DC Court Says Former Afghan Officials Not Likely to Succeed in Challenging Sanctions Listings

The U.S. District Court for the District of Columbia on April 19 partially dismissed a lawsuit from sanctioned individuals Mir Rahman Rahmani and Hafi Ajmal Rahmani and over two dozen of their companies challenging their sanctions listing for their alleged role in a corruption scheme that swiped millions of dollars from U.S. contracts in Afghanistan (Mir Rahman Rahmani v. Janet Yellen, D.D.C. # 24-00285).

Judge Rudolph Contreras said the Office of Foreign Assets Control and the State Department acted within their statutory authority to list the parties, dismissing the two counts claiming otherwise. The judge also said the Rahmanis and the businesses lacked standing for two other claims since the court can't grant the desired remedy, and that the plaintiffs are unlikely to succeed in their claim that OFAC acted arbitrarily in listing them.

The Rahmanis and 44 of their companies were sanctioned under the Global Magnitsky Human Rights Accountability Act in December 2023 for leading a "complex procurement corruption scheme" meant to steal millions from U.S. government-funded contracts for Afghan security forces (see 2312110026).

OFAC said the Rahmanis executed a four-part plan centered on fuel procurement for the Afghan forces, in which they (1) artificially inflated fuel prices on contracts they won; (2) "engaged in import tax fraud by bribing Afghan customs officials for letters that allowed" them to over-import fuel without tax; (3) under-delivered on their contracts, bribing Afghan army personnel to hide this failure; (4) and bribed voters and election officials to get the Rahmanis elected to the Afghan parliament and Mir Rahman Rahmani as Speaker of the parliament.

The Rahmanis, who left parliament when the Taliban took over Afghanistan, said OFAC didn't have the statutory authority under the Global Magnitsky Act to sanction the pair since the statute's plain language only allows for the listing of former government officials. The court said that it's "unnecessary" to see if the Global Magnitsky Act allows sanctioning former government officials if the International Emergency Economic Powers Act "provides sufficient authority for the sanctions against the Rahmanis."

Contreras said that the Global Magnitsky Act "does not limit the imposition of sanctions for corruption under IEEPA to individuals who are currently government officials." He said that even if Global Magnitsky Act sanctions are limited to current government officials, "the Court sees no reason to conclude that sanctions under IEEPA," which these are, "are limited in that manner." The judge added that attempts from the Rahmanis to limit IEEPA's reach as not including corruption is "not compelling when" the president has declared "dozens of IEEPA national emergencies and authorized sanctions to address all manner of threats."

Two of the Rahmanis' claims challenging the State Department's visa and entrance restrictions on the pair similarly said that such action couldn't be taken since they are former government officials. The duo claimed they suffered reputational harm as a result of this action. The court said the Rahmanis lacked standing to continue advancing these claims given that "the remedy the Rahmanis seek would not redress their alleged injury."

A court decision echoing the Rahmanis' position "would do nothing to contradict the factual basis of State's public assessment that the Rahmanis have been involved with significant corruption." That remedy lies with the challenge to the sanctions' evidentiary basis. An "issue of statutory construction" would do nothing to address the reputational injuries suffered by State's actions, the opinion said. "The Rahmanis cannot put the cat back in the bag: they can only improve their reputation by establishing that State was factually incorrect, or at least without adequate support for the designations.”

Contreras lastly said that the Rahmanis are unlikely to succeed in showing that OFAC acted arbitrarily and capriciously in listing them, despite the lack of evidence on the record. While the former officials weren't given a summary of the confidential record, as is standard in comparable litigation due to the suit's accelerated timeline, OFAC has presented enough evidence supporting the designations, the court said.

The agency's news release alone, which detailed the four-part plan, was enough for the court to say that the sanctions designation was supported. The only "independent" evidence offered by the Rahmanis is a German court decision that said a newspaper couldn't use OFAC's news release to make corruption claims about the companies. "But this foreign court decision on the limits of permissible journalism practices has no bearing on whether OFAC’s determinations were supported by the information available to the agency," the opinion said.

The judge added that the present case is on more solid footing than two previous sanctions designation challenges before the D.C. court -- Xiaomi Corp. v. Department of Defense and Luokong Technology Corp. v. Department of Defense. In both, the court granted PIs blocking sanctions against two companies since there wasn't enough evidence to support the listings. But here, OFAC has provided "significantly more" details.