28 Jun 2011

Corruption exposed as Afghan bank chief flees

Last week I blogged on the subject of news items that bore. I could well have included Afghanistan in my list. News that bores, is news that never changes…ten years into the West’s Afghan adventure, ten years on from 9/11, the danger is that for the citizen, little changes in Afghanistan.

Well now something has happened that is not about “our boys”, not about the war, nor even about the Taliban or al-Qaeda. That something is the most