News / Asia

Former Top Officials in Kabul Bank Scandal Under Arrest

An Afghan girl walks past by Kabul Bank's main office in Kabul, Afghanistan, March 27, 2011.
An Afghan girl walks past by Kabul Bank's main office in Kabul, Afghanistan, March 27, 2011.

Afghanistan is going after former officials linked to a massive banking scandal that has jeopardized tens of millions of dollars in foreign aid.

Deputy Attorney General Rahmatullah Nazari said Thursday authorities have arrested the former chairman and former chief executive at Kabul Bank, the country's biggest private lender.

He refused to share the specific charges but said ex-chairman Sher Khan Farnood and former chief executive Khalilullah Fruzi had embezzled hundreds of millions of dollars.  

Nazari said both men were arrested Wednesday and could appear in court for trial in about a month.  

The arrests are the first in a scandal that caused Kabul Bank to lose more than $900 million, pushing it to the edge of a collapse before the country's central bank stepped in to rescue it.  They come just days after the former governor of Afghanistan's central bank fled to the United States, saying he feared for his life.

Former Central Bank Governor Abdul Qadir Fitrat told VOA his life was in danger from those he tried to prosecute for "stealing millions" from Kabul Bank.  Afghan prosecutors contend Fitrat played a role in the Kabul Bank scandal and want him brought back to Afghanistan to faces charges.

The financial fiasco has caused some international donors to question the stability of Afghanistan's financial system, just as the country is trying to take on more responsibility for security and development.

The International Monetary Fund (IMF) has decided not to renew its support program until the Afghan government takes concrete steps to resolve the Kabul Bank crisis.  Tens of millions of dollars in aid from foreign donor nations has been subsequently withheld from Afghanistan.

Deputy Attorney General Nazari said Tuesday an arrest warrant for Fitrat has been sent to Interpol and the U.S. embassy in Kabul.

The scandal has touched some of the country's most powerful families.  Afghan President Hamid Karzai's brother and Vice President Mohammad Qasim Fahim's brother are both shareholders in Kabul Bank.

Some information for this report was provided by AP, AFP and Reuters.

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