This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2014/10/02/world/asia/afghanistan-president-corruption-investigation.html
The article has changed 4 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| New Afghan Leader, Putting Focus on Graft, Revives Bank Fraud Inquiry | New Afghan Leader, Putting Focus on Graft, Revives Bank Fraud Inquiry |
| (7 days later) | |
| KABUL, Afghanistan — Signaling his intent to improve the Afghan government’s poor reputation on corruption, President Ashraf Ghani on Wednesday ordered a new examination of the stagnant Kabul Bank fraud prosecutions. | |
| The bank, likened to a roughly $800 million Ponzi scheme after powerful insiders pillaged it through fraudulent loans, has come to symbolize the legal impunity enjoyed by Afghanistan’s elite. And the case has become a major sticking point for donor nations and the International Monetary Fund, which at one point made prosecution of those responsible for the bank’s collapse a condition of any new loans to the government. | The bank, likened to a roughly $800 million Ponzi scheme after powerful insiders pillaged it through fraudulent loans, has come to symbolize the legal impunity enjoyed by Afghanistan’s elite. And the case has become a major sticking point for donor nations and the International Monetary Fund, which at one point made prosecution of those responsible for the bank’s collapse a condition of any new loans to the government. |
| Just three days into Mr. Ghani’s presidency, his decree about the bank was clearly meant to reassure Western partners that aid to the country would not be a bad investment. The day before, as Afghanistan signed long-term security deals with the United States and NATO, Mr. Ghani had emphasized the importance of international aid in tackling “shared challenges.” | Just three days into Mr. Ghani’s presidency, his decree about the bank was clearly meant to reassure Western partners that aid to the country would not be a bad investment. The day before, as Afghanistan signed long-term security deals with the United States and NATO, Mr. Ghani had emphasized the importance of international aid in tackling “shared challenges.” |
| In the Kabul Bank case, although 21 defendants were convicted on various charges in March 2013, the case has languished on appeal for more than a year as the court deliberated whether to uphold sentences that many argued were light to begin with. Only a few flagrant offenders have seen jail time. | In the Kabul Bank case, although 21 defendants were convicted on various charges in March 2013, the case has languished on appeal for more than a year as the court deliberated whether to uphold sentences that many argued were light to begin with. Only a few flagrant offenders have seen jail time. |
| In his aggressively worded decree, Mr. Ghani ordered the detention of the convicted and a review of the case by the Afghan Supreme Court with the possibility of expanding charges. It was unclear, however, whether the judiciary could expand the list of defendants beyond the scope of the original prosecution. | |
| The order issued tight timelines for action, including three days to detain those whose appeals are pending, a month and a half for the Supreme Court to produce its findings and 10 days to work out cooperation agreements with countries where the stolen money may have been sent. It also explicitly directed the Attorney General’s office, which some Afghan and Western officials have accused of shielding people who benefited from the fraud, to cooperate with the investigation. | The order issued tight timelines for action, including three days to detain those whose appeals are pending, a month and a half for the Supreme Court to produce its findings and 10 days to work out cooperation agreements with countries where the stolen money may have been sent. It also explicitly directed the Attorney General’s office, which some Afghan and Western officials have accused of shielding people who benefited from the fraud, to cooperate with the investigation. |
| But even as numerous Western and Afghan officials applauded Mr. Ghani’s move, some noted that for now it was only a gesture. | But even as numerous Western and Afghan officials applauded Mr. Ghani’s move, some noted that for now it was only a gesture. |
| It remains to be seen how the government will meet its deadlines and how the case will be pursued beyond the initial push. The major question is whether the list of defendants will grow to include more politically connected people who were not prosecuted despite facing serious fraud accusations — including Mahmood Karzai, former President Hamid Karzai’s brother, and Haseen Fahim, the brother of the deceased Vice President Marshal Muhammad Qasim Fahim. | It remains to be seen how the government will meet its deadlines and how the case will be pursued beyond the initial push. The major question is whether the list of defendants will grow to include more politically connected people who were not prosecuted despite facing serious fraud accusations — including Mahmood Karzai, former President Hamid Karzai’s brother, and Haseen Fahim, the brother of the deceased Vice President Marshal Muhammad Qasim Fahim. |
| “Today’s action matches Ghani’s rhetoric about stanching out corruption, but there are a couple of questions looming,” said one Western official who has followed the case closely, who like others interviewed about the case spoke on condition of anonymity because he was not authorized to comment publicly. “The real litmus test of this decree is whether all of the shareholders who weren’t indicted are indicted.” | “Today’s action matches Ghani’s rhetoric about stanching out corruption, but there are a couple of questions looming,” said one Western official who has followed the case closely, who like others interviewed about the case spoke on condition of anonymity because he was not authorized to comment publicly. “The real litmus test of this decree is whether all of the shareholders who weren’t indicted are indicted.” |
