US President Barack Obama has said that America did not pay $400m (£304m) to Iran in January as ransom, nor was the money a "nefarious" or "secret" deal with Tehran. His comments come shortly after Republican presidential candidate Donald Trump attacked the White House and alleged that there was a video wherein pallets of cash were seen being delivered to Tehran.

Some US officials stirred a controversy after claiming that US had secretly sent palettes of cash amounting to $400m on the same day four Americans, including Washington Post journalist Jason Rezaian were released from a Tehran prison. The payment also coincided with the implementation of the long-standing nuclear agreement with the Western world.

Although Obama confirmed that the payment was made to Iran in cash – it was part of a settlement reached with the country over a dispute regarding a failed military equipment deal – he defended the transaction saying it was no secret. "We announced these payments in January. Many months ago. They were not a secret. We were completely open with everybody about it," the president said on Thursday (4 August) during a news conference at Pentagon.

He also said: "We do not pay ransom. We didn't here, and we won't in the future. Those families know we have a policy that we don't pay ransom.

"And the notion that we would somehow start now, in this high-profile way, and announce it to the world, even as we're looking in the faces of other hostage families whose loved ones are being held hostage, and saying to them we don't pay ransom, defies logic."

Meanwhile, at an election rally in Portland, Maine earlier on Thursday, Trump reportedly said that he saw a video that showed a "nice plane" carrying palettes of cash to Iran. "A tape was made -- you saw that?" Trump asked the crowd at the rally, CNN reported.

"With the airplane coming in, nice plane ... and the money coming off, I guess," he said and added that the video was "given to us" by the Iranians to "embarrass our country and embarrass our president".

Barack Obama
US President says although $400m was paid to Tehran, it was not handed over to free four American prisoners Getty

Although it is unclear which video the presidential hopeful was talking about, as many believe there was no such video, he went ahead to attack Obama and said: "We have a president who's incompetent."

Subsequently, Secretary of State John Kerry said that the money was part of a $1.7bn settlement reached with Iran over an old dispute regarding a failed military equipment deal that happened before the Islamic revolution in 1979. He added that the equipment could not be delivered because in 1979, the Iranian government was toppled and revolutionaries took Americans hostage at the US embassy in Tehran. Kerry said the negotiations on the failed deal have been ongoing since 1981 and that the negotiations were unrelated to the nuclear deal and the discussions about American prisoners held in Iran.

"The United States does not pay ransom and does not negotiate ransoms," Kerry echoed Obama's comment while talking to reporters in Buenos Aires. "It is not our policy. This story is not a new story. This was announced by the president of the United States himself at the same time.

"We believe this [$1.7bn] agreement ... actually saved the American taxpayers potentially billions of dollars. There was no benefit to the United States of America to drag this out," he added.