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I have found two intersting articles if you find the time to read them.
First article:
Over $500m of undocumented loans sinks Kabul Bank
May 30, 2011
A number of Kabul's elite, some owning properties in
Dubai, have received undocumented millions in loans,
with the bank only able to get back two-thirds of the
whole debt.
A failed Afghan bank doled out nearly half a billion dollars in unsecured,
undocumented loans to a roster of Kabul’s elite, including sitting cabinet
ministers and a powerful former warlord, anti-corruption officials said on
Sunday.
Azizullah Luddin, chairman of the High Office of Oversight and Anti
corruption, also said that records suggested the government would only
be able to get back around two thirds of Kabul Bank’s $925 million in
outstanding loans.
“We are sure that $347 million will be paid back which we have no worries
about,” he told a news conference to release the findings of a report
detailing the bank’s woes.
“Other borrowers have properties in Dubai and in Kabul and in case they
aren’t able to pay back, we can get $200-$250 million by selling them…So
we can get back a possible total of around $600 million,” he added.
The bank, whose major shareholders had close family ties to Afghanistan’s
leadership, came to the brink of collapse last year and was taken over by
the Central Bank.
The Afghan government has since pledged to dismantle it, to meet
International Monetary Fund requirements on financial standards, but
progress has been very slow.
GETTING AWAY WITH IT
Ludin said three or four sitting cabinet ministers, several MPs and Abdul
Rashid Dostum, a power broker and former warlord, were among the names
on a list of debtors who had evaded usual banking standards to secure a
loan.
“$467 million dollars has been paid out without any documents or any
guarantees or papers,” Ludin said.
“We might be able to get back large amount of this money because we
have prepared a list of 207 borrowers,” he said.
Dostum owed around $1 million to the bank, he added.
But both Ludin and Yasin Usmani, chairman of the Anti-Corruption
Monitoring and Evaluation Committee, placed most of the blame for Kabul
Bank’s failure at the door of the Central Bank, rather than with Kabul
Bank’s owners and top managers.
These include Mahmoud Karzai, brother of President Hamid Karzai, and
Mohammad Haseen, brother of the deputy president.
GOVERNMENT WAS WARNED
Ludin said Afghanistan’s intelligence agency had warned the Central Bank
months ago there were major problems in Kabul Bank’s finances, but had
been told that it was not their business.
Individuals in the financial sector also tried to raise a red flag with the
auditors, Usmani said.
“We blame the Central Bank because their monitoring was very weak,” he
said, adding that he thought all private banks in Afghanistan needed more
rigorous checks.
The 30-page report, which Ludin waved around during the news
conference, has been delivered to President Karzai and the Attorney
General. They will decide whether to release it to the public and whether
to pursue any prosecution, he said.
The tangled state of the bank’s finances was evident even at the news
conference, where officials gave figures $13 million apart for the total
amount of loans outstanding.
They later explained the higher figure came from an updated calculation of
interest due. But other figures for the amounts repaid and still
outstanding, and summaries of different types of loan, had discrepancies
of several million dollars. (By Emma Graham-Harrison and Hamid Shalizi,
Editing by Nick Macfie)
Second article:
KABUL, Afghanistan — The governor of Afghanistan’s Central Bank angrily
responded Monday to a presidential panel’s criticism of his agency in
connection with a scandal at the nation’s largest private bank.
“This is ridiculous; this is nonsense,” the Central Bank governor, Abdul
Qadir Fitrat, said during a news conference he convened to dispute the
report.
On Sunday, a panel appointed by President Hamid Karzai to make
recommendations and assess responsibility for large-scale fraud at the
private bank had faulted the Central Bank as well as international auditors,
financed by American aid money, for failing to uncover the deception
sooner.
“I categorically reject the report,” Mr. Fitrat said, calling it “completely
biased and completely invalid,” and written without full consultation with
the Central Bank. He also noted that some of the members of the panel
Mr. Karzai appointed had refused to sign it in protest.
The report itself was not made public, but the panel’s chairman, Azizullah
Ludin, read selectively from it, leveling strong personal criticisms at Mr.
Fitrat.
