Doug Stanglin

USA TODAY

The Obama administration secretly airlifted $400 million in cash to Iran in January to settle a decades-old legal dispute just as the Iranians were releasing four Americans detained by Tehran, The Wall Street Journal reported Wednesday.

The Journal, citing U.S. and European officials and congressional staff briefed on the operation, said wooden pallets stacked with euros, Swiss francs and other currency were flown into Iran on an unmarked cargo plane.

The money was the first installment of a $1.7 billion settlement the administration reached with Iran to resolve a 37-year-old dispute over a failed arms deal signed just before the fall of Shah Mohammad Reza Pahlavi in 1979. The legal wrangling was being arbitrated before the international tribunal in The Hague.

White House Press Secretary Josh Earnest said Wednesday that the payment was not ransom for the release of the prisoners, and that the claims were an example of the lengths to which opponents of the Iran deal will go to discredit it.

Republican presidential nominee Donald Trump took to Twitter Wednesday to criticize his Democratic rival, Hillary Clinton, over the report.

"Our incompetent Secretary of State, Hillary Clinton, was the one who started talks to give 400 million dollars, in cash, to Iran. Scandal!" Trump tweeted.

Sen. Tom Cotton, a Republican from Arkansas and a strong opponent of the Iran nuclear deal, accused Obama of paying “a $1.7 billion ransom to the ayatollahs for U.S. hostages,” the Journal reported. Iranian press reports quoted senior Iranian defense officials describing the cash as a ransom payment.

The four prisoners included two Iranian-Americans arrested by Iranian security services during Obama's first term, the detention of Jason Rezaian, The Washington Post's Tehran bureau chief, in 2014 on espionage charges and the arrest in 2015 of a fourth Iranian-American.

The newspaper said U.S. and European officials would not disclose exactly when the cash-laden plane landed in Tehran, but a report by the Iranian Tasnim news agency, with close ties to the Revolutionary Guard, said it arrived at Mehrabad airport on the same day the Americans left the country.

The initial idea was to swap the Americans for Iranians held in U.S. jails, but the plans shifted in December as discussions dovetailed with the arbitration in The Hague over the old arms deal, the Journal reported. In the end, the U.S. did release or pardoned seven Iranians, although none chose to return to Iran.

In January, President Obama referred to the resolution of the arms dispute — without disclosing the $400 million cash payment — by saying that “(w)ith the nuclear deal done, prisoners released, the time was right to resolve this dispute as well."

In Washington, White House spokesman Josh Earnest on Wednesday denied the payment amounted to ransom for hostages, saying that would violate U.S.policy.

He said the timing of the various deals and prisoner release overlapped because the multiple agreements with Iran "came to a head at the same time" as parallel negotiations were wrapped up.

Earnest defended the deal by saying, "first of all, it's Iranian money" and noting that the money had been paid into a U.S. account in 1979 as part of a deal to buy military equipment that never took place because of the overthrow of the shah.

As for why cash was used in the transaction, Earnest said "the fact of the matter is that the U.S. doesn’t have a banking relationship with Iran" because of continued concerns about Tehran's "nefarious" behavior in such areas as terrorism and human rights.

He also said the bulk of the money "has been going to shoring up their economic weakness, and that's exactly what we predicted,” while acknowledging that “it’s possible that some of the money” has been used by Iran to support Hezbollah and the regime of President Bashar Assad in Syria.