| The reopening of the case also risked further penalties for regulators whose efforts to clean up the mess at the bank were punished by prosecutions ordered at the highest levels of the Afghan government. A number of regulators are among the 21 people already convicted, and seeing them jailed would be “the definition of a miscarriage of justice,” said another Western official familiar with the case. | The reopening of the case also risked further penalties for regulators whose efforts to clean up the mess at the bank were punished by prosecutions ordered at the highest levels of the Afghan government. A number of regulators are among the 21 people already convicted, and seeing them jailed would be “the definition of a miscarriage of justice,” said another Western official familiar with the case. |
| “These people were prosecuted in retribution, not because they were complicit,” the official added. | “These people were prosecuted in retribution, not because they were complicit,” the official added. |
| One important step toward a reckoning on Kabul Bank may come on Thursday, with the release by a Western-funded anticorruption body of a comprehensive list of names and amounts of people who benefited from the fraud. | One important step toward a reckoning on Kabul Bank may come on Thursday, with the release by a Western-funded anticorruption body of a comprehensive list of names and amounts of people who benefited from the fraud. |
| The Monitoring and Evaluation Committee, which conducted a public inquiry into the scandal in 2012, will release its report, “Unfinished Business,” which names every beneficiary of the Kabul Bank scandal, the amount of money each received, and how much each did — or did not — repay. | The Monitoring and Evaluation Committee, which conducted a public inquiry into the scandal in 2012, will release its report, “Unfinished Business,” which names every beneficiary of the Kabul Bank scandal, the amount of money each received, and how much each did — or did not — repay. |
| “You cannot find a better case to prove how impunity prevails in Afghanistan,” said Drago Kos, a member of the committee who is also chairman of the Organization for Economic Cooperation and Development’s Working Group on Bribery. “The Afghan people lost a lot of money in Kabul Bank, and nobody has been held responsible,” he said. “As long as this is the case, they will not trust their government.” | “You cannot find a better case to prove how impunity prevails in Afghanistan,” said Drago Kos, a member of the committee who is also chairman of the Organization for Economic Cooperation and Development’s Working Group on Bribery. “The Afghan people lost a lot of money in Kabul Bank, and nobody has been held responsible,” he said. “As long as this is the case, they will not trust their government.” |
| Mr. Kos said the report listed 19 companies and individuals, from a private airline to Mahmood Karzai, with debts totaling $880 million. It also lists assets purchased with the fraudulent loans, including 11 villas in Dubai, a complex of 108 shops and 34 apartments in Kabul, seven planes for the airline and an oil storage complex with 50 vehicles. | Mr. Kos said the report listed 19 companies and individuals, from a private airline to Mahmood Karzai, with debts totaling $880 million. It also lists assets purchased with the fraudulent loans, including 11 villas in Dubai, a complex of 108 shops and 34 apartments in Kabul, seven planes for the airline and an oil storage complex with 50 vehicles. |
| In a reflection of the difficulty of the work, the anticorruption group delayed its publication until after President Karzai had stepped down because “we were sure that the previous president would do nothing,” Mr. Kos said. | In a reflection of the difficulty of the work, the anticorruption group delayed its publication until after President Karzai had stepped down because “we were sure that the previous president would do nothing,” Mr. Kos said. |
| The Afghan vice president’s office had already pressured a tribunal not to pursue some of the main beneficiaries of the fraud, including Mr. Karzai’s brother, according to Mr. Kos. Other Afghan officials said Mr. Karzai also interfered with the tribunal. Mahmood Karzai’s lawyers later served Mr. Kos with a libel summons, apparently in a bid to stop his work, Mr. Kos said. | |
| The crisis centered on a web of fraudulent insider loans, which went mostly to bank shareholders, who often had powerful political connections. Mahmood Karzai, for instance, borrowed $22 million, while Haseen Fahim borrowed $78 million. | The crisis centered on a web of fraudulent insider loans, which went mostly to bank shareholders, who often had powerful political connections. Mahmood Karzai, for instance, borrowed $22 million, while Haseen Fahim borrowed $78 million. |
| The bank had more than a million depositors, many of whom were public service employees. When the bank collapsed, the Afghan government assumed losses of more than $800 million — a bill ultimately absorbed by Western donors who had been bankrolling the Afghan economy since 2001. | The bank had more than a million depositors, many of whom were public service employees. When the bank collapsed, the Afghan government assumed losses of more than $800 million — a bill ultimately absorbed by Western donors who had been bankrolling the Afghan economy since 2001. |