News / Asia

Lack of Oversight Blamed for Kabul Bank Crisis

A security guard stands outside the main office of Kabul Bank, September 1, 2010.
A security guard stands outside the main office of Kabul Bank, September 1, 2010.
VOA News
An independent panel probing Afghanistan's failed Kabul Bank says a few individuals acted with "reckless disregard" in defrauding the bank, while a lack of oversight and enforcement contributed to the loss of hundreds of millions of dollars.

A new report issued Wednesday says $861 million in illicit loans were made to 19 individuals and businesses, including $270 million to the bank's former chairman.  

The committee says senior bank officials told employees to make loans based on fabricated records, and used two sets of accounting books to carry out a "sophisticated operation of fraudulent lending and embezzlement."

The 87-page report says the scheme utilized new loans to give the impression that money was being repaid, but that true repayments of principal or interest were "extremely rare."

The committee was created in 2010 to monitor and evaluate anti-corruption efforts, and includes three Afghans and three international appointees.

It says Afghan citizens will bear the cost of the bank's failure with money that could have been used for education, healthcare, infrastructure or security.

Major bank failure

Kabul Bank was once Afghanistan's largest private lender and nearly collapsed in 2010.  Afghanistan's central bank stepped in and took control of the bank, which was later split into two.

Wednesday's report calls Kabul Bank one of the biggest banking failures in the world, and says it will undermine not only public trust in financial and government institutions, but also efforts to rebuild Afghanistan.

The report says bank management gave out $66 million in bank funds used to benefit businesses they controlled.  The money bought properties, hundreds of cars and paid salaries to Pamir Airways employees described as "pilots for cash delivery."

Almost $6 million went to travel expenses that were explained with few details and often no supporting documents.

As of August, $128 million in cash and another $190 million in assets had been recovered.

21 indicted

Afghanistan's attorney general has indicted 21 people and named several others as persons of interest in connection with criminal activity at Kabul Bank.  The report says five people are in custody, but that many of those indicted and considered persons of interest have fled the country.

The Afghan government has called for the United States to extradite the former head of the Afghan central bank, Abdul Qadir Fitrat, who fled to the U.S. last year.  Fitrat said he feared for his life after trying to prosecute those who stole from Kabul Bank.  Afghan officials say Fitrat played a role in the scandal and want him brought back to Afghanistan to face charges.

The new report criticizes outside political influence on the attorney general's independent ability to determine what charges should be brought.  It cites a committee set up by President Hamid Karzai in 2011 to report on the crisis, which immediately announced the Afghan leader would himself decide whom to prosecute.

Karzai also issued a decree absolving those who paid back the principal of outstanding loans from having to pay interest or face criminal charges.

The panel said there is "great concern" about delays and the manner of the attorney general's own investigation.  The report says "reasonable grounds" for an investigation existed as early as September 2010, but that a formal investigation did not begin until April 2011.

Political ramifications

The panel says some of the bank's money went toward financing the campaigns of at least one presidential candidate and between 30 and 40 parliamentarians.  It recommended Afghanistan adopt political financing regulations that include open reports of who makes political contributions.

The panel also says the attorney general's office should document its investigations in writing, including "clear rationale" for why it decided to issue or not issue any charges.

The report also calls on a special tribunal set up by Karzai to hear the case to focus its efforts on processing the charges of those already indicted, instead of other activities including those related to recovering funds.

The panel, officially known as the Independent Joint Anti-Corruption Monitoring and Evaluation Committee, asked the Afghan government, the country's central bank and other affected institutions to respond in 60 days with their intentions to implement the committee's recommendations.

You May Like

Pundits Split Over Long-Term US Role in Afghanistan

Security pact remains condition for American presence beyond 2014; deadline criticized More

US Eyes Islamic State Threat

Officials warn that IS could pose a threat to US homeland More

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Moscow says Russian troops crossed into Ukrainian territory by mistake 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.
Scientists Unlock Mystery of Bird Flocksi
X
George Putic
August 25, 2014 4:00 PM
How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Scientists Unlock Mystery of Bird Flocks

How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Ukrainian officials say they have captured Russian soldiers on Ukrainian territory -- the latest accusation of Moscow's involvement in the conflict in eastern Ukraine. VOA's Gabe Joselow reports from the Ukrainian side of the battle, where soldiers are convinced of Russia's role.
Video

Video Rubber May Soon Come From Dandelions

Synthetic rubber has been around for more than a century, but quality tires for cars, trucks and aircraft still need up to 40 percent or more natural rubber content. As the source of natural rubber, the rubber tree, is prone to disease and can be affected by bad weather. So scientists are looking for replacements. And as VOA’s George Putic reports, they may have found one in a ubiquitous weed.
Video

Video Jewish Life in Argentina Reflected in Yiddish Tango

Jewish people from across Europe and Russia have been immigrating to Argentina for hundreds of years. They brought with them dance music that was eventually mixed with Argentine tango. The result is Yiddish tango -- a fusion of melodies and cultural experiences that is still evolving today. Elizabeth Lee reports on how one band is bringing Yiddish tango to Los Angeles.
Video

Video Peace Returns to Ferguson as Community Tries to Heal

Thousands of people nationwide are expected to attend funeral services Monday in the U.S. Midwestern city of St. Louis, Missouri, for Michael Brown, the unarmed African-American teenager who was fatally shot by a white police officer August 9 in the St. Louis suburb of Ferguson. The shooting touched off days of violent demonstrations there, resulting in more than 100 arrests. VOA's Chris Simkins reports from Ferguson where the community is trying to move on after weeks of racial tension.
Video

Video Meeting in Minsk May Hinge on Putin Story

The presidents of Russia and Ukraine are expected to meet face-to-face Tuesday in Minsk, along with European leaders, for talks on the situation in Ukraine. Political analysts say the much welcomed dialogue could help bring an end to months of deadly clashes between pro-Russia separatists and Ukrainian forces in the country's southeast. But much depends on the actions of one man, Russian President Vladimir Putin. VOA's Daniel Schearf reports from Moscow.
Video

Video Artists Shun Russia's Profanity Law

Russia in July enacted a law threatening fines for publicly displayed profanity in media, films, literature, music and theater. The restriction, the toughest since the Soviet era, aims to protect the Russian language and culture and has been welcomed by those who say cursing is getting out of control. But many artists reject the move as a patronizing and ineffective act of censorship in line with a string of conservative morality laws. VOA's Daniel Schearf reports from Moscow.
Video

Video British Fighters on Frontline of ISIS Information War

Security services are racing to identify the Islamic State militant who beheaded U.S. journalist James Foley in Syria. The murderer spoke English on camera with a British accent. It’s estimated that several hundred British citizens are fighting for the Islamic State, also called ISIL or ISIS, alongside thousands of other foreign jihadists. Henry Ridgwell reports for VOA from the center of the investigation in London.

AppleAndroid