After the fall of Kabul, the U.S. government seized the assets of the country’s central bank, and last week the administration announced it would hold half of the roughly $7 billion for families who had brought suit against the Taliban, and deploy the other half at some undetermined point in time “for the benefit of the Afghan people.”
Neither Jenner & Block nor Wiggins Childs Quinn & Pantazis LLC, two of the lead law firms representing the victims seeking compensation from the Afghanistan government, responded to a request for comment on the role of Wolosky or the firms’ fee structure for the decision. A representative of Wolosky referred questions to the White House.
In September, when Wolosky joined the administration, Axios reported he would be involved in resettlement of refugees “as well as other issues related to the U.S. drawdown from Afghanistan.” Wolosky was reportedly hired as a “special government employee,” a role that allows temporary appointments for up to 130 days in a year. Wolosky officially signed onto the 9/11 victims’ case on January 13, 2021, according to his filing with the court.
The White House said that Wolosky recused himself from discussions over whether the Afghan central bank reserves should be seized and handed over to him and his clients. “Lee Wolosky’s service as an SGE at the White House Counsel’s Office ended on January 6, 2022. Lee was formally recused from all matters related to Jenner & Block during his time as an SGE,” a White House spokesperson said. “Given his past representation of the victims of 9/11, he was specifically recused and walled off from any and all discussions related to any litigation related to the victims of 9/11, including but not limited to the disposition of the Afghan reserves at the Federal Reserve Bank of New York.”
Prior to his role at Jenner & Block, Wolosky was a partner at Boies Schiller Flexner, where he also represented the families of 9/11 victims in an effort to seize funds from the Iranian central bank held in Luxembourg, arguing that Iran had aided Al Qaeda. Luxembourg ultimately ruled that the sovereign immunity of Iran took precedence over the plaintiff’s claim. Before that, Wolosky was appointed by former President Barack Obama to lead the ultimately failed effort to close the Guantánamo Bay prison.
The Afghanistan central bank was designed largely by the United States during the occupation and was modeled on the Federal Reserve. It remains in operation today, and two members of its board are Afghan American. By law, it is independent of the government and can’t be raided for pet government projects or to patch deficits. Its mandate is limited to price and currency stability. President Joe Biden’s use of the reserves to pay off a legal judgment for the clients of a recent senior administration official puts the administration’s criticism of the previous Afghan government as hopelessly corrupt in a new light.
The consequences of seizing the reserves of the central bank have been similar in Afghanistan to what would happen to the U.S. economy if the Federal Reserve was suddenly shut down. Businesses have been unable to secure loans, depositors have been unable to access money held in banks, importers have been unable to fund imports, the currency has collapsed, and prices have soared. More than a million refugees have fled starvation since the fall.
“The administration’s executive order on the frozen funds is tantamount to brazen theft and a death sentence for countless Afghans,” said Arash Azizzada, co-founder of Afghans for a Better Tomorrow. “It’s shortsight, cruel and will serve to worsen the catastrophe currently unfolding in Afghanistan.”
“Taking money which rightfully belongs to the Afghan people,” he added, “will not bring justice but ensure more misery and death in Afghanistan.”