Austrian court unfreezes ambassador’s accounts

Austrian court unfreezes ambassador's accounts
Zalmay Khalilzad in 2008. Photo: Monika Flueckiger/World Economic Forum
An Austrian court has unfrozen the bank accounts belonging to the wife of a top former US diplomat who was allegedly under investigation for money laundering, according to a statement from the couple's lawyer.

Zalmay Khalilzad, a senior diplomat to the near east under the Bush administration, discovered in May 2013 that his wife's Austrian bank accounts — supposedly containing around €1.15 million (US$1.5 million) had been frozen by Austrian authorities.

On Monday, the Profil news magazine reported that a cache of documents obtained from the recycling bins of the Austrian court system revealed that a court had imposed the asset freeze in response to an investigation from U.S. authorities.  Reports suggested that the Austrian authorities acted a little too zealously in response to what was only intended to be a request for information.

Khalilzad's wife, Cheryl Benard, holds dual Austrian and US citizenship, having completed her studies in Austria.  A lawyer for Benard, Holger Bielesz, stated that he went to court in March to unblock the assets.  A decision was made to unfreeze the accounts on September 3rd, but was only revealed to him on Wednesday.

“The appellate decision by the regional high court is a complete vindication of the position of Ms. Benard and Ambassador Khalilzad,” the statement said. “The seizure of the accounts is lifted and the funds in the accounts are no longer frozen.”

Bielesz refused to comment on details of the Profil report, which suggested that large sums of money had been transferred into several accounts held by Benard as a result of deals with Iraqi and United Arab Emirates companies.

According to a report in the New York Times, the US Department of Justice has been conducting an investigation into possible tax evasion and money laundering, and had sent a routine request to Austria for judicial assistance, citing the importance of strict confidentiality.  The document leak which brought the freeze to light is a huge embarrassment for Austrian authorities.

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