U.S. technology and trade, played an important role in persuading Vietnarn's leadership to address important U.S. concerns in tile normalization process. These concerns included assistance in accounting for POWs and MlAs from the Vietnam War', accepting responsibility for over $200 million in U.S. claims which had been adjudicated by the Foreign Claims Settlement Commission, and moderating Vietnamese actions in Cambodia.
In addition, blocked assets have helped us to secure equitable settlements of claims of U.S. nationals against such countries as Romania, Bulgaria, and Cambodia in the context of normalization of relations. These results could not have been achieved without effective blocking programs.
However, our blocking programs simply cannot function, and cannot serve to protect these important interests, if blocked assets are subject to attachment and execution by private parties, as the proposed legislation would permit. The need to deal with the increasing demands for information on assets, blocked and unblocked, of these terrorism-list governments as monetary judgments are awarded would seriously disrupt the operations of the Treasury Department in administering the blocking programs. These demands would greatly impair Treasury's investigative functions through the release of deliberative process and enforcement-related materials thereby divulging sensitive operational details and raising important issues of confidentiality with U.S. banks and others who provide information on assets. Additionally, the ability to use blocked assets as leverage against foreign states that threaten U.S. interests is essentially eliminated if the President is unable to preserve and control the disposition of such assets. Private rights of execution against blocked assets would permanently rob the President of the leverage blocking provides by depleting the pool of blocked assets.
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In the Cuban and Iranian contexts, for example, the value of judgments (including both compensatory and punitive damages) won by the Brothers to the Rescue families exceeds the total known value of the blocked assets of Cuba in the United States, and the value of the judgment won by the Flatow family, or the former Beirut Hostages, exceeds the total known value of the blocked assets of the Government of Iran in the United States. Attachment of these blocked assets to satisfy private judgments in these and similar cases would leave no remaining assets of terrorism-list governments in the President's control, denying the President an important source of leverage and seriously weakening his hand in dealing with threats to our national security.'
In addition, the prospect of future attachments by private parties would place a perpetual cloud over the President's ongoing control of all blocked assets programs. This would further undermine the President's ability to use such assets as leverage in negotiations, even where attachments had not yet occurred.
Put simply, permitting attachment of blocked assets would likely seriously undermine the use of our blocking programs as a key tool for combating threats against our national security and, in the Iranian context, would not even achieve the goal of full payment of the compensatory damages of all existing judgments against Iran,
2) Our Obligation and Interest in Protecting Diplomatic Property
The proposed legislation also could cause the United States to violate our obligations under international law to protect diplomatic and consular property, and would undermine the legal protections for such property on which we rely every day to protect the safety of our diplomatic and consular property and personnel abroad. Even though the current legislation arguably provides protection for a slightly broader range of diplomatic property than previous legislative proposals, it is still fundamentally flawed in its failure to permit the President to protect properties, including consular properties, some diplomatic bank accounts, diplomatic residences, and properties of foreign missions to international organizations, which international law obligates us to protect.
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The United States' legal obligation to prevent the attachment of diplomatic and consular property could not be clearer. Protection of diplomatic property is required by the Vienna Convention on Diplomatic Relations, to which the United States and all of the states against which suits presently may be brought under the 1996 amendments to the FSIA are parties, Under Article 45 of the Vienna Convention on Diplomatic Relations we are obligated to protect the premises of diplomatic missions, together with their real and personal property and archives, of countries with which we have severed diplomatic relations or are in armed conflict. This would include diplomatic residences owned by the foreign state.
Likewise, under Article 27 of the Vienna Convention on Consular Relations, the same protection is required for consular premises, property, and archives. Attachment of any of the types of property covered by the Vienna Conventions on Diplomatic and Consular Relations could place the United States in violation of our obligations under international law.
The proposed legislation would only permit the President to ensure the protection of a narrow portion of the property covered by the Vienna Conventions, and would thereby place the United States in violation of our legal obligations. In addition, the proposed legislation as drafted could cause us to breach our obligations to ensure the inviolability of missions to the United Nations, pursuant to the UN Headquarters Agreement and the General Convention on Privileges and Immunities.
Our national interest in the protection of diplomatic property could not be clearer or more important. [Italicized for emphasis] The United States owns over 3,000 buildings and other structures abroad that it uses as embassies, consulates, missions to international organizations, and residences for our diplomats. The total value of this property is between $12 and $15 billion.
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Because we have more diplomatic property and personnel abroad than any other country, we are more at risk than any other count1y if the protections for diplomatic and consular property are eroded. [Italicized for emphasis] If we flout our obligations to protect the diplomatic and consular property of other countries, then we can expect other countries to target our diplomatic property when they disagree strongly with our policies or actions. Defending our national interests abroad at times makes the United States unpopular with some foreign governments. We should not give those states who wish the United States with an easy means to strike at us by declaring diplomatic property fair game.
