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| Afghan police 'ignored Interpol arrest warrant for Kabul Bank founder' | Afghan police 'ignored Interpol arrest warrant for Kabul Bank founder' |
| (about 3 hours later) | |
| The founder of a failed Afghan bank that operated as a $900m (£560m) Ponzi scheme was wanted by Interpol for money-laundering and illegal banking, but Afghan authorities ignored his arrest warrant for years, leaving him free to plunder his home country, a special court investigating the scandal has found. | The founder of a failed Afghan bank that operated as a $900m (£560m) Ponzi scheme was wanted by Interpol for money-laundering and illegal banking, but Afghan authorities ignored his arrest warrant for years, leaving him free to plunder his home country, a special court investigating the scandal has found. |
| Background checks made on Sherkhan Farnood when he founded Kabul Bank in 2004 might not have uncovered his murky past, but three years later police in Afghanistan were told that Russia wanted to prosecute him for financial crimes, including purchasing property for illegal use. | |
| The Interpol arrest warrant came as Farnood was just starting to use bank money to build up a portfolio of luxury villas and other property in Dubai worth $151m, and help other shareholders, friends and political connections line their own pockets, a public inquiry into the crisis found. | |
| If authorities had followed up the request, or simply taken it as a warning to look more closely into the finances of Farnood and his bank they might have staved off a banking scandal that, relative to the size of Afghanistan's puny national economy, is the worst the world has seen. | If authorities had followed up the request, or simply taken it as a warning to look more closely into the finances of Farnood and his bank they might have staved off a banking scandal that, relative to the size of Afghanistan's puny national economy, is the worst the world has seen. |
| "Interpol sent out an arrest warrant for him for illegal banking activities, organising a criminal group, money-laundering, which means basically he did the same thing there," said Drago Kos, chair of the joint Afghan and international anti-corruption committee behind the public inquiry. | "Interpol sent out an arrest warrant for him for illegal banking activities, organising a criminal group, money-laundering, which means basically he did the same thing there," said Drago Kos, chair of the joint Afghan and international anti-corruption committee behind the public inquiry. |
| "Then he came over here, and what was funny was that since 2007, Interpol Afghanistan knew about it and did nothing. Even today they do nothing and he is still wanted by the Russians." | "Then he came over here, and what was funny was that since 2007, Interpol Afghanistan knew about it and did nothing. Even today they do nothing and he is still wanted by the Russians." |
| Farnood and the bank's CEO, Khalilullah Ferozi, both went on trial this month for their part in the bank's collapse, but the hearings were suspended after the first week. The head of the special court said it was not clear when the trials would resume. | |
| During his time in charge of Kabul Bank, Farnood presided over theft staggering in its scale and audacity, the inquiry found. The fraud did not begin until around 2006, Kos said, but Farnood probably never intended to run Kabul Bank as a conventional business. "To have a Ponzi scheme you need a certain amount of money," he said. "They just didn't have the money to do it from the beginning." | During his time in charge of Kabul Bank, Farnood presided over theft staggering in its scale and audacity, the inquiry found. The fraud did not begin until around 2006, Kos said, but Farnood probably never intended to run Kabul Bank as a conventional business. "To have a Ponzi scheme you need a certain amount of money," he said. "They just didn't have the money to do it from the beginning." |
| An array of forged documents and fake official stamps for non-existant companies helped managers keep one set of books for auditors and another for themselves; more than $800m of the stolen money went to just 12 people and seven companies connected to them. | |
| Hundreds of millions of dollars were sent abroad, some in the food trays of an airline owned by shareholders linked to the bank, with staff salaries of $320,000 booked as "Pilots of Cash Delivery". Other sums were sent more mundanely through international wire transfers. | Hundreds of millions of dollars were sent abroad, some in the food trays of an airline owned by shareholders linked to the bank, with staff salaries of $320,000 booked as "Pilots of Cash Delivery". Other sums were sent more mundanely through international wire transfers. |
| Members of Kabul's elite, including the brothers of President Hamid Karzai and the vice-president, Mohammad Fahim, were among the shareholders. Both have repaid money and deny any wrongdoing. | |
| At one point the then-chief executive drove around the Afghan capital handing out money in envelopes. "It was almost worse than corruption," said Kos. "In corruption you give the money and ask for something in return. Here the money was given without asking for anything in return." | At one point the then-chief executive drove around the Afghan capital handing out money in envelopes. "It was almost worse than corruption," said Kos. "In corruption you give the money and ask for something in return. Here the money was given without asking for anything in return." |
| Khalilullah Ferozi has declined to say how much he handed out, or to whom exactly. But among the banks' creditors are a group who got $3.1m in loans but are so powerful that receivers for Kabul Bank have declined to even ask for the money back. Political meddling by the country's elite also delayed efforts to put those responsible on trial and recover lost assets. | |
| "Many of the primary actors carry on their business in Afghanistan without fear of ever being held accountable, not to mention prosecuted," the public inquiry found, warning of "impunity for powerful Afghans" along with "scapegoating of the less powerful". | "Many of the primary actors carry on their business in Afghanistan without fear of ever being held accountable, not to mention prosecuted," the public inquiry found, warning of "impunity for powerful Afghans" along with "scapegoating of the less powerful". |
| Receivers will be lucky to get back half of the missing cash, Kos said. So as the government bailed out Kabul Bank, ultimately it is the ordinary people of a country – with an average yearly income of less than $500 – who will have to pay for the massive theft by greedy members of the elite. | |
| "Every citizen in Afghanistan will bear the cost of the hundreds of millions of dollars required to secure deposits and the tens of millions of dollars required to deal with the aftermath," the report on the public inquiry found. "This is real money from the annual budget of the government that could be much better spent on other priorities such as education, healthcare, infrastructure, or security." | "Every citizen in Afghanistan will bear the cost of the hundreds of millions of dollars required to secure deposits and the tens of millions of dollars required to deal with the aftermath," the report on the public inquiry found. "This is real money from the annual budget of the government that could be much better spent on other priorities such as education, healthcare, infrastructure, or security." |