Kabul Bank employees flee to Pakistan amid investigation into lending, officials say

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Washington Post Foreign Servic e
Monday, January 31, 2011; 10:00 PM

KABUL - The acting chief financial officer and other Pakistani employees of Kabul Bank have fled Afghanistan amid an investigation into the scope of the bank's reckless lending and allegations that its shareholders paid large bribes to many senior Afghan officials, according to Afghan officials and others familiar with the issue.

The executive, Rana Tayyab Tahir, and his colleagues in the finance department of Afghanistan's largest and most sophisticated bank fled to Pakistan on Jan. 14, a move some said was made out of fear for their lives and possible arrest in Afghanistan.

Afghan authorities have called several bank managers, including foreigners, in for questioning and detained some in southern Afghanistan's Helmand province in connection with illicit transfers of bank funds.

Sherkhan Farnood, a world-class poker player who founded Kabul Bank and served as its chairman until his ouster in September, is now under effective house arrest, along with former chief executive Khalil Fruzi. Both are barred from leaving Afghanistan.

But other shareholders who took out million-dollar loans, including Mahmoud Karzai, the brother of President Hamid Karzai, and Haseen Fahim, the brother of Vice President Mohammad Qasim Fahim, have been allowed to leave the country.

Tahir and his colleagues could not be reached for comment. Two bank insiders said that authorities appear to be making managers into scapegoats for the powerful shareholders who withdrew hundreds of millions from the bank for personal use.

Investigators with Afghanistan's Central Bank and the attorney general's office have begun the complicated process of unraveling the web of illicit loans to politically connected shareholders and allegations of bribery to members of Karzai's administration.

Fruzi doled out millions of dollars to cabinet members, lawmakers and other influential Afghans, according to former bank officials and investigators, as used bank money to finance Karzai's 2009 election campaign.

"Nearly everyone in the cabinet got money from the bank," said a person familiar with the investigation.

Fruzi could not be reached for comment. Farnood, reached by telephone, said he was not allowed to comment.

Several people involved in the probe say they do not believe the attorney general's office will attempt to prosecute the powerful shareholders. The investigation, they said, had been stalled by a lack of technical capacity to understand the transactions and by political pressure from President Karzai's office.

Last year, the U.S. government pressed Afghans to accept an independent forensic audit of Kabul Bank by an international accounting firm, but Karzai's government resisted. This month, Afghan finance ministry officials told Western officials that they would move forward with the forensic audit, under their control, and have begun accepting bids.

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