Political Interference in Kabul Bank Prosecution
An inquiry into the theft of some $900 million which led to the near-collapse of Afghanistan's largest bank has found there was high-level political interference over who should face prosecution.
The scandal touched a brother of President Hamid Karzai and a brother of his vice president Marshal Mohammad Qasim Fahim, who were shareholders in the bank, but they have not been charged with any wrongdoing.
A trial of nearly two dozen suspects, which is being handled by a special tribunal set up by Karzai earlier this year, is seen as a crucial test of the government's commitment to crack down on rampant corruption.
The fraud scandal first broke in 2010 and prompted the International Monetary Fund temporarily to suspend hundreds of millions of dollars of international aid to Afghanistan.
The government's handling of the case is being watched closely by Western countries which have pledged billions of dollars in aid after NATO troops withdraw in 2014 -- on condition that corruption is brought under control.
"Information received during the inquiry indicates that the final decision about who to indict was made at the political level in the spring of 2011 by a high-ranking committee," the report by the foreign-funded inquiry said Wednesday.
"Prosecutors from the attorney general's office were called in to amend the indictment to conform to the decisions taken."
Three Afghans and three foreigners sat on the Independent Joint Anti-corruption Monitoring and Evaluation Committee which conducted the investigation.
"The reason for the Kabul Bank losses and the ensuing crisis include fraud, weak regulation and oversight, impunity and political interference," the inquiry found.
The New York Times reported a separate audit by the Kroll investigative firm which said that from its very inception Kabul Bank was little more than a "Ponzi scheme" for funneling cash to a small coterie of influential Afghans close to the president.
Wednesday's inquiry also hinted that Karzai himself benefited from the bank, saying the institution had "reportedly provided millions of dollars to the campaign of at least one presidential candidate" against central bank advice.
Although the inquiry did not name Karzai, it has been reported Kabul Bank was a major donor to Karzai's 2009 re-election campaign.
Afghanistan has put on trial nearly two dozen people accused of involvement in the fraud that pushed the nation's once-biggest private lender to the brink of collapse.
The 22 suspects include the bank's founder and chairman Sher Khan Farnoud and CEO Khalilullah Ferozi, who are accused of stealing hundreds of millions of dollars through off-book loans.
"The indictment did not include officials from accounting firms that created false documents for Kabul Bank, airline employees that smuggled money out of Afghanistan, or shareholders who received funds from loans at zero interest, apparently without the intention of repayment," the report said.
Renamed New Kabul Bank, the institution was bailed out by the government after its former bosses failed to return $900 million they had allegedly taken in secret loans.
The committee of inquiry recommends that "the impunity that exists in Afghanistan to come to an end by fully prosecuting all perpetrators and participants of the Kabul Bank fraud".
Source: Agence France Presse
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