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

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact 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.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
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 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.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs