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Bank fraud convict Ferozi invests a fortune in housing scheme

Bank fraud convict Ferozi invests a fortune in housing scheme

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On
Nov 04, 2015 - 17:30

KABULinfo-icon (Pajhwok): Former Kabul Bank chief executive and major defaulter Khalilullah Ferozi, who was convicted last year in the massive banking fraud scandal, on Wednesday launched work on an ambitious township project -- involving an initial investment of $98 million -- in the heart of the nation’s capital.

Ferozi and Sher Khan Farnood -- founder of what has come to be dubbed as a piggy bank -- had been convicted on charges of defrauding the Kabul Bank of nearly a billion dollars. Each was sentenced to 10 years in jail in December 2014. One of the leading Afghan tycoons, Ferozi is said to be serving his jail term at night under a deal with the government.

Once the country’s largest lender, the Kabul Bank plunged into deep crisis in 2009, when it lost $987 million in fraudulent property deals, huge off-book loans and credit to fake corporations. The big-time scam prompted the government to take over the bank’s affairs and change rename it as New Kabul Bank.

Later, the government announced a $825 million bailout plan for the bank, whose scandal soon came to be the talk of the town. The scam angered international donors besides generating a heated debate in Parliament. Of $987 million stolen, the government claims having recovered $437 million. Twenty-four defaulters returned their debts until July.

President Ashraf Ghani’s Legal Advisor Abdul Ali Mohammadi, addressing the foundation stone-laying ceremony for the 34-acre housing scheme on the Kabul Airport Road, said the bank’s screening commission had decided to recover loans from defaulters in easy ways.

As long as the convicts were in jail or abroad, they could not repay their debts, he argued, saying the cabinet had decided the debtors be facilitate to make investments within the country to be able to repay the loans.

The decision was later endorsed by the judicial organs. Now that Ferozi has been allowed to invest in the scheme, other convicts could also avail themselves of the opportunity, according to the presidential advisors.

Ahmad Zia Massoud, the president’s special representative on reform and good governance, told the ceremony Ferozi was a principal partner in the township project. The repayment of his loans would be financed with profits from the investment, he explained.

Urban Development Minister Syed Sadat Mansoor Naderi said the Hoshmand town (Smart City) -- having 40 blocks and each containing 4,800 apartments -- would be constructed on 34 acres of prime land. The multimillion dollar project will take four years to complete.

Naderi added around 2,500 people would be provided direct employment opportunities on the $900 million project. Initially, a sum of $98 million would be invested in the scheme. Ferozi has to repay an amount of $137 million as per the court verdict in the case.

He pledged the township would be built to international standards, including facilities like markets, mosques, kindergartens, malls, parks, clinics, etc. The township administration will pay $50 per square metrein tax to the treasury, fetching the government a revenue of $75 million.

Ferozi, the township main investor, thanked the unity government for providing him the chance to invest in the project and offering the opportunity for his release. He acknowledged his liability to repay $137 million to Kabul Bank.

Under his agreement with the Kabul Bank commission, Ferozi said, he would pay back the remaining amount in seven years. The interest will be paid in three years.

About the Smart City project, he said: “The project is mine. I am the owner of this land.” His released had become possible in line with the court decision and his signing of the agreement to pay back the bank loan. Seventeen percent of the debt upfront has already been paid back.

Ferozi sounded confident of discharging his legal obligation sooner than the seven-year deadline. “I will make $300 million in profits. It will pay what I owe the government in 13 or 14 months, and the project will bring the government an additional $75 million in taxes.”

myn/nh/mud

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