KABUL: Afghanistan’s new president on Wednesday reopened an inquiry into a 2010 scandal over a bank that collapsed triggering a financial crisis and dealing a heavy blow to confidence in the banking sector.
President Ashraf Gani reopened an inquiry into the theft of almost $1 billion (Dh3.67 billion) from Kabul Bank with a decree, fulfilling a campaign promise to make fighting corruption a priority.
Afghanistan’s corruption watchdog called the scandal “one of the largest banking failures in the world”.
Few of those involved were ever punished or returned the money.
“As a first step, based on our promise to take action against administrative corruption, today the Kabul Bank case will be reopened and an investigation will be launched,” Gani told reporters in Kabul.
“We promised to combat corruption comprehensively, on a full scale and in a principled manner.” The two former heads of the bank, founder Sher Khan Fernod and former chief executive Haji Khalil Ferozi, convicted of taking $810 million of the $935 million stolen, were both sent to jail for five years.
Brothers of then President Hamid Karzai and his then first vice-president, Mohammad Qasim Fahim, who were both shareholders, were spared jail sentences thanks to a presidential decree that granted immunity from prosecution to those who returned funds.
The case was viewed as a crucial barometer of Afghanistan’s commitment to stabilising the economy. The government was forced to bail out the country’s then biggest bank. It was later relaunched as the state-run New Kabul Bank.
Mahmood Karzai, the brother of the former president, said he had no worries about the reopening of the case, saying loans that he had taken were legal and he had repaid them with full interest.
“I welcome it. I am an open book. I know I am clean and when you are clean, you are not afraid,” Mahmoud Karzai told Reuters, adding he hoped the perpetrators would be brought to justice and the money returned.
While small sums were returned, most of the money was never repaid and confidence in the banking sector has yet to fully recover.
“It’s a smart move for the new government to announce further investigations because there is little else that would demonstrate their commitment to fighting corruption,” said Grant McLeod, former adviser to the corruption watchdog and author of its upcoming report on the Kabul Bank, due out later this month.
“That being said, there have been many promises and feigned proceedings in the past so it really comes down to how credibly the investigations are done.”
