Afghan and foreign guilt in Kabul bank scandal

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“BANK HOLIDAY” AT KABUL BANK IN AFGHANISTAN 9-5-2010

Hundreds of Afghans have been trying to withdraw money from the country’s largest bank, amid concerns that it could collapse.

The panic was sparked by reports that Kabul Bank has lent millions of dollars to members of the political elite, who used the money to make risky investments.

Al Jazeera’s Hoda Abdel Hamid reports from Kabul.

From MSN in Canada:

By Heidi Vogt, Rahim Faiez

Updated: April 11, 2011 2:49 AM

Afghan president: West shares in Kabul Bank fiasco

KABUL – Afghanistan’s president said Monday that foreign advisers share a large part of the blame for the country’s banking crisis and will face criminal investigation along with the bank managers and shareholders. …

The nation’s largest private lender nearly collapsed last year under allegations of mismanagement, cronyism and questionable lending that implicated many members of the Afghan elite with ties to the government.

The fiasco has led many international donors to question the stability of Afghanistan’s financial system. Some Western allies are holding back aid until it is clear the banking system is solid.

Afghanistan’s central bank has taken over the institution but has not yet said if it plans to sell off Kabul Bank, which plays a key role in the Afghan economy by handling payrolls for government workers and security forces.

A U.S. government report issued this month said that in the case of Kabul Bank, “fraudulent loans were used to divert $850 million to insiders. This amount reportedly represented 94 per cent of the bank’s outstanding loans.”

Karzai told reporters that all bank shareholders have been removed and those who do not return lent funds will face criminal investigation.

However, he also blamed the crisis on international advisers who issued reports saying the bank was functioning normally. He said the government is investigating these outside advisers and auditors and will follow up any indications of misconduct with a criminal trial.

“Hundreds of millions of dollars have been paid to these individuals and organizations to help the banking system of the country and they failed in their task,” Karzai said. He named PriceWaterhouseCoopers — whose Pakistani subsidiary conducted audits of the bank, along with consulting firms Deloitte LLP and BearingPoint Inc. …

USAID, the U.S. international aid agency, terminated its $92 million contract with Deloitte in March after the USAID inspector general issued a report saying that Deloitte employees acting as advisers to the central bank had failed to report signs of irregularities at Kabul Bank. …

In May 2009, BearingPoint Inc. sold its public services business to Deloitte. The same advisers who worked for BearingPoint continued to advise the central bank’s under USAID’s contract with Deloitte.

US military admits running 20 secret jails in Afghanistan: here.

Afghanistan Feature: How Did A US Drone Manage to Kill 23 Innocent Men & Boys? Here.

Kabul’s Roads, Paved With Good Intentions: here.

Are The Kill Teams The New Abu Ghraib? Here.

$1.6 Trillion Spent on Military; Global Day of Action: here.

USA: 10,000 protest the war in NYC; 1,500 in SF. Onward and upward with the antiwar movement: here.

Related articles

• Afghanistan banking scandal continues (dearkitty1.wordpress.com)
• Afghan elite ransacked $900m from Kabul Bank, inquiry finds (guardian.co.uk)
• Audit Describes Corrupt Kabul Bank as ‘Ponzi Scheme’ (news.antiwar.com)
• Report: Afghan bank fraud siphoned out savers’ money (edition.cnn.com)
• Kabul Bank sent millions of dollars abroad: report (thehindu.com)
• Report Says Kabul Bank Fraud Sent Almost $900 Million Abroad (rferl.org)
• Kabul Bank Audit Details Extent of Fraud (nytimes.com)
• Kabul Bank fraud ‘profited elite’ (bbc.co.uk)

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