Noting that regulators in many Western countries had missed far bigger
frauds, including Bernard L. Madoff’s $50-billion scam, Mr. Fitrat said, “It is
particularly difficult to uncover fraud when the management of the bank is
actively involved in it.”
The worst that could be said of the Central Bank was that it missed the
growing problems at the private bank, known as Kabul Bank, Mr. Fitrat
said. Loans totaling $925 million, including accumulated interest, were
often made with no collateral or even documentation, and went to many
members of Parliament, government ministers and politically connected
figures, including the president’s brother.
“The Central Bank had no part in the fraud; the fraud was by Kabul Bank,”
he said, saying the Ludin panel unfairly tried to shift the blame to his
agency. He noted that the Central Bank had acted aggressively once it
knew what had happened at Kabul Bank, replacing its management and
breaking the bank up to allow receivers to pursue the bad loans.
“Kabul Bank was a very difficult job to do and it made our life very tough,”
he said, referring to political pressure on the Central Bank. “Instead of
rewarding us or praising our efforts, they are punishing people who help
implement the law. It’s hopeless in Afghanistan; if you work honestly it’s
really difficult.”
Mr. Ludin, interviewed by telephone after the news conference, defended
the position his panel took. “This is the problem in Afghanistan,” he said.
“The government of Afghanistan appoints people to key positions who
have no knowledge, who are uneducated, with lack of experience, and
these kinds of problems happen.”
Asked if he was referring to Mr. Fitrat, an experienced banker who
formerly worked for the World Bank, Mr. Ludin acknowledged he was. “It is
clear the whole problem was the Central Bank of Afghanistan,” he said.
“They knew everything that was going on in Kabul Bank. He is the root of
the problem and he knew everything.”
The presidential panel was made up of Mr. Ludin, who is head of the High
Commission on Anticorruption, as well as another presidentially appointed
anticorruption figure and a representative of the attorney general’s office.
An official from the Ministry of Finance was also appointed to it, but did
not take part, Mr. Ludin said.
Mr. Ludin formerly was appointed by Mr. Karzai to head the Independent
Elections Commission during the 2009 presidential elections, which were
widely regarded as fraudulent by international observers but were
vigorously defended by Mr. Ludin.
First article:
Over $500m of undocumented loans sinks Kabul Bank
May 30, 2011
A number of Kabul's elite, some owning properties in
Dubai, have received undocumented millions in loans,
with the bank only able to get back two-thirds of the
whole debt.
A failed Afghan bank doled out nearly half a billion dollars in unsecured,
undocumented loans to a roster of Kabul’s elite, including sitting cabinet
ministers and a powerful former warlord, anti-corruption officials said on
Sunday.
Azizullah Luddin, chairman of the High Office of Oversight and Anti
corruption, also said that records suggested the government would only
be able to get back around two thirds of Kabul Bank’s $925 million in
outstanding loans.
“We are sure that $347 million will be paid back which we have no worries
about,” he told a news conference to release the findings of a report
detailing the bank’s woes.
“Other borrowers have properties in Dubai and in Kabul and in case they
aren’t able to pay back, we can get $200-$250 million by selling them…So
we can get back a possible total of around $600 million,” he added.
The bank, whose major shareholders had close family ties to Afghanistan’s
leadership, came to the brink of collapse last year and was taken over by
the Central Bank.
The Afghan government has since pledged to dismantle it, to meet
International Monetary Fund requirements on financial standards, but
progress has been very slow.
GETTING AWAY WITH IT
Ludin said three or four sitting cabinet ministers, several MPs and Abdul
Rashid Dostum, a power broker and former warlord, were among the names
on a list of debtors who had evaded usual banking standards to secure a
loan.
“$467 million dollars has been paid out without any documents or any
guarantees or papers,” Ludin said.
“We might be able to get back large amount of this money because we
have prepared a list of 207 borrowers,” he said.
Dostum owed around $1 million to the bank, he added.
But both Ludin and Yasin Usmani, chairman of the Anti-Corruption
Monitoring and Evaluation Committee, placed most of the blame for Kabul
Bank’s failure at the door of the Central Bank, rather than with Kabul
Bank’s owners and top managers.
These include Mahmoud Karzai, brother of President Hamid Karzai, and
Mohammad Haseen, brother of the deputy president.
