Terrorism victims can garnish money sprint owes Iran

WSJ -- A federal judge ruled Wednesday that a group of terrorism victims owed hundreds of millions of dollars from Iran can garnish funds that Sprint Nextel Corp. (S) owes to a state-owned Iranian telecommunications company.

The Sprint payments to be seized are small: $613,000. But U.S. District Judge Royce Lamberth in Washington said the ruling was "a step in the right direction" for victims of the 1996 truck bombing of the Khobar Towers in Saudi Arabia, which housed U.S. military personnel. The blast killed 19 American servicemen and wounded many others.

Lamberth said he wanted to believe his ruling "represents renewed hope for long-suffering victims of state-sponsored terrorism." But the bleak reality, he said, was that the Sprint funds were an "infinitesimal sum" dwarfed by the "endless agony and suffering befalling these victims."

Lamberth ruled in 2009 that the victims and their families were entitled to nearly $600 million in damages from Iran. The judge found that senior Iranian officials planned and sponsored the bombing, working with Hezbollah to execute it.

As part of their effort to collect on the judgment, the victims sought to garnish the money Sprint owed to the Telecommunication Infrastructure Company of Iran.

Despite the U.S. economic sanctions against Iran, Sprint has a license that allows it to exchange long-distance traffic with the state-owned company. It owed the money for calls processed by the Iranian network.

Sprint said in court papers that it had little incentive to litigate the case, but objected to the victims' garnishment because it feared it would have to pay the money twice--once to the victims and then again to the Iranian company, which likely would still demand payment.

Sprint warned that such garnishments would interfere with U.S. foreign-policy judgments that encourage telecommunications traffic between the U.S. and Iran.

Lamberth, however, said that Congress in 2008 announced a "broad new policy to aid terrorist victims," allowing them to seize funds headed for any agency or instrumentality of Iran. "The court will not stand as a roadblock on the path to justice," he said.

The judge last year invited the federal government to express its views on whether terrorism victims can garnish payments by U.S. companies, but he said in Wednesday's ruling that no U.S. officials ever responded.

Lamberth ordered Sprint to turn over the money within three weeks.

Sprint said in a statement that it "is satisfied with the ruling and will comply with it." Lawyers for the plaintiffs did not immediately respond to requests for comment.