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The Killid Group

Kabul Bank blame-game deepens

Written by Abdul Ghayoor Waziri
Saturday, 14 May 2011 10:10

Kabul Bank blame-game deepens

At least two of the bankrupt bank's former shareholders accuse Da Afghanistan Bank of incompetence and corruption - the governor of the bank concedes to failure only. 
Mahmoud Karzai, the elder brother of President Hamid Karzai who owes US$22 million to the troubled Kabul Bank, says senior officials in Da Afghanistan Bank were aware of the crisis in Kabul Bank well in advance but overlooked the situation.
"The Afghan people must know the fact that Kabul Bank collapsed due to the illegal activities of Shir Khan Farnound, lack of appropriate oversight, corruption in Da Afghanistan Bank and other international contractors, and negligence by the U.S. Agency for International Development," the entrepreneur Karzai told Killid. He also accused some circles, including the U.S. Embassy, of plotting against him in order to tarnish the reputation of his younger brother, Hamid Karzai.
Abdul Ghafaar Dawi, owner of Dawi Oil who has borrowed $37 million from the ill-fated Kabul Bank, also accuses some government officials of a smear campaign against him. "Negligence and inattention by the governor of Da Afghanistan Bank led to the collapse of Kabul Bank and he is responsible for the current scandal," Dawi told Killid. He claimed that the state-run Arian Afghan Airline owes him about $23 million for the fuel his company has provided the carrier over the past few years and called on the government to deduct the amount from his Kabul Bank loan.
However, his claim was rejected by Ariana's deputy director Momand: "We don't owe any amount to Dawi Oil but have a legal dispute over the rate of some 26,000 tons of fuel which were given to us three years ago." Momand said the dispute had been sent to the Attorney General for a verdict.

Failure accepted
Abdul Qadir Fetrat, the embattled governor of Da Afghanistan Bank, strongly rejects his complicity in the Kabul Bank scandal and repudiates allegations of corruption in his office. He, nonetheless, acknowledged the failure of his office to ensure stronger oversight over the affairs in Kabul Bank and the inability to react promptly when the bankruptcy started last year.
"I confess that we - Da Afghanistan Bank and its contracted foreign partners - failed to spot the issue immediately," Fetrat said adding that he had a "comprehensive" package on how to tackle the issue in the future.
He said news about Kabul Bank's collapse first reached him through "U.S. intelligence sources" which he did not name specifically. "We were informed about illicit investments by the bank borrowers in Gas Group, Pamir Airways, Gulbahar Shopping Center, Kabul Mix Reservoir and other business ventures and we reacted swiftly."
This may be hard to believe since names of Kabul Bank's alleged wrongdoers were reported by the U.S. media in September 2010 and Mr. Fetrat only reiterated them during a parliamentary testimony in April 2011.
Some MPs such as Shukria Barakzai, spouse of Abdul Ghafaar Dawi, says the list of alleged culprits in the Kabul Bank bankruptcy is long and includes names of many senior politicians, MPs and government officials.
While loaning money from a bank is a legitimate act it is believed that a lot of the Kabul Bank loans were without interest and tied to very loose repay regulations. The Kabul Bank senior management has also been blamed for abusing the bank's credits as a piggy bank and for personal interests.

What justice can help?
President Hamid Karzai has vowed that everyone involved in the Kabul Bank collapse would be brought to a fair and transparent court and no reservations would be considered. The President has not assured that his own brother and the brother of his first Vice President, who are accused of wrongdoing in the Kabul Bank, would not be spared from justice.
Over the past six months the government has undertaken several measures to curb the Kabul Bank crisis which included sacking the bank's top managers, repaying customers who wanted to withdraw their funds and collecting some of the loans.
According to the Ministry of Finance, Kabul Bank has loaned over $860 million to individuals and companies of which less than $50 million have been recovered and pledges on the return of $316 million in the near future have been received. It is unclear where the remaining $494 million have gone and whether the amount could be recovered ever. So far the government's main plan is to bailout the bank's financial losses with a strange recovery target of 8 years - the bailout amounts will be received until 2019.
This seems more of a cover up scheme than a genuine and just intervention by the state. The Kabul Bank scandal has already damaged the government's already tarnished reputation inside and abroad but peoples' desire for justice has not faded away completely.
Whatever justice Mr. Karzai will decide in regards to the alleged culprits of the Kabul Bank collapse will certainly prove his commitment to justice regardless of political, familial and personal reservations. President Karzai has been accused of overlooking corruption in his cabinet - none of his ministers with awaiting corruption cases have been trailed yet - and it would be interesting to see if he would clear his brother's case.


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