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| Kabul Bank fraud verdicts raise fears about official indifference to corruption | Kabul Bank fraud verdicts raise fears about official indifference to corruption |
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| Two key players in the $900m (£600m) Kabul Bank scandal in Afghanistan have been sentenced to just five years in prison each, a relatively light sentence that will fuel concerns about government indifference to rampant corruption in the country. | Two key players in the $900m (£600m) Kabul Bank scandal in Afghanistan have been sentenced to just five years in prison each, a relatively light sentence that will fuel concerns about government indifference to rampant corruption in the country. |
| The judges baffled observers with a last-minute change in the charges against the men, dropping allegations of embezzlement, forgery, money-laundering and other serious offences in favour of "breach of trust", which carries a shorter maximum sentence. | The judges baffled observers with a last-minute change in the charges against the men, dropping allegations of embezzlement, forgery, money-laundering and other serious offences in favour of "breach of trust", which carries a shorter maximum sentence. |
| Kabul Bank nearly collapsed in 2010, and has since been described by western officials as virtually a Ponzi scheme. | Kabul Bank nearly collapsed in 2010, and has since been described by western officials as virtually a Ponzi scheme. |
| In addition to their prison time, the chairman, Sherkhan Farnood, and chief executive, Khalilullah Ferozi, have been ordered to pay back a combined total of more than $800m. | In addition to their prison time, the chairman, Sherkhan Farnood, and chief executive, Khalilullah Ferozi, have been ordered to pay back a combined total of more than $800m. |
| But the new charges will make it far harder for accountants to claw back the stolen cash from offshore accounts and other hiding places. A money-laundering conviction would have brought an automatic confiscation order, but experts say the three judges only issued a much weaker demand for return of goods obtained illegally. | But the new charges will make it far harder for accountants to claw back the stolen cash from offshore accounts and other hiding places. A money-laundering conviction would have brought an automatic confiscation order, but experts say the three judges only issued a much weaker demand for return of goods obtained illegally. |
| "Today was a disappointment for the resolution of issues resulting from the Kabul Bank fraud," said Drago Kos, the Slovenian chairman of the joint Afghan and international anti-corruption committee, which organised a public inquiry into the crisis last year. | "Today was a disappointment for the resolution of issues resulting from the Kabul Bank fraud," said Drago Kos, the Slovenian chairman of the joint Afghan and international anti-corruption committee, which organised a public inquiry into the crisis last year. |
| "International standards require sanctions that are proportionate, dissuasive, and effective. We feel that this is lacking in the judgment issued today. Even worse for the Afghan people, this judgment fails to take advantage of provisions in the anti-money-laundering law that would facilitate recovery of the missing money." | "International standards require sanctions that are proportionate, dissuasive, and effective. We feel that this is lacking in the judgment issued today. Even worse for the Afghan people, this judgment fails to take advantage of provisions in the anti-money-laundering law that would facilitate recovery of the missing money." |
| Instead, there appears to be little more than a request for the men to return money that they had no scruples about siphoning off. | Instead, there appears to be little more than a request for the men to return money that they had no scruples about siphoning off. |
| One western official said: "It's almost like a moral obligation: you took the money, you have got to give it back. How do you enforce that? I'm not sure. | One western official said: "It's almost like a moral obligation: you took the money, you have got to give it back. How do you enforce that? I'm not sure. |
| "Where do you take it, which court do you take it to? Who actually enforces that provision?" | "Where do you take it, which court do you take it to? Who actually enforces that provision?" |
| The colourful hearing was a reminder of the sometimes informal nature of Afghan justice, held in a worn but once-imposing courtroom at Kabul's police headquarters, where vivid blue wall panels covered with gilt embossed plasterwork surrounded inlaid wooden desks. | The colourful hearing was a reminder of the sometimes informal nature of Afghan justice, held in a worn but once-imposing courtroom at Kabul's police headquarters, where vivid blue wall panels covered with gilt embossed plasterwork surrounded inlaid wooden desks. |
| Both of the main defendants took to the stand to vehemently attack the prosecution case and each other, and protest their innocence. Ferozi, who shoulder bumped Farnood on his way to the stand, also marched over to the judges with a letter outlining his version of the bank's collapse. | Both of the main defendants took to the stand to vehemently attack the prosecution case and each other, and protest their innocence. Ferozi, who shoulder bumped Farnood on his way to the stand, also marched over to the judges with a letter outlining his version of the bank's collapse. |
| Defendants mingled with the small audience of mostly journalists and diplomats, and after starting more than an hour late the testy chief justice – who was trying five men in absentia and had 16 other defendants in court – told the prosecutor to speed up his summary. All but one were sentenced to imprisonment, ranging from two to five years, and one man was fined. | Defendants mingled with the small audience of mostly journalists and diplomats, and after starting more than an hour late the testy chief justice – who was trying five men in absentia and had 16 other defendants in court – told the prosecutor to speed up his summary. All but one were sentenced to imprisonment, ranging from two to five years, and one man was fined. |
