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New Kabul Bank also faces $50m losses: Watchdog

New Kabul Bank also faces $50m losses: Watchdog

Feb 25, 2015 - 19:33

KABULinfo-icon (Pajhwok): The Integrity Watch Afghanistaninfo-icon on Wednesday said the New Kabul Bank was also facing losses after the government failed to take stern action against individuals involved in the Kabul Bank scandal.

The former Kabul Bank plunged into deep crisis after a run on deposits in 2010 when reports surfaced $935 million had been stolen from the bank by its chief executives and stakeholders.

The then President Hamid Karzai government was forced to bail out the country’s then biggest bank, which was later re-launched as the state-run New Kabul Bank..

So far only about a third of the $935 million stolen has been recovered, according to the receivers.

The two former heads of the bank, founder Sher Khan Fernod and former Chief Executive Haji Khalil Ferozi, had been convicted in the initial inquiry of taking $810 million of the stolen money and were both sentenced to jail for five years. Their jail terms were tripled in November last year.

Integrity Watch Afghanistan chief Syed Ikram Afzali told reporters in Kabul the government had failed to seriously take action against the individuals involved in the scandal.

He said the unity government had so far done nothing special with regard to the bank scandal and had no strong intention to do so.

Afzali said the government was yet to recover the stolen money in a transparent manner and was yet to inform people what it had done so far in this regard.

He said the government could not punish some of the individuals involved in the scandal because they had strong political connections and judicial institutions were also rife with corruption.

Afzali said their investigation showed the government had so far recovered $228 million of the $977 million stolen money over the past five years.

The recovered money included $179 million in cash and the rest in form of properties the government had seized from the accused, he said.

He said the authorities concerned had not effectively implemented President Ghani’s decree in the Kabul Bank scandal.

Ghani announced on Oct. 1 that he would re-open the inquiry into the theft from the bank, fulfilling a campaign promise to make fighting corruption a priority.

Afzali also said the New Kabul Bank faced losses amounting to $50 million and the losses had been on the increase.

He urged the government to create an organized oversight system to monitor banks’ activities, increase the capacity of bank officials and implement banking laws.

He warned if such a system was not put in place, other private banks could meet the fate of the Kabul Bank.

When contacted the Finance Ministry spokesman and the central bank acting head said they had nothing to do with the Kabul Bank issue.

An official at the New Kabul Bank told Pajhwok Afghan the bank’s chief was in a meeting and no other official was allowed to speak to the media.


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