In the specific case of Iran, attachment of Iran's diplomatic and consular properties could also result in substantial U.S. taxpayer liability. Iran's diplomatic and consular properties in the United States are the subject of a claim brought by Iran against the United States before the Iran U.S. Claims Tribunal. The Iran-U.S. Claims Tribunal is an arbitration court located at The Hague in the Netherlands. It was established as part of the agreement between Iran and the United States that freed the U.S. hostages in Iran and resolved outstanding claims that were then pending between the United States and Iran. Pursuant to this agreement and awards of the Tribunal, Iran has paid $7.5 billion in conipensatioii to or for the benefit of U.S. nationals. The Tribunal also has jurisdiction over certain claims between the two governments.
Although we are contesting Iran''s claim vigorously, the Tribunal could find that the United States should have transferred Iran's diplomatic and consular property to it in 198 1. If it does so and the properties are not available because they have been liquidated to pay private judgments, the U.S. taxpayer would have to bear the cost of compensating Iran for the value of the properties. Under the Algiers Accords, Tribunal awards against the governments are enforceable in the courts of any country, under the laws of that country.
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3) Equity Among Claimants
We are also deeply concerned that the proposed legislation would frustrate equity among U.S. nationals with claims against terrorism-list states. It would create a winner-take-all race to the courthouse, arbitrarily permitting recovery for the first, or first few, claimants from limited available assets, leaving other similarly-situated claimants with no recovery at all. In fact, it would take away assets potentially available to them.
However, the Alejandre, Flatow, and Anderson cases do not represent the only claims of U.S. nationals against Cuba and Iran. No other claimants would benefit at all from the proposed legislation; indeed this legislation would seriously prejudice their interests.
In the case of Cuba, the U.S. Foreign Claims Settlement Commission (''FCSC'') has certified 5,911 claims of U.S. nationals against the Government of Cuba, totaling approximately $6 billion with interest, dating back to the early 1960s. Contrary to statements made at the April 8 hearing, these include not just expropriation claims, but also the wrongful death claims of family members of two individuals whom the 4Cuban Government executed after summary trial for alleged crimes against the Cuban state. Other claims relate to the Castro Government's seizure of homes and businesses from U.S. nationals. These claimants have waited over 35 years without receiving compensation for their losses. This bill will not help them at all.
The same situation applies with respect to Iran. In addition to the Flatow and Anderson plaintiffs, who have judgments for compensatory and punitive damages totaling $5 89 million, former hostages who were held captive in LebanonDavid Jacobsen, Joseph Cicippio, Frank Reed, and their familiescollectively have won a judgment against Iran totaling $65 million. Additional suits against Iran are currently pending in the Federal District courts.
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Moreover, given the nature of these regimes, it remains possible that in spite of our substantial efforts to combat terrorism, foreign terrorist states will commit future acts in violation of the rights of U.S. nationals, which may give rise to claims against them. If such incidents occur, these claimants will also have an interest in being compensated.
Against this background, in which outstanding judgments for compensatory and Insubstantial punitive damages far exceed available funds, the proposed legislation would permit the first claimants to reach the courthouse to deplete all the available assets of terrorism-list governments, leaving nothing for other similarly situated claimants to satisfy even compensatory damages they are awarded. Satisfaction of the judgments in the Alejandre, Flatow, and Anderson cases would come at the expense of all other claimants against Cuba and Iran, both past and future.
In sum, permitting the attachment of blocked and diplomatic properties in individual cases, as the proposed legislation would do, would undermine our ability to combat threats to our national security, violate our obligations under international law, place our diplomatic and consular properties and personnel abroad at risk, and lead to arbitrary inequities in the treatment of similarly-situated U.S. nationals with claims against foreign governments.
4) Breaching the Sovereign Immunity of the United States
We are equally concerned about the provision of the proposed legislation that would permit garnishment of debts of the United States. Not only would this provision breach the longest established principle that the United States Government has sovereign immunity from garnishment actions, it would seriously undermine our Foreign Military Sales program, which is an important tool supporting U.S. national security policy and strategy, by creating an exception to the processes and principles under which the program operates that has not existed in the program's 40-year history.
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By allowing plaintiffs to attempt to tap the FMS Trust Fund to satisfy their judgments, the entire FMS program would be jeopardized as foreign customers question whether funds they are required to pay under the FMS program might be at risk of diversion or attachment. H.R. 3485 would therefore inject a major element of uncertainty and unreliability into the FMS program.
