Biden administration officials are divided over what to do with $687 million in assets a French company forfeited after pleading guilty to aiding terrorist groups like the Islamic State, according to people familiar with internal deliberations.

The dispute, which has pit the State Department against the Justice Department, raises a tangle of legal, moral and policy problems about the financial implications of executive branch officials handling an unusually large amount of money that has not gone through the usual process of being appropriated for a specific purpose by Congress.

Among the points of contention: whether the administration can or should funnel some of the money toward helping international victims of ISIS, most of whom are still in Syria or are refugees elsewhere in the Middle East.

Adding to the complications, a group of ISIS victims now living in the United States also want a share of the assets. They are represented by Amal Clooney, a prominent human rights lawyer who is married to George Clooney, the actor who is helping raise money for Mr. Biden’s re-election campaign, and by Lee Wolosky, a former Biden administration official.

The vast sum at stake comes from the first prosecution of a corporation for conspiring to provide material support to a terrorist organization. In 2022, the French building materials giant Lafarge pleaded guilty to paying off ISIS and another terrorist group in Syria, the Nusra Front, in 2013 and 2014, to ensure that it could keep operating a plant in the region.

When the civil war in Syria broke out, Lafarge had just built an expensive cement factory in the northern part of that country. Officials at the company struck the unusual agreement with militant groups, court papers said, in part so it would be in a position to profit off the need to rebuild in Syria when the war ended.

As part of its plea deal, the successor company to Lafarge — it has since merged with a Swiss company, Holcim — paid a criminal fine of $91 million and forfeited $687 million in assets.

Administration officials have not made any decisions, according to half a dozen people familiar with the matter, most of whom spoke on the condition of anonymity to discuss sensitive internal deliberations. But the White House and National Security Council have recently started asking pointed questions about the dispute, elevating the internal conflict, the people said.

The Justice Department and State Department declined to comment.

After the company disgorged the assets, the government put them into a Justice Department account that covers its expenses in trying to seize ill-gotten gains from criminals. Congress sometimes removes excess funds from that account, so much of the money could ultimately end up at the U.S. Treasury.

But some advocates have argued that at least some of the money should go to international victims and survivors of atrocities at the hands of the Islamic State. 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 that path, raising the possibility in an open letter.

Inside the Biden administration, the State Department has also argued that some money should go toward establishing an international fund for victims of the Islamic State. The effort is said to have been spearheaded by Beth Van Schaack, the U.S. ambassador-at-large for global criminal justice, with approval from the secretary of state, Antony J. Blinken.

But officials at the Justice Department have expressed doubts about the executive branch’s legal authority to unilaterally determine how to spend an immense amount of money, even on a good cause. Constitutionally, Congress wields the power of the purse by deciding how to appropriate funds, and it has also set limits on how funds raised from asset forfeitures may be used.

Under federal law, the attorney general has certain discretionary power to send some forfeited assets to foreign governments that cooperated in investigating such a case. The Justice Department is planning to eventually send about $200 million to France, several of the people said, but has delayed doing so because France has its own investigation pending against the company.

Federal law and regulations allow the Justice Department to use forfeited assets to compensate victims with a nexus to the underlying offenses and who suffered a “pecuniary loss” — like seizing assets from embezzlers, and then returning money to their victims.

The forfeiture statute also says, vaguely, that the attorney general has authority “to take any other action to protect the rights of innocent persons which is in the interest of justice and which is not inconsistent” with the other parts of the statute.

But the authority of the Justice Department to decide what to do with forfeited assets does not generally extend to providing restitution for other kinds of wrongs, like having been physically assaulted if there is no associated financial loss.

Left unclear is whether the law that allows the attorney general to send some money to a foreign state that assisted with an investigation presents a workaround to those limits. This year, for example, the Justice Department announced that it would direct about $500,000 in forfeited assets, which came from a case involving a violation of sanctions against sending military equipment to Russia, to help the victims of Russia’s invasion of Ukraine.

The department acknowledged in a news release that it could not directly transfer the funds to Ukraine, but quoted the deputy attorney general, Lisa O. Monaco, lauding what she called a “creative” legal solution to that limit: Because Estonia had helped with the investigation, the department could lawfully send the seized assets to its government. Estonia agreed that it would in turn use the money to help the Ukrainian people rebuild.

The letter from the coalition of civil society groups suggested deploying the same maneuver — in this case, on a much larger scale. It is far from certain whether that is a realistic possibility, however. The Ukraine matter involved only half a million dollars, not half a billion. And it is unclear whether French law would allow the French executive branch to unilaterally spend so much money on an overseas cause, either.

A French official, speaking on the condition of anonymity to discuss a sensitive topic, said that because the French government has not yet received any of the seized assets from the United States, there has been no decision about how to allocate it.

Another open question is who counts as a victim. A narrow interpretation, evidently adopted by the Justice Department, is that the people ISIS killed or abused would not be considered victims of Lafarge’s crime because their injuries were too attenuated from the payments the company made to keep its plant operating.

A broader interpretation is that Lafarge’s payments helped ISIS finance its misdeeds as it took over parts of Syria and Iraq, so all of its victims should be seen as having a connection to the case. Among those making that argument are Ms. Clooney and Mr. Wolosky, who have also petitioned the Justice Department for some of the money on behalf of their clients.

Ms. Clooney and Mr. Wolosky together represent about 400 Yazidis, members of the Kurdish-speaking religious and ethnic minority in Syria who were persecuted by the Islamic State in a genocidal campaign a decade ago. They were resettled in the United States, mostly in Nebraska.

Mr. Wolosky also separately represents a group of about 23 plaintiffs that includes American soldiers who were injured in ISIS attacks while deployed in the Middle East and family members of troops who were killed. The two groups are also directly suing the company.

Mr. Wolosky said some of the money already forfeited to the U.S. government should go to compensating ISIS victims in the United States.

“The government received close to a billion dollars without ever notifying the victims — including the families of fallen U.S. servicemen — as it was required to do, and has never paid the victims a penny,” Mr. Wolosky said in a statement. “That’s not right.”

The two lawyers are said to have met last month with Molly Moeser, the acting chief of the department’s money laundering and asset recovery section, and to have written directly to Mr. Garland.

Mr. Wolosky said that their clients intended to bring a legal action to assert their rights if the government does not give them a share of the money.

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