Asia

Kabul Bank fraud: Afghan court increases jail terms

Sherkhan Farnood and Khalilullah Ferozi appear in court in Kabul Image copyright EPA
Image caption Sherkhan Farnood (l) Khalilullah Ferozi (r) were sentenced live on television

An Afghan court has increased the jail sentences for two top officials at Kabul Bank, which collapsed in 2010 after losing almost $1bn (£630m).

Former chairman Sherkhan Farnood, and the bank's CEO Khalilullah Ferozi, were jailed for five years in 2013.

They appealed but have now each been sentenced to five years for money laundering and 10 for embezzlement.

The losses at Kabul Bank amounted to about 5% of the country's economy. Most of the money is yet to be recovered.

It was one of the world's biggest banking scandals, involving a brother of the former president, Hamid Karzai.

The bank handled payroll for government employees like teachers and policemen, but had to be bailed out by international donors when the scale of the losses emerged.

Image copyright AFP
Image caption There was a run on the bank when allegations of corruption emerged

The International Monetary Fund suspended loans to Afghanistan during the crisis.

Ghani's test

Farnood and Ferozi were convicted last year of fraud and embezzlement and sentenced to five years in prison, a term described as "relatively light" by an anti-corruption watchdog.

At their appeal Farnood was also ordered to pay a fine of $237m (£149m).

Both men are expected to appeal again.

The court ordered the assets of Mahmood Karzai, and Haseen Fahim, brother of a former vice-president, to be frozen until they repay their debts. They have been spared prosecution under a presidential decree issued by Hamid Karzai granting them immunity.

Tuesday's sentences come after the new Afghan President, Ashraf Ghani, ordered an inquiry into the fraud to be reopened.

The case is being seen as a first test of the president's commitment to tackle widespread corruption in Afghanistan, the BBC's Daud Qarizadah says.

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