Austrian court unfreezes accounts of ex-envoy Zalmay Khalilzad’s wife

An Austrian court lifted a seizure of bank accounts belonging to the wife of Zalmay Khalilzad, a former U.S. ambassador to Iraq, Afghanistan and the United Nations, according to a lawyer representing the couple.

The accounts were frozen after the U.S. Justice Department requested bank records from Austrian authorities last year. Khalilzad and his wife, author Cheryl Benard, challenged the action in court in Austria.

“The seizure of the accounts is lifted, and the funds in the accounts are no longer frozen,” Robert Buehler, the couple’s Washington-based lawyer, said in a statement.

The regional high court in Vienna issued the decision Sept. 3 but did not notify lawyers for the couple until a week later, Buehler said.

Buehler called the decision “a complete vindication” of the couple’s claim that Viennese prosecutors did not have cause to freeze the accounts and did so only when the Justice Department requested records.

In an email, Khalilzad said that he is “gratified that the Austrian court ruled completely in our favor and lifted the freeze immediately.”

“Of course, this has been a trying time for us,” Khalilzad wrote. “However, we are happy that the matter has been resolved favorably.”

Khalilzad said U.S. authorities were interested in money he transferred last year from one of his U.S. bank accounts to an account in Vienna registered in his wife’s name. He said they used the money to buy an apartment in Vienna for his family.

Khalilzad said there was no wrongdoing and he was not contacted by the Justice Department about the transfer.

The case came to light after Profil, an Austrian newsmagazine, published a story saying U.S. prosecutors were investigating Khalilzad and his wife for possible tax evasion and money laundering related to bank transfers totaling nearly $1.5 million.

Profil said a blogger had found Austrian legal documents on the case in a garbage dump this year.

The Austrian Embassy in Washington did not respond to a request for comment. The Justice Department declined to comment on the case or say why the bank records were of interest.

“As a matter of policy, the department generally neither confirms nor denies whether a matter is under investigation,” Peter Carr, a spokesman for the Justice Department, said in an email.

Born in Afghanistan in 1951, Khalilzad came to the U.S. as a high school exchange student in Ceres, in California’s San Joaquin Valley. He studied at the American University in Beirut, where he met his wife, who has U.S. and Austrian citizenship. He later received his doctorate from the University of Chicago.

President George W. Bush sent Khalilzad to Afghanistan as a special presidential envoy from 2001 to 2003, during which he oversaw the creation of the new Afghan government. He stayed in Kabul as the U.S. ambassador to Afghanistan from 2003 to 2005.

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

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