Yesterday, NBC News reported that the Trump Group – owned and operated by Republican presidential candidate Donald J. Trump – had leased property in New York to Bank Melli, a major state-owned Iranian bank that was previously designated for U.S. sanctions, between 1998-2003. As the headline implied – “Trump Group Did Business with Iranian Bank Later Linked to Terror” – the Trump Group’s dealings with Bank Melli were not only hypocritical – considering candidate Trump’s stance on the Iran nuclear deal – but also likely illicit, as the U.S. trade embargo, first imposed in 1995, would have prohibited dealings with the Iranian bank.

The implication, however, is a false one. While the NBC News report did note that – despite the “sweeping embargo in place…prohibit[ing] Americans from doing business with Iran” – “some Iranian organizations were granted licenses exempting specific transactions from sanctions,” it could not determine whether or not Bank Melli had been granted a license to operate in New York at the time. According to the report, “[t]he Treasury Department, the Trump campaign and Bank Melli all declined to answer whether the agency had issued a license to the Trump Organization or the bank permitting rent payments during Trump’s ownership of the building.”

Few will note, but hidden in court filings last decade is an answer to the riddle. In The Bank of New York v. Rubin, 2005 WL 6105186 (S.D.N.Y. 2005), the Government of the United States filed a Statement of Interest to ensure that the U.S. government’s interest was considered during trial deliberations. As part of that Statement of Interest, the Government revealed certain of its license authorizations to a group of Iranian banks – Bank Melli, Bank Sepah, and Bank Saderat (collectively, the “Iranian Banks”) – over the prior decade. Specifically, the Statement noted:

[O]n June 13, 1995, OFAC granted the Iranian Banks specific licenses allowing them to cover overhead expenses and fulfill obligations in existence on June 6, 1995 (“1995 Licenses”). The Iranian Banks were authorized to deposit funds and receive wire transfers to specific operating accounts in order to fulfill obligations in existence on June 6, 1995, but were not otherwise authorized to engage in banking business after June 6, 1995. For example, they were not allowed to process student remittances.

The Iranian Banks were given until March 1996 to complete transactions relating to obligations that pre-dated the imposition of a broad trade embargo in May-June 1995. In March 1996, OFAC issued a further round of specific licenses to the Iranian Bank (“1996 Licenses”). The 1996 Licenses required the closing of accounts authorized by the 1995 Licenses and allowed the Iranian Banks to open specified new accounts for payroll and overhead expenses. The licenses limited the activities in which the Iranian Banks may engage to conducting research and acting as a liaison with United States holders of correspondent bank accounts. In effect, the Iranian Banks are permitted to maintain a skeletal presence in the United States as “representative” offices. The Iranian Banks had expressed to OFAC their concern that, if forced to close operations entirely under the ITR, they would lose their licenses to operate under New York banking law.

In other words, the Government states that OFAC had indeed licensed Bank Melli, et. al., to maintain a representative office in the United States for a specified and limited set of purposes. The Government attached as Exhibits these licenses to their filed Statement of Interest.

Bank Melli was provided two specific licenses – one for its offices in Los Angeles, the other for its offices in New York. Neither of these license authorizations contain an expiration clause, suggesting that the license authorization was open-ended until the Government decided to revoke the license. Pursuant to License No. IA-3537 – issued to Bank Melli Iran New York Representative Office on March 29, 1996 – Bank Melli Iran was therein authorized to:

…conduct activities related to research in the United States and to act as a liaison with United States holders of correspondent bank accounts held by its head office and foreign branches and affiliates, in accordance with the terms of a conditional Representative Office license to be issued by the Superintendent of Banks of the State of New York.

Under the license, the staff of Bank Melli Iran New York Representative Office was to be limited to a maximum of four individuals, consisting of two officers and two clerical employees.  Implicit in the license authorization is that Bank Melli would be able to maintain their then-current offices in New York and Los Angeles.

Where had Bank Melli maintained an office at the time of the issuance of this license? 767 Fifth Avenue, New York, NY – the General Motors Building that the Trump organization bought in 1998.  In other words, Bank Melli was licensed to maintain its representative office in the General Motors Building; and, as such, Trump effectively inherited this lease upon purchase of the building.  While we do not know the precise terms of Bank Melli’s lease at the time, the Trump Organization would most likely have been obliged to adhere to the terms of the lease, as lessees are not deprived of their rights due to a change in ownership of the building.  As such, it could well be the case that Trump did not do proactive business with Bank Melli so much as he inherited a lease with the Iranian bank upon purchase of the General Motors Building — a lease that had been effectively licensed by the U.S. government.

We at SanctionLaw are not in the business of defending candidate Trump, but nonetheless it is troubling that reports would impugn Trump for maintaining a lease for Bank Melli that had been licensed by U.S. authorities. In licensing the transaction, OFAC had determined that such transaction was in the U.S.’s national security and foreign policy interest. To suggest that – by leasing the property to an Iranian bank that was later alleged in 2007 to be acting in support of Iran’s WMD program and facilitating funds transfers to Iran’s Qods Force – Trump was undermining core U.S. interests is to distort the historical record and create a dangerous precedent in which market actors refuse to engage in licensed activities with sanctioned parties out of reputational concern.  Indeed, doing so could well prove anathema to U.S. interests, as the difficulties in lifting the sanctions on Iran attest.