New Kabul Bank

History

Founding

The Kabul Bank was established in 2004. It is connected throughout the globe with SWIFT facility, which enables fund transfer for its customers. The bank has correspondent relationship with seven international banks situated in Germany, China, Iran, Tajikistan, Saudi Arabia and India.

Corruption scandal

Kabul Bank was badly shaken in 2011, in one of "the worst banking scandals in history", according to The Guardian newspaper. In late 2012, according to the Los Angeles Times, independent investigators and journalists uncovered widespread corruption in Kabul Bank. The New York Times, in 2012, headlines indicate "Audit Says Kabul Bank Began as 'Ponzi Scheme'" following investigation and judicial action in the aftermath of the Bank's crisis and scandal.

In 2010, it was disclosed that its Chairman other insiders were spending the bank's US$1 billion for their own personal lavish style living and lending money under the table to family, relatives and friends. In September 2010, one of the principal owners of the bank said that depositors had withdrawn $180 million in two days and predicted a "revolution" in the country's financial system unless the Afghan government and the United States moved quickly to help stabilize the bank.{{cite news|url=https://www.google.com/hostednews/afp/article/ALeqM5jJma5WN_riCwDv-7SbQTEOx6AHsA?docId=CNG.f3c56da45464a41c1cd517b13c5de4ac.2a1|archive-url=https://archive.today/20130125063751/http://www.google.com/hostednews/afp/article/ALeqM5jJma5WN_riCwDv-7SbQTEOx6AHsA?docId=CNG.f3c56da45464a41c1cd517b13c5de4ac.2a1|url-status=dead|archive-date=25 January 2013|title=Afghan government orders all private banks to be audited

In 2010, mobs of customers massed outside of bank locations.Wall Street Journal,(16 February 2011), "Grand Jury Investigates Karzai Brother U.S. Federal Probe Risks Worsening Relations With the Afghan President; Mahmood Karzai Hires a Washington Lawyer" On 27 December 2010, a suicide car bomber killed at least three Afghans, including one policeman, as he targeted police officers who lined up to withdraw their salaries in front of Kabul Bank in central Kandahar; the midday explosion also wounded 16 policemen and five civilians.

2011

On 19 February 2011, at least 38 people (including 13 policemen) were killed during an insurgent raid on a branch of Kabul Bank in Jalalabad, the provincial capital of Nangarhar. Three suicide bombers reportedly entered the bank and detonated themselves, and fighting between insurgents and security forces continued for over four hours; President Hamid Karzai and a NATO International Security Assistance Force spokesman condemned the attack, which was the deadliest in the country since June 2010. Two surviving attackers, including teenageer Zar Ajam, were swiftly tried and hanged at Pul-e-Charkhi prison in Kabul in June 2011.

In its July 2011 review of the Kabul Bank scandal and aftermath, international non-governmental organization (NGO) Transparency International raised repeated concerns about problems of corruption in Afghanistan and its impact on the economy, business investment, security and civil society. In October, the Washington Post reported that Mahmood Karzai could soon be indicted for tax evasion in the U.S., though he denied the charges, telling the newspaper: "I'm very clean", and insisting his only interest was "rebuilding Afghanistan."

In mid-January 2011, acting chief financial officer and other Pakistani employees of Kabul Bank fled to Pakistan, apparently out of fear for their lives and possible arrest, though some said they were being made scapegoats for powerful shareholders. Afghan authorities also called in several bank managers, including foreigners, for questioning and detained some in southern Afghanistan's Helmand Province in connection with illicit transfers of bank funds.

In early February 2011, DAB Governor Abdul Qadir Fitrat said the central bank would impose stricter rules on banks wanting to handle about US$1.5 billion worth of salaries for government and security officials, which until now has been done by Kabul Bank. Fitrat also told Reuters the total amount of money at risk over suspected irregularities at Kabul Bank amounted to $579 million, almost twice the figure estimated when the bank's troubles first surfaced. Fitrat dismissed concerns that it faced liquidation, saying it would be privately owned again within three years. "Kabulbank is stabilised, it has enough cash at its disposal and the central bank is trying to rehabilitate the bank and then at some point sell it to potential buyers in two or three years," Fitrat told Reuters. In early July 2011, Fitrat resigned as head of the central bank after fleeing to the United States, claiming his life had been threatened and that he was being made a scapegoat for politically connected individuals.

After a mid-February 2011 visit by Neal Wolin, the U.S. deputy Treasury secretary, the Afghan finance ministry said that weak international support had exacerbated the crisis. "Afghan and US officials agreed that (the crisis)... was compounded by the erroneous audit by PricewaterhouseCoopers, and ineffective international technical assistance and supervision", the ministry said. However, Wolin pressed the government to rapidly place the lender into receivership, echoing calls made by a previous International Monetary Fund (IMF) delegation. Since 2011, the Karzai Government has rejected banking oversight and reform efforts by the United States in the wake of the Kabul Bank scandal and collapse according to reports by the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) in 2013–14.

