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

Video Five Patients Given Experimental Ebola Drug Said To Be Improving

Experimental drugs have been tried on six people: three Westerners and now, three African pyhysicians More

Video In Ukraine, Fear and Distrust Remain Where Fighting has Stopped

As Ukrainian military reclaims control of eastern cities residents rebuild their lives, but many say everyone is being treated with suspicion More

Video In Rural Kenya, Pressure Builds Against Female Circumcision

Girls learn to object; FGM practitioners face penalties from jail sentences to stiff fines 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.
Five Patients Given Experimental Ebola Drug Said to Be Improvingi
X
Carol Pearson
August 19, 2014 11:43 PM
The World Health Organization has approved the use of experimental treatments for Ebola patients in West Africa. The Ebola outbreak there is unprecedented, the disease deadly. The number of people who have died from Ebola has surpassed 1,200. VOA's Carol Pearson reports on the ethical considerations of allowing experimental drugs to be used.
Video

Video Five Patients Given Experimental Ebola Drug Said to Be Improving

The World Health Organization has approved the use of experimental treatments for Ebola patients in West Africa. The Ebola outbreak there is unprecedented, the disease deadly. The number of people who have died from Ebola has surpassed 1,200. VOA's Carol Pearson reports on the ethical considerations of allowing experimental drugs to be used.
Video

Video In Ukraine, Fear and Distrust Remain Where Fighting has Stopped

As the Ukrainian military reclaims control of eastern cities from pro-Russian separatists, residents are getting a chance to rebuild their lives. VOA's Gabe Joselow reports from the town of Kramatorsk in Donetsk province, where a sense of fear is still in the air, and distrust of the government in Kyiv still runs deep.
Video

Video China Targets Overseas Assets of Corrupt Officials

As China presses forward with its anti-graft effort, authorities are targeting corrupt officials who have sent family members and assets overseas. The efforts have stirred up a debate at home on exactly how many officials take that route and how likely it is they will be caught. Rebecca Valli has this report.
Video

Video Leading The Fight Against Islamic State, Kurds Question Iraqi Future

Western countries including the United States have begun arming the Kurdish Peshmerga forces in northern Iraq to aid their battle against extremist Sunni militants from the Islamic State. But there are concerns that a heavily-armed Kurdistan Regional Government, or KRG, might seek to declare independence and cause the break-up of the Iraqi state. As Henry Ridgwell reports from London, the KRG says it will only seek greater autonomy from Baghdad.
Video

Video In Rural Kenya, Pressure Builds Against Female Circumcision

In some Kenyan communities, female genital mutilation remains a rite of passage. But activists are pushing back, with education for girls and with threats of punishment those who perform the circumcision. Mohammed Yusuf looks at the practice in the rural eastern community of Tharaka-Nithi.
Video

Video For Obama, Racial Violence is Personal Issue

The racial violence in the St. Louis suburb of Ferguson is presenting U.S. President Barack Obama with an issue to which he has a deep personal connection. To many Americans, Obama's election as America's first black president marked a turning point in race relations in the United States, and Obama has made ending the violence a policy priority. On Monday he issued a new call for calm and understanding. Luis Ramirez reports from the White House.
Video

Video Clinton-Obama Relationship Could Impact 2016 Election

President Barack Obama and former Secretary of State Hillary Clinton have a long and complicated relationship. That relationship took another turn recently when Clinton criticized the president’s foreign policy. VOA National Correspondent Jim Malone reports there is renewed attention on the Clinton-Obama relationship as Hillary Clinton considers running for
Video

Video Iran Looks to Maintain Influence in Baghdad With New Shia PM

Washington and Tehran share the goal of stopping Syrian-based militants in Iraq. But experts say it's Iran, not the United States, that will most influence how the new government in Baghdad approaches internal reforms and the war in Syria. VOA State Department Correspondent Scott Stearns has the story.

AppleAndroid