Kabul Bank: Afghan politicians 'interfered with inquiry'

Afghans walk past a branch of the Kabul Bank (file photo)
Image caption Investors withdrew their savings amid claims of corruption and mismanagement

Afghanistan's politicians interfered in a criminal inquiry into a $900m (£560m) banking fraud, a watchdog has said.

The Afghan-based anti-corruption body claimed politicians had amended the list of suspects to be charged over the collapse of Kabul Bank.

Separately a US firm's audit, leaked to US media on Tuesday, said the money had been funnelled to 19 firms and people linked to the Afghan political elite.

Some of the money was said to have been smuggled out on airline food trays.

The Kabul Bank scandal has enmeshed some of the biggest names in Afghan public life, and raised huge doubts about the strength of the country's institutions.

Allegations of corruption led to thousands of Afghans rushing to withdraw their money from the bank in 2010, forcing international lenders to bail it out.

A US audit found that much of the bank's money had been channelled into dummy companies and foreign accounts in the form of zero-interest loans that were never paid back.

International donors have described it as a Ponzi scheme.

Earlier this month a trial began of more than 20 people accused of involvement in the fraud.

'Not political'

The report released on Wednesday pointed out that the bank's failure represented about 5% of Afghanistan's GDP, making it "one of the largest banking failures in the world".

The bank had allegedly kept two sets of financial records, one for the regulators and one documenting the corrupt payments.

Prosecutors investigating the fraud were called to a high-level political committee to discuss the inquiry in spring 2011, according to the report by the Independent Joint Anti-Corruption Monitoring and Evaluation Committee.

The final list of suspects to be indicted, which was not released until early 2012, was then altered to conform to the politicians' demands, the report says.

"The indictment did not include officials from accounting firms that created false documents for Kabul Bank, airline employees that smuggled money out of Afghanistan, or shareholders who received funds from loans at zero interest, apparently without the intention of repayment," the 87-page report said.

The anti-corruption committee, a panel of three Afghans and three foreigners set up with funds from the UK and Denmark, compiled the report to inform international donors about what had happened.

Earlier Basir Azizi, a spokesman for the attorney general's office, had denied that the case had been treated as a political issue.

"We strongly reject any comments that the attorney general's office dealt with this case as a political issue," he said on Tuesday.

President Hamid Karzai's brother, Mahmoud, has several times been linked to the fraud, but he has not been prosecuted and has consistently denied any wrongdoing.

The judge in charge of the inquiry told Reuters news agency that Mahmoud Karzai had returned $22m earlier this year.

Under a government amnesty, those who returned money by June were given immunity from prosecution.

The bank was put into receivership last April, and so far more than $300m in cash and assets has been recovered.

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