Following the departure of Hamid Karzai in 2014, Ashraf Ghani re-opened efforts to recover funds lost by embezzlement, corruption, and fraud by the bank's insiders. Ghani vowed to seek to continue the investigation of the Kabul Bank crisis and fight corruption in Afghanistan. In October 2014, the Ghani Administration in Kabul reportedly officially re-opened the investigation.

In September 2010, the Afghan Central Bank said it was prepared to provide loans to the Kabul Bank, "if it requests". After the bailout by the government, by 2015, authorities were inviting bids to privatize the new bank. In 2016, Afghanistan's Joint-Stock Company offered to buy New Kabul Bank for $31 million. Pakistan's MCB Bank also made a bid, as New Kabul Bank was to be privatized in October 2018.

References

References

1. Boone, Jon. (15 November 2011). "Afghan finance minister admits doubts over Kabul Bank's missing $1bn". The Guardian.
2. (28 November 2012). "Report cites extensive corruption involving Afghan bank".
3. Rosenberg, Matthew. (26 November 2012). "Kabul Bank Audit Details Extent of Fraud". The New York Times.
4. Filkins, Dexter. (2 September 2010). "Depositors Panic Over Bank Crisis in Afghanistan". [[New York Times]].
5. Ellis, Eric. (7 November 2010). "Why Farnood was flushed out of Kabulbank". [[Euromoney]].
6. Partlow, Joshua. (1 February 2011). "Kabul Bank employees flee to Pakistan amid investigation into lending, officials say". [[Washington Post]].
7. Londono, Ernesto. (2 October 2011). "In Kabul Bank scandal, little money recovered". [[Washington Post]].
8. (7 March 2011). "Mahmoud Karzai being investigated for racketeering, extortion and tax evasion – Macleans.ca".
9. Spencer, Richard. (8 September 2010). "Hamid Karzai's brother made £500,000 on Kabul Bank property deal". The Telegraph.
10. Higgins, Andrew. (22 February 2010). "Banker feeds crony capitalism in Afghanistan". Financial Times.
11. Imbert, Louise. (November 2011). "Hushed up scandal of the Kabul Bank – The Afghan banking crisis". Le Monde Diplomatique.
12. Risen, James. (3 June 2012). "Karzai Family Moves to Protect Its Privilege". The New York Times.
13. (15 October 2010). "Karzai's brother might be indicted for evading U.S. taxes".
14. Filkins, Dexter. (2 September 2010). "Depositors Panic Over Bank Crisis in Afghanistan". The New York Times.
15. Abi-Habib, Maria. (28 December 2010). "Afghan Bomber Targets Officers, Kills at Least Three". [[Wall Street Journal]].
16. (20 February 2011). "Insurgents raid Afghan bank; 38 killed". [[CNN]].
17. (21 June 2011). "Afghanistan hangs Kabul Bank attackers". [[Al Jazeera]].
18. Gutcher, Lianne. (19 July 2011). "Afghanistan's anti-corruption efforts thwarted at every turn". The Guardian.
19. Higgins, Andrew. (22 February 2010). "In Afghanistan, signs of crony capitalism".
20. Huffman, Michael. (3 December 2011). "The Kabul Bank Scandal and the Crisis that Followed".
21. Green, Matthew. (18 February 2011). "Kabul rebukes outsiders over bank crisis role". [[Financial Times]].
22. (16 October 2011). "Afghan parliament approves $51m payout over Kabul Bank". [[Agence France-Presse.
23. Partlow, Joshua. (30 June 2011). "Elaborate ruse behind vast Kabul Bank fraud". [[Washington Post]].
24. "Archived copy".
25. Sorkin, Amy Davidson. (2010-09-01). "Too Corrupt to Fail?".
26. (27 September 2010). "Karzai Brother Being Investigated For Corruption".
27. Davidson, Amy, The New Yorker (7 June 2012), "The Karzai Rule : Who Pays for Corruption in Afghanistan"
28. (28 November 2012). "Billions of Dollars Sent Illegally Abroad from Kabul Bank". Satrapia.
29. "AFGHANISTAN'S BANKING SECTOR: THE CENTRAL BANK'S CAPACITY TO REGULATE COMMERCIAL BANKS REMAINS WEAK".
30. (8 January 2014). "Afghan central bank's 'fragile state' increases risk of new banking crisis, audit finds". 2014-01-08.
31. Standifer, Cid. (9 January 2014). "Report: Afghan banking authority rejects U.S. help".
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33. "US aid will boost Ukraine, but doubts remain over 2025 supplies".
34. "'Important symbolic act' – DW – 10/03/2014".
35. (2014-10-01). "Kabul Bank fraud: Ghani reopens Afghan corruption case". BBC News.
36. "Islamic State claims bombing in Afghanistan that kills dozens". Washington Post.
37. "Two charged in deadly Afghan bank attack executed".
38. Farmer, Ben. (6 September 2010). "Kabul Bank gets Afghan bail-out".
39. (7 November 2015). "Afghan government cancels property deal with convicted banker". Reuters.
40. Eltaf Najafizada. (28 July 2016). "Afghan Firm Offers $31 Million to Buy Defrauded New Kabul Bank".
41. Eltaf Najafizada. (6 April 2016). "Pakistan's MCB Bank Bids to Buy Afghanistan's New Kabul Bank".