Austria freezes bank accounts of wife of ex-diplomat Zalmay Khalilzad

Austrian authorities froze bank accounts in Vienna belonging to the wife of Zalmay Khalilzad, a former U.S. ambassador to Iraq, Afghanistan and the United Nations under President George W. Bush, after the Justice Department requested bank records in May 2013, according to a lawyer for the couple.

Khalilzad and his wife, author Cheryl Benard, are “vigorously contesting the seizure of the accounts,” Robert Buehler, a Washington-based lawyer, said in a statement Monday.

The Justice Department’s request to the Austrian authorities did not contain evidence of money laundering or other offenses, Buehler said, and no charges have been brought against the couple.

Buehler said the Justice Department did not ask Austrian authorities to freeze the accounts, and he doesn’t know why the Austrian prosecutor took that step.

“For reasons that remain unclear, an Austrian prosecutor ignored the plain language of the [Justice Department] request and froze Ms. Benard’s accounts solely on the basis of the … requests for information,” Buehler said.

In an email response to questions from the Los Angeles Times, Khalilzad said the Justice Department asked Austrian authorities for records about a transfer of funds from one of his U.S. bank accounts to an account in Vienna belonging to his wife. The funds were used to purchase an apartment for his family in Vienna, he said.

“I want you to know there has been no wrongdoing whatsoever, as the investigation will demonstrate,” Khalilzad wrote Monday. He said he has not been contacted by the Justice Department about the transfer.

Citing a story in the Austrian newsmagazine Profil, the Associated Press reported Monday that Khalilzad and his wife are being investigated by U.S. authorities on suspicion of transferring $1.5 million to accounts in Vienna from business activities in the United Arab Emirates and Iraq.

Department of Justice spokesman Peter Carr declined to comment. The Austrian Embassy in Washington did not respond to a request for comment.

Khalilzad served as special presidential envoy to Afghanistan from 2001 to 2003 after the collapse of the Taliban government, and oversaw the convening of traditional grand councils, or loya jirgas, that approved creation of a new Afghan government. He stayed in Kabul as the U.S. ambassador to Afghanistan from 2003 to 2005.

Khalilzad next served as U.S. ambassador to Iraq from 2005 to 2007 and U.S. permanent representative to the U.N. from 2007 to 2009.

Born in Afghanistan, Khalilzad was a high school exchange student in Ceres, in California’s San Joaquin Valley. He received his doctorate from the University of Chicago.

He served as a senior State Department official in the Ronald Reagan administration, and as a senior Pentagon official under President George H.W. Bush. He heads Khalilzad Associates, an international business consulting firm based in Washington.