Biden administration officials are divided over how to handle $687 million in assets seized from a French company after it admitted helping terrorist groups including the Islamic State, people familiar with the matter said.
The dispute pits the State Department against the Justice Department and raises a host of legal, ethical and policy questions about the financial implications of executive branch officials handling unusually large sums of money that did not go through the normal appropriations process.
One point of contention is whether the government can or should use some of the funds to help international victims of the Islamic State, most of whom remain refugees in Syria or elsewhere in the Middle East.
To make matters worse, a group of ISIS victims now living in the United States also want a share of the assets. They are represented by prominent human rights lawyer Amal Clooney and former Biden administration official Lee Wolosky. It was actor George Clooney who helped Biden run for re-election.
The huge sums involved come from the first indictment of a company for conspiring to provide material support to a terrorist organization. In 2022, French building materials giant Lafarge admitted to paying bribes to ISIS and the Nusra Front, another terrorist organization in Syria, in 2013 and 2014 to ensure that it could continue to operate a factory in the region.
When the Syrian civil war broke out, Lafarge had just built an expensive cement plant in the north of the country. Court documents say company officials struck the unusual deal with the militant group in part so the company could profit from Syria’s need to rebuild after the war.
As part of the plea agreement, Lafarge’s successor company, which later merged with the Swiss company Holcim, paid a $91 million criminal fine and had $687 million in asset forfeitures.
No decision has been made by administration officials, according to six people familiar with the matter, most of whom spoke on condition of anonymity discussing sensitive internal deliberations. But the White House and the National Security Council have recently begun asking tough questions about the dispute, people familiar with the matter said, exacerbating the internal conflict.
The Justice Department and State Department declined to comment.
After the company turned over the assets, the government deposited them into a Justice Department account to pay for its efforts to seize ill-gotten gains from criminals. Congress sometimes removes excess funds from this account, so much of the money may end up in the U.S. Treasury.
But some supporters believe at least some of the funds should go to international victims and survivors of Islamic State atrocities. Last month, a coalition of civil society groups and think tanks, including members of the Atlantic Council, urged Attorney General Merrick B. Garland to consider this path, raising the possibility in an open letter.
Within the Biden administration, the State Department has also argued that some money should be directed toward establishing an international fund for victims of the Islamic State. The effort is said to be led by U.S. Ambassador-at-Large for Global Criminal Justice Beth Van Schack, with approval from Secretary of State Antony Blinken.
But Justice Department officials are skeptical of the legal authority of the executive branch to unilaterally decide how to spend huge sums of money, even for good reasons. Under the Constitution, Congress exercises fiscal power by deciding how to appropriate funds and also sets limits on how funds raised from asset forfeiture can be used.
Under federal law, the attorney general has certain discretion to turn over some seized assets to foreign governments that cooperate in investigating such cases. The Justice Department planned to eventually provide about $200 million to France, but that action was delayed because of the pending French investigation into the company, several people familiar with the matter said.
Federal laws and regulations allow the Department of Justice to use forfeited assets to compensate victims who were linked to underlying crimes and suffered “monetary losses,” such as by seizing assets from embezzlers and then returning the money to the victims.
The forfeiture statute also vaguely states that the Attorney General has the power to “take any other action to protect the rights of innocent persons which is in the interests of justice and is not inconsistent with other parts of the statute”.
But the Justice Department’s authority to decide what to do with forfeited assets generally does not extend to providing compensation for other types of wrongs, such as physical assault without associated financial loss.
What’s unclear is whether the law that allows attorneys general to send money to foreign countries assisting investigations provides a workaround for those restrictions. This year, for example, the Justice Department announced it would use approximately $500,000 in assets seized for violating sanctions on shipments of military equipment to Russia to help victims of Russia’s invasion of Ukraine.
The department acknowledged in a press release that it was unable to transfer funds directly to Ukraine, but quoted Deputy Attorney General Lisa O. Monaco praising what she called a “creative” legal solution to the restriction. : Because Estonia helped solve the problem. Estonia agreed in turn to use the money to help the Ukrainian people rebuild.
The civil society coalition’s letter suggests the same strategy — in this case, on a much larger scale. However, whether this is a realistic possibility is far from certain. The Ukraine issue only involves $500,000, not $500 million. It is unclear whether French law allows the French executive to unilaterally spend so much money on overseas ventures.
A French official, who spoke on condition of anonymity to discuss a sensitive topic, said that because the French government has not yet received any of the assets seized by the United States, it has not yet decided how to distribute them.
Another unresolved question is who counts as the victim. The Justice Department apparently adopted a narrow interpretation that people killed or tortured by ISIS would not be considered victims of Lafarge crimes because their injuries were justified by the company’s payments to keep the factories open. Weakened too much.
The broader interpretation is that Lafarge’s payments helped finance Islamic State’s wrongdoings as it seized parts of Syria and Iraq, so all victims should be considered relevant to the case. Those who made that argument included Ms. Clooney and Mr. Wolowski, who also petitioned the Justice Department on behalf of their clients for some of the funds.
Together, Ms. Clooney and Mr. Woloski represent about 400 Yazidis, members of Syria’s Kurdish-speaking religious and ethnic minority who were persecuted by Islamic State in a genocidal campaign a decade ago. They were resettled in the United States, mostly in Nebraska.
Mr. Wolowski also represents approximately 23 plaintiffs, including U.S. soldiers injured in ISIS attacks while deployed in the Middle East and family members of slain service members. Both groups are also suing the company directly.
Wolowski said some of the funds the U.S. government has confiscated should be used to compensate ISIS victims in the United States.
“The government received nearly $1 billion but never notified the victims, including the families of fallen U.S. service members, as required, and never paid a penny to the victims,” Wolowski said in a statement. That’s not right.”
The two lawyers are said to have met with Molly Moeser, the acting head of the department’s money laundering and asset recovery unit, last month and wrote directly to Mr Garland.
Wolowski said their clients plan to file legal action to defend their rights if the government doesn’t give them some of the funding.
