Sunday, May 29 – Regulators in Afghanistan are blamed by an Afghan commission on financial mismanagement at the nation’s largest private bank. The commission on Sunday said that monitors should have kept Kabul Bank from making hundreds of millions in questionable loans that forced the bank into receivership.
The bank has been in turmoil since this past fall when it was discovered that shareholders — some of them relatives or backers of President Hamid Karzai — had lent themselves millions to invest in luxurious mansions in Dubai, United Arab Emirates, and risky prestige projects like an airline and shopping malls in Kabul. Many of the loans were “undocumented,” so there was no system to ensure they were paid back.
According to Azizullah Lodin, the head of Afghanistan’s anticorruption office and one of four commissioners investigating the Kabul Bank misconduct, About $467 million of outstanding loans were made without appropriate documentation or collateral.
Lodin further said that these are loans made to people without regard to any formal banking system.
The investigatory commission said that any decision on who to take to court will be made by President Hamid Karzai, though international allies and the head of the central bank have called for the Afghan government to prosecute those involved in fraud or other illegal activity at Kabul Bank.
The comments come after central bank chief Abdul Qadir Fitrat stood up last month in parliament to defend his organization’s actions to address the problems after learning about them from news reports and called for prosecutions of the executives and shareholders involved in the questionable loans.