Additionally, foreign governments make pre-payments into the FMS Trust Fund to ensure payment of U.S. suppliers for products and services provided to foreign governments in US approved sales of defense products and services. Under section 37 of the Arms Export Control Act, these funds are available solely for payments to U.S. suppliers, and for refunds to foreign purchasers in connection with such sales. If the FMS Trust Fund can be exposed to attachment through an act of Congress for purposes other than ensuring payment for arms sales, not only may foreign governments simply question the wisdom of engaging in such transactions with the United States, but payments to U.S. 'suppliers would be threatened.
The proposed legislation also will negatively affect our defense industrial base. If passed as currently written, not only Will U.S. defense firms be uncertain about whether and when they will be paid, but our ability to maintain open production lines needed to support the U.S. military, which the FMS program greatly facilitates, also would be disrupted.
We have heard that the intent of the proposed legislation is to ''make terrorist states pay.'' However, exposing the Iranian FMS Trust Fund account (''Iran FMS account'') to attachment will not cause Iran to pay. Here too, at the end of the day, the U.S. taxpayer will bear this burden if this fund is tapped. The United States will have to pay Iran whatever amount in the Iran FMS account is held by the Iran-U.S. Claims Tribunal to be owed to Iran. The current balance of the Iran FMS account, which is approximately $400 million, is the subject of Iran's multi-billion dollar claim against the United States before the Tribunal, arising out of the Iran FMS program.
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Depleting Iran's FMS account through attachment by the plaintiffs in no way discharges any obligation to Iran the U.S. Government may ultimately be determined to have by the Tribunal, And if Iran prevails on its claims, it can seek to enforce its award against U.S. property anywhere in the world, since the awards of the Iran-U.S. Claims Tribunal are enforceable in the courts of any country. Any Tribunal award that cannot be satisfied from the Iranian FMS account will have to be satisfied with U.S. government finds. Thus American taxpayers, rather than Iran, would actually pay under H.R. 3485. CBO's cost estimate for the bill has been confirmed that the legislation would cost the Treasury, and hence the taxpayer, $420 million, most of which is associated with the FMS Trust Fund.
This provision is also of particular concern because it would prevent the United States from meeting its obligations to make payments in satisfaction of awards the Tribunal renders against the United States. Instead, the proposed legislation would permit private parties to garnish the funds of the U.S. Government in order to collect such payments before they reach Iran. Even without this change in the law, there have been efforts in the Flatow case to garnish the payment of a $6 million Tribunal award in Iran's favor.
It is important to understand that allowing private litigants to garnish amounts we owe Iran under Tribunal awards would not discharge the U.S. Government's liability to Iran to pay such money. For example, if the efforts in the Flatow case had succeeded, the Flatow family would have received $6 million, but the United States still would have owed Iran $6 million under the unpaid award. And again because the awards of the Iran-U.S. Claims Tribunal are enforceable in the courts of any country, Iran can seek to enforce awards against U.S. property other countries if we do not pqy them voluntarily. [Italicized for emphasis]
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Permitting garnishment of the payment of such awards could thus result in the U.S. taxpayer paying twice: once when a private claimant garnishes the payment, and a second time upon Iran's successful enforcement of the still unsatisfied award against us abroad. Because the judgments against Iran received by these plaintiffs total in the hundreds of millions of dollars, permitting garnishment of debts owed by the United States to Iran as a means of satisfying these judgments could cost the U.S. taxpayer hundreds of millions of dollars.
Finally, while we are.vigorously contesting all of Iran's claims at the Tribunal, if we are unable to pay even the smallest awards against us, our position before the Tribunal in all other In claims will clearly be undermined.
5) Eliminating Legal Separateness of Agencies and Instrumentalities
There are also significant problems with the provision of the proposed legislation. that would change the way the FSIA defines a foreign state's agencies and majority owned or controlled instrumentalities for terrorism-list countries where there is a terrorism-related judgment against it. This provision would overturn the Congress's own considered judgment when it passed the FSIA in 1976, as well as existing Supreme Court case law and basic principles of corporate and international law. In addition, it would prejudice the interests of U.S. citizens and corporations who invest abroad.
This provision would make corporations that are majority-owned or controlled by a terrorism-list foreign government liable for terrorism-related judgments awarded against that government. The Congress recognized the danger of this position when it passed the FSIA in 1976. The Conference Report to that bill observed that '' [i]f U.S. law did not respect the separate juridical identities of different agencies or instrumentalities, it might encourage foreign jurisdictions to disregard the juridical divisions between different U.S. corporations or between a U.S. corporation and its independent subsidiary.''
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We are concerned that this proposal to disregard separate legal personality, although limited in the bill to terrorism-list states and their majority owned entities, could create the perception that the United States is unreliable as a location for banking or investment. Especially for companies with linkages to foreign governments, such a provision could be viewed as an expansion of U.S. economic sanctions. It could raise concerns about the United States as a safe financial center and about the likelihood of possible legal actions against their assets in the United States. This perception could undermine the competitive ability of U.S. financial firms to lead private organizations abroad and to attract banking business and investments to the United States.
