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What went wrong at Kabulbank?
Afghanistan’s main financial institution was thrown into turmoil over a reported $160 million of luxury villas in Dubai. Here’s the situation so far.
September 15, 2010 3:18 by Reuters
Afghanistan’s central bank has stepped in to take control of the troubled Kabulbank, its governor said on Tuesday, after suspected irregularities threw the country’s top private financial institution into turmoil. Here are some questions and answers about the bank, its troubles and what it means for President Hamid Karzai and his Western backers.
WHAT IS KABULBANK?
Kabulbank began operations in 2004, almost three years after U.S.-backed Afghan forces ousted the Taliban, and is Afghanistan’s largest private bank in terms of business volume, number of branches, customer base and employees.
Financial records posted on its website show it had total assets of $1.01 billion and liabilities of $991 million in 2009. It has 68 branches, most of them in the capital, and plans to open 11 more elsewhere. It also has links with international banks in Germany, China, Tajikistan, Saudi Arabia, India, Belgium, Italy and Iran, and is the principal agent for Western Union Money Transfer, handling remittances from Afghans living abroad.
The bank handles payrolls for the state, and its customers include about 300,000 soldiers, police officers and other state employees, whose salaries are funded by the United States and other Western donors. It also lends money to the private sector.
Kabulbank has close ties to Afghanistan’s government and ruling elite. One of Karzai’s brothers is a major shareholder, as is a brother of First Vice President Mohammad Qasim Fahim. Fahim’s brother, Mohammad Haseen, is under investigation, along with former Chairman Sher Khan Farnood and former Chief Executive Officer Khalilullah Fruzi, Central Bank Governor Abdul Qadir Fitrat told Reuters on Tuesday. Karzai’s brother, Mahmoud Karzai, is not.
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