Slush Pile: Citibank Freezes Victims' Funds

2007 Slush Pile

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Citibank Freezes Victims' Funds

2007 Reader Submission
Pending Acceptance

Md. Bank Freezes Funds of Scholar Jailed in Tehran State, Treasury Get Involved In Effort to Unlock Accounts

It was a hard enough day for Shaul Bakhash, as he dealt with the ongoing drama surrounding the imprisonment in Iran of his wife, noted American scholar Haleh Esfandiari. Then he found an express letter on the doorstep of his Potomac home yesterday morning announcing that Citibank had frozen his wife's bank accounts on grounds that she is now a "resident" of Iran.

In the letter, Citibank said the accounts had been frozen "in accordance with U.S. Sanctions regulations," which stipulate that U.S. banks are prohibited from servicing accounts for residents of Iran.

So began a stressful process of inquiries and appeals for help -- to the bank, financial contacts, the State Department and the press -- to finally reach a resolution.

Bakhash, a historian at George Mason University, quickly learned that his two Citibank accounts had also been closed, even though he has not visited Iran since 1980. Bakhash and Esfandiari are both U.S. citizens, but Esfandiari has maintained her Iranian passport so she can visit her family in Tehran twice a year. She was on a 10-day visit to see her 93-year-old mother when she was put under virtual house arrest for four months, after which she was jailed in Tehran's Evin Prison on May 8. Iran charged her this week with espionage and endangering national security.

There is no law stipulating that bank accounts of dual U.S.-Iranian citizens must be closed if they go to Iran, the Treasury Department said yesterday, unless they have been specifically designated by the U.S. government for sanctions. "Iranian nationals living in the United States may open and maintain accounts in U.S. financial institutions, even if they go back occasionally to Iran," the official said, speaking on the condition of anonymity because of the sensitive detention.

Citizens can maintain bank accounts in U.S. financial institutions even if they move to Iran, although U.S. banks cannot provide normal services on the accounts while the customers are in Iran, the official said.

Bakhash described the decision to freeze the accounts as "ridiculous" and "arbitrary." Esfandiari's paycheck from the Smithsonian's Woodrow Wilson International Center for Scholars, where she is director of Middle East programs, is deposited directly into her Citibank account. Because she is not in the country, she could not change the payment arrangements. Freezing the accounts could have made it difficult to pay major bills, Bakhash added.

"Clearly someone at the bank recognized my wife's name from the newspaper accounts and took action without contacting me. We did not even receive a phone call before the letter," he said in an interview. "We have had money there for 10 years, and I didn't expect to be treated so shabbily after such a long time."

To help out, the State Department contacted the Potomac branch of Citibank yesterday, offering to write a letter to the bank confirming that Esfandiari and Bakhash are U.S. citizens, that Esfandiari is not a resident of Iran, and that she is held there against her will, a State Department official said.

After several more calls, Bakhash said that late in the afternoon the bank told him it would consider reactivating his two accounts but not Esfandiari's two accounts.

"We deeply regret our mistake in blocking certain accounts," said Shannon Bell, Citibank's deputy director of public relations in New York. "We are requesting that the Treasury Department expedite our request to reactivate other accounts that are subject to Treasury restrictions regarding individuals in Iran. We are in contact with the family and have apologized for the stress this inconvenience has caused."

Treasury officials, however, said they were unaware of Citibank's initial action until yesterday.

Well after the end of business hours, calls were still being exchanged among the many parties. At 8 p.m. yesterday, in an expedited decision, Treasury said it had informed Citibank that it could reactivate all the accounts. At 8:30 p.m., Bell called The Washington Post to say that all accounts would be reopened.

Bakhash was informed by a senior Citibank official at 8:45 p.m. that the bank would again do business with him and his wife.

2007 Slush Pile

Citibank Freezes Victims' Funds

2007 Reader Submission Pending Acceptance

2007 Reader Submission
Pending Acceptance