In addition, if the United States were to ''pierce the corporate veil'' in this manner, there could well be similar actions in foreign countries. Foreign countries may enact similar changes to their law or foreign courts might disregard the separate status of private, U.S. owned companies in cases where a litigant had a judgment against the U.S. Government.
Compared to the billions of dollars the United States Government and private U.S. interests have invested abroad, the blocked assets of terrorism-list state entities, agencies, and instrumentalities located in the United States are small. In the case of Iran, we do not have a comprehensive picture of Iranian assets in the United States that might be affected by this proposed legislation. There is currently no blocking of Iranian assets in the United States (other than the residual of property blocked during the Hostage Crisis), and thus no obligation on the part of U.S. persons to report specific information on them.
U.S. citizens, corporations, the United States Government, and taxpayers have far more money invested abroad than those of any other country, and thus have more to lose if investment protections such as those provided by the presumption of separate status is eroded. [Italicized for emphasis] If we saddle the investors of other countries with the debts of foreign governments with which they are co-investors, as the proposed legislation would do, then we can expect U.S. investors and taxpayers to pay a considerably higher price when other governments follow our example.
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Finally, disregarding, separate legal personality as provided for in this proposal could possibly lead to substantial U.S. taxpayer liability for takings claims in U.S. courts and possibly before international form.
We are grateful for this opportunity to address a very important subject involving the fight against terrorism, compensation for victims, and critical national interests. Unfortunately, however, the concerns raised here indicate that the 1996 amendment waiving sovereign immunity and creating a judicial cause of action for darna0es arising from acts of terrorism has not met its goals of providing compensation to victims and deterring terrorism. In fact, if blocked assets were exhausted to compensate the families, which would be the result of this bill, the leverage to affect the conduct of the terrorism-list states would be lost along with the blocked assets. We are not happy that these suits have not led to recovery for families who have brought cases under the 1996 amendment. A system that has to date left no recovery option other than one that conflicts with U.S. national interests and would result in substantial U.S. taxpayer liability is not an acceptable system.
We have been giving this a very hard look and have been working with several members of Congress to address this difficult problem. We are anxious to continue doing so. Together, we hope to formulate immediate and longer-term approaches that will address the concernsof compensation for terrorist acts and the U.S. national interests and international obligationsthat we all share in a much more satisfactory way. Most importantly, we believe that, for a workable and effective solution, we need a careful and deliberative review of the issues, informed by our experience since the 1996 amendment.
Page 115 PREV PAGE TOP OF DOC As mentioned earlier, we suggested last year that the Administration and Congress commit to a joint commission to review all aspects of the problem, and to recommend to the President and the Congress proposals to find ways to help these families receive compensation, in a way consistent with our overall national interests and international obligations. We believe that this is the best way to deal with these issues and that it therefore merits further consideration. We believe that such a commission should be one of stature and with the right expertise to confront all the hard issues we have discussed todayincluding the lack of effective remedies in these cases because of sanctions against terrorism-list countries under U.S. law, which are absolutely necessary to maintain.
A fundamental principle for this joint commissionby definitionwould be the need to inventory outstanding claims and develop an effective and fair mechanism for compensation of victims of terrorism. The commission should be encouraged to think broadly, including consideration of avenues other than the judicial one created by the 1996 amendment.
We hope discussions on the Commission and the broader issue of compensation for victims of terrorism will yield a solution that best addresses all parties' respective interests. Again, we are committed to working, together with you, members of this Subcommittee, and others to find non-legislative and legislative means to achieve our shared goal of fair and just compensation for victims of terrorism.
(Footnote 1 return)
This case is the second in a series of cases brought in the Court by U.S. citizens and their kin who were seized and held hostage in Beirut in the 1980's by the Hezbollah (or Hizballah), a politico-paramilitary organization operating in Lebanon as an agent of the Iranian government. See Cicippio v. Islamic Republic of Iran, 18 F. Supp.2d 62 (D.D.C. 1998).
(Footnote 2 return)
''Throughout Anderson's captivity, the Associated Press supported Maddy and Sulome. Maddy received his salary and A. P. personnel assisted United Nations efforts to get Anderson released. The A.P. bureau chief in Cyprus alerted Maddy on December 1, 1991, to his imminent release, and the A.P. flew her and Sulome to Damascus to greet him.
(Footnote 3 return)
Sulome Anderson, who was born in the United States during Terry Anderson's captivity, is a U.S. citizen. Although she was not yet born at the time of Terry Anderson's kidnapping, she has standing to maintain a cause of action for loss of solatium. See Bonbrest v. Kotz, 65 F. Supp. 138 (D.D.C. 1946).