| There were concerns about the judicial process, however. The judges took less than 10 minutes to "deliberate" on the convictions, issued a one-page verdict with no explanation of the sentences and the prosecution of some regulators among the accused appeared to have a tenuous legal basis, raising concerns about political bias. | There were concerns about the judicial process, however. The judges took less than 10 minutes to "deliberate" on the convictions, issued a one-page verdict with no explanation of the sentences and the prosecution of some regulators among the accused appeared to have a tenuous legal basis, raising concerns about political bias. |
| The western official said: "There was evidence that was very weak on some of these people. They were just there when this happened, and what they were charged with and convicted with was not telling anybody about it. | The western official said: "There was evidence that was very weak on some of these people. They were just there when this happened, and what they were charged with and convicted with was not telling anybody about it. |
| "You'd have to get pretty deep into it to find out if that was an intentional act that qualified as a crime." | "You'd have to get pretty deep into it to find out if that was an intentional act that qualified as a crime." |
| Relative to the puny size of the Afghan economy, Kabul Bank was the biggest banking scandal the world has seen, and as the problems first surfaced there were serious concerns that it could destabilise the country's entire financial system. | Relative to the puny size of the Afghan economy, Kabul Bank was the biggest banking scandal the world has seen, and as the problems first surfaced there were serious concerns that it could destabilise the country's entire financial system. |
| Officials will be lucky to get back half the missing cash; many of the assets bought with the stolen money have collapsed in value, including the now-grounded Pamir Airways and lavish Dubai real estate purchased at the height of a property bubble there. | Officials will be lucky to get back half the missing cash; many of the assets bought with the stolen money have collapsed in value, including the now-grounded Pamir Airways and lavish Dubai real estate purchased at the height of a property bubble there. |
| The brothers of President Hamid Karzai and the vice-president, Mohammad Fahim, were among the bank's shareholders, although they have not been prosecuted, and handling of the high-profile case has been seen by the international community as a "litmus test" of Kabul's desire to rein in corruption. | The brothers of President Hamid Karzai and the vice-president, Mohammad Fahim, were among the bank's shareholders, although they have not been prosecuted, and handling of the high-profile case has been seen by the international community as a "litmus test" of Kabul's desire to rein in corruption. |
| William Patey, then the UK ambassador to Afghanistan, said of the case against Farnood and Firozi last year: "Kabul Bank is so symbolic because it's two people who have been caught bang to rights; they've been caught red-handed. | William Patey, then the UK ambassador to Afghanistan, said of the case against Farnood and Firozi last year: "Kabul Bank is so symbolic because it's two people who have been caught bang to rights; they've been caught red-handed. |
| "All the rest remains allegations and suspicions, so that's why it's a kind of litmus test. If you won't do these ones, what chance the rest?" | "All the rest remains allegations and suspicions, so that's why it's a kind of litmus test. If you won't do these ones, what chance the rest?" |
| Farnood had a murky past, and in 2007 Interpol issued an arrest warrant for illegal banking activities, organising a criminal group and money-laundering in Russia. | Farnood had a murky past, and in 2007 Interpol issued an arrest warrant for illegal banking activities, organising a criminal group and money-laundering in Russia. |
| Afghan police ignored it, even as he went on a spending spree with Afghan bank money, buying luxury properties and helping other shareholders, friends and political connections line their own pockets. He has been ordered to repay $279m. Firozi was ordered to repay $531m. | Afghan police ignored it, even as he went on a spending spree with Afghan bank money, buying luxury properties and helping other shareholders, friends and political connections line their own pockets. He has been ordered to repay $279m. Firozi was ordered to repay $531m. |
| Both men, who have been under a very loose house arrest for nearly two years and sometimes spotted at smart Kabul restaurants, said they would appeal against their sentences. If the appeals process is as slow as the original trial, and the house arrest is counted towards their time in prison, the men might spend very little time behind bars. | Both men, who have been under a very loose house arrest for nearly two years and sometimes spotted at smart Kabul restaurants, said they would appeal against their sentences. If the appeals process is as slow as the original trial, and the house arrest is counted towards their time in prison, the men might spend very little time behind bars. |
| The ruling contrasts with other high-profile fraud cases, like that of the disgraced US financier Bernie Madoff, who was sentenced to the maximum 150 years in prison for masterminding a $65bn (£38bn) fraud. Although he stole more cash, and caused financial ruin or serious problems for many individuals, that Ponzi scheme was not considered a threat to the entire US economy. | The ruling contrasts with other high-profile fraud cases, like that of the disgraced US financier Bernie Madoff, who was sentenced to the maximum 150 years in prison for masterminding a $65bn (£38bn) fraud. Although he stole more cash, and caused financial ruin or serious problems for many individuals, that Ponzi scheme was not considered a threat to the entire US economy. |
| The chief justice, Shams-ul-Rahman Shams, said more than 20 people were still under investigation, and there could be further prosecutions. | The chief justice, Shams-ul-Rahman Shams, said more than 20 people were still under investigation, and there could be further prosecutions. |
| Additional reporting by Mokhtar Amiri | Additional reporting by Mokhtar Amiri |
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