GOVERNMENT WAS WARNED
Ludin said Afghanistan’s intelligence agency had warned the Central Bank
months ago there were major problems in Kabul Bank’s finances, but had
been told that it was not their business.
Individuals in the financial sector also tried to raise a red flag with the
auditors, Usmani said.
“We blame the Central Bank because their monitoring was very weak,” he
said, adding that he thought all private banks in Afghanistan needed more
rigorous checks.
The 30-page report, which Ludin waved around during the news
conference, has been delivered to President Karzai and the Attorney
General. They will decide whether to release it to the public and whether
to pursue any prosecution, he said.
The tangled state of the bank’s finances was evident even at the news
conference, where officials gave figures $13 million apart for the total
amount of loans outstanding.
They later explained the higher figure came from an updated calculation of
interest due. But other figures for the amounts repaid and still
outstanding, and summaries of different types of loan, had discrepancies
of several million dollars. (By Emma Graham-Harrison and Hamid Shalizi,
Editing by Nick Macfie)
Second article:
KABUL, Afghanistan — The governor of Afghanistan’s Central Bank angrily
responded Monday to a presidential panel’s criticism of his agency in
connection with a scandal at the nation’s largest private bank.
“This is ridiculous; this is nonsense,” the Central Bank governor, Abdul
Qadir Fitrat, said during a news conference he convened to dispute the
report.
On Sunday, a panel appointed by President Hamid Karzai to make
recommendations and assess responsibility for large-scale fraud at the
private bank had faulted the Central Bank as well as international auditors,
financed by American aid money, for failing to uncover the deception
sooner.
“I categorically reject the report,” Mr. Fitrat said, calling it “completely
biased and completely invalid,” and written without full consultation with
the Central Bank. He also noted that some of the members of the panel
Mr. Karzai appointed had refused to sign it in protest.
The report itself was not made public, but the panel’s chairman, Azizullah
Ludin, read selectively from it, leveling strong personal criticisms at Mr.
Fitrat.
Noting that regulators in many Western countries had missed far bigger
frauds, including Bernard L. Madoff’s $50-billion scam, Mr. Fitrat said, “It is
particularly difficult to uncover fraud when the management of the bank is
actively involved in it.”
The worst that could be said of the Central Bank was that it missed the
growing problems at the private bank, known as Kabul Bank, Mr. Fitrat
said. Loans totaling $925 million, including accumulated interest, were
often made with no collateral or even documentation, and went to many
members of Parliament, government ministers and politically connected
figures, including the president’s brother.
“The Central Bank had no part in the fraud; the fraud was by Kabul Bank,”
he said, saying the Ludin panel unfairly tried to shift the blame to his
agency. He noted that the Central Bank had acted aggressively once it
knew what had happened at Kabul Bank, replacing its management and
breaking the bank up to allow receivers to pursue the bad loans.
“Kabul Bank was a very difficult job to do and it made our life very tough,”
he said, referring to political pressure on the Central Bank. “Instead of
rewarding us or praising our efforts, they are punishing people who help
implement the law. It’s hopeless in Afghanistan; if you work honestly it’s
really difficult.”
Mr. Ludin, interviewed by telephone after the news conference, defended
the position his panel took. “This is the problem in Afghanistan,” he said.
“The government of Afghanistan appoints people to key positions who
have no knowledge, who are uneducated, with lack of experience, and
these kinds of problems happen.”
Asked if he was referring to Mr. Fitrat, an experienced banker who
formerly worked for the World Bank, Mr. Ludin acknowledged he was. “It is
clear the whole problem was the Central Bank of Afghanistan,” he said.
“They knew everything that was going on in Kabul Bank. He is the root of
the problem and he knew everything.”
The presidential panel was made up of Mr. Ludin, who is head of the High
Commission on Anticorruption, as well as another presidentially appointed
anticorruption figure and a representative of the attorney general’s office.
An official from the Ministry of Finance was also appointed to it, but did
not take part, Mr. Ludin said.
Mr. Ludin formerly was appointed by Mr. Karzai to head the Independent
Elections Commission during the 2009 presidential elections, which were
widely regarded as fraudulent by international observers but were
vigorously defended by Mr. Ludin.
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