News / Asia

Kabul Bank Scandal Tests Afghan Stability

Central Bank Governor Abdul Qadir Fitrat (File Photo)
Central Bank Governor Abdul Qadir Fitrat (File Photo)

Multimedia

Audio

Afghanistan’s largest lender, Kabul Bank, is embroiled in a corruption scandal threatening billions of dollars in international aid. The International Monetary Fund says its support to the country depends on whether officials can fix the problems that led to the bank’s collapse and government takeover last year.

The situation got even more complicated this week. Afghanistan issued an arrest warrant for Central Bank governor Abdul Qadir Fitrat, after he fled to Washington and resigned his post.

In an interview with VOA, the former central bank chief said he feared his life was in danger from those he tried to prosecute for "stealing millions" from Kabul Bank.

Abdul Qadir Fitrat speaks with VOA's John Walker in Washington:

But the Afghan government says Fitrat is the guilty party, and was involved in massive fraud at the bank.

VOA’s Kate Woodsome spoke with Martine van Bijlert, the co-director of the Kabul-based Afghanistan Analysts Network, about the scandal, the bank’s history, and its impact on the future of Afghanistan.

Listen to the Interview:

Abdul Qadir Fitrat told VOA there’s evidence showing a complex Ponzi scheme, designed to drain millions from Kabul Bank and flow to corrupt individuals. Is this a legitimate claim?

“Well, basically, it’s clear that the Kabul Bank didn’t operate like a normal bank. The shareholders borrowed or took large amounts of money from the bank, and invested that in very shaky investments. So some of that is still there and some of that has been lost. Basically, they used it as a private investment fund, which is not the normal way of running a bank.”

Fitrat says he’s in danger for accusing the bank’s shareholders, including the brothers of the Afghan president and vice president, of corruption. Does he have a reason to be scared?

“In Afghanistan, everything’s personal. And so if you go public and you smear someone’s name, because that’s the way it’s being seen, that’s taken very personally. Basically Fitrat briefed parliament on the research and the investigation they had done, and he named the biggest borrowers in the bank, and that included the brothers of the president and the brother of the vice president.

They were not very pleased that they were presented as corrupt individuals. Whether that goes as far as really putting his life in danger, I am not so sure. But he was very much under a lot of pressure.”

He was also under a lot of pressure from the international community to clean up this bank.

“It was very important for the international community. It actually became the main point in the negotiations between the IMF [International Monetary Fund] and the Afghan government. And the IMF is still not satisfied with how much the Afghan government has moved on this case. It’s withholding an agreement, which is making other donors withhold funds, so it’s really a big deal.

The U.S. is very closely involved in this sector. They’ve been the force pushing for resolving the banking crisis. They pushed Fitrat very hard to go public in parliament. They really want this out in the open and sorted out. It’s just very complicated because there are possibilities that a very large part of the political class is involved in this somehow. There’s been a report that said USAID, that’s been supporting the banking sector, should have been much more proactive. It’s become a very complex problem wherein actually everybody who’s involved has some blame.”

Kabul Bank handles about 80 percent of the government payroll, including salaries for policemen and teachers, so it’s really a part of sort of the running of the government. How stable is it, and what’s the potential fallout from this scandal?

“Well, what happened is that they split the bank into sort of a good running part, which is the part that handles the salaries at the moment, and then the part which holds all the loans which should never have been given. And that part is in receivership and they’re trying to get as much back from those loans as they can.

So, in principle, the good part of the bank should be stable at the moment. It’s going to probably be sold at some point, but for the moment it’s being run under the Central Bank and the Ministry of Finance. But in general, the banking system in Afghanistan is very shaky. It’s not been well regulated. That’s also why this could have happened. And it’s just not very well established yet, so there is a bit of nervousness that if any other banks get into trouble or if there are any other big media issues, it could really shake the Afghan economy.”

The bank had an unusual start. It was founded in 2004 by an international poker player, Sherkhan Farnood.

“It was founded by someone who didn’t have experience in the banking center, but he did have experience in the Hawala sector, in the informal money transporting sector. This is part of the lack of regulation within the banking system that people with no prior experience could set up large banks like that and play such a central role in the Afghan economy.”

Afghanistan has issued an arrest warrant for Fitrat, who has U.S. residency. How is this going to affect the already strained U.S.-Afghan relations?

“It’s going to be very interesting to watch who’s going to be the new head of the Central Bank. Because it’s such an important issue for the United States, they will find it very important that it’s someone they can work with; that it’s someone who’s seen as professional and proactive and who will want to clean up the banking sector. There has been sort of a history of appointing people to spite the U.S. or the international community, or to annoy them.

In the negotiations about the IMF agreement, the Minister of Finance has come out saying, ‘I’m sorry I’ve done everything I’ve needed to do. They’re still not happy, it’s a waste of my time.’ So that could become very contentious. On the issue of Fitrat and his extradition, I think the U.S. is going to be looking very carefully at what the allegations are and how much they may or may not be true. There could be truth in them, it could also be a form of retaliation. I’d be surprised if the U.S. extradites him.”

You May Like

Changing Under Pressure, IS ‘Potent’ as Ever

US intel officials describe Ramadi's fall as concerning, but say it isn't emblematic of larger effort to degrade IS capabilities More

Nigeria Fuel Shortage Shows Fragility of Africa’s Oil Giant

Although it is the largest oil producer in Africa, country has nearly ran out of fuel it needs to power its generators, cars and airplanes over the past week More

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
3D Printer Makes Replica of Iconic Sports Cari
|| 0:00:00
...    
🔇
X
George Putic
May 27, 2015 9:31 PM
Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs