Afghan police beat back mob of government workers at Kabul Bank branch

Despite media reports of corruption at Kabul Bank, Afghan officials insist that it is not in danger of collapse.
By David Nakamura and Javed Hamdard
Wednesday, September 8, 2010; 9:34 AM

KABUL - Fears over the future of ailing Kabul Bank grew violent Wednesday as state police beat back crowds of frustrated Afghan government workers attempting to withdraw their salaries on the final day before a four-day national holiday.

More than 500 government employees, including local police officers, Afghan National Army soldiers and teachers, mobbed the sole Kabul Bank branch that remained open, only to be kept at bay by armed police from the country's National Directorate of Security. The crowds pressed in so closely that the NDS police started punching and shoving people to keep them back. The guards also threatened to destroy the cameras of journalists attempting to take pictures of the scene. A cameraman was punched before jumping into a car and speeding off.

"This is shameful that these simple police officers are beating up more high-ranking officers," said Abdul Hanan, a policeman who had come to collect his $450 monthly salary. "We are educated people, not animals. We need to get our salaries. I have worked in more than 20 provinces, but I am standing out here unable to get my salary."

The standoff was the latest setback for attempts by President Hamid Karzai's administration to control public fears about the future of Kabul Bank, whose top two executives were forced to resign last week after the discovery of a series of risky off-the-books loans and property investments in Dubai.

Since then, panicked Afghans have removed well more than half of the bank's $500 million in liquid cash, despite assurances from the Karzai administration and Afghanistan's Central Bank that Kabul Bank is solvent and not in need of a government bailout. Kabul Bank, the country's largest private bank, handles payments for 250,000 government employees, and U.S. officials say a meltdown could affect the war effort to defeat the Taliban.

On Tuesday, according to a source in the Ministry of Finance, Karzai ordered that all government funds in the bank - estimated at between $100 million and $150 million - cannot be transferred elsewhere, a bid to ensure the bank is able to continue to pay salaries.

Wednesday was the final day that salaries could be cashed before the four-day Eid al-Fitr, which celebrates the end of Ramadan. Families often spend significant money on food and presents for the holiday.

Abdul Samad, an employee of the Ministry of Rural Rehabilitation and Development, was among the people demanding their salaries at Kabul Bank. He said he had not been paid in two months.

"I told them if I can't get my money, they will have to sit quietly and we would have no Eid," he said.

While Samad was talking, an NDS guard came over to order him to move back. The guard told the crowd that Abdul Qadir Fitrat, the governor of the Central Bank, was now in charge of Kabul Bank. Fitrat has maintained that the Central Bank is merely approving decisions made by the new chief executive of the bank, Masood Ghazi, a former Central Bank executive.

But Samad yelled at the guard that "those four mafia guys own this bank," referring to ousted chairman Sherkhan Farnood and ousted chief executive Khalilullah Fruzi, among others. The Central Bank has frozen the assets of several of those executives.

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