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.
TEXT SIZE - +
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 Pope Francis Hopes Dual Canonizations Will Reconcile Church

John the XXIII and John Paul II will be made saints in a ceremony at St. Peter’s Square on April 27 More

Thailand Reacts to Plots Targeting Israelis

Authorities hope arrest of two Lebanese suspects will disrupt plot to attack young Israeli tourists More

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

'Once Upon a Forest' takes viewers deep into heart of tropical rainforest 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.
Pope Francis Hopes Dual Canonizations Will Reconcile Churchi
|| 0:00:00
...
 
🔇
X
Jerome Socolovsky
April 22, 2014 4:14 PM
On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Robotic Mission Kicks Up Lunar Dust

A robotic mission to the moon was deliberately crashed onto the lunar surface late last week, but not before scientists had collected data gathered by the spacecraft which was designed to self-destruct. VOA's Rosanne Skirble reports on the preliminary findings of the craft, called LADEE - an acronym for Lunar Atmosphere and Dust Environment Explorer.
Video

Video Boko Haram Claims Responsibility for Bombing in Nigerian Capital

The Nigerian militant group known as Boko Haram has claimed responsibility for a bombing in the capital on April 14th that killed 75 people. In the video message, Abubakar Shekau, the man who says he ordered the bombing, says nothing about the mass abduction of more than 100 teenage girls, most of whom are still missing. Heather Murdock has more for VOA from Abuja.
Video

Video Ukraine Developments Hang Over Obama Trip to Asia

President Barack Obama's trip to Asia this week comes as concerns over Beijing's territorial ambitions are growing in the region. Those concerns have been compounded by Russia's recent actions in Ukraine and the possibility that Chinese strategists might be looking to Crimea as a model for its territorial disputes with its neighbors. VOA's Bill Ide has more from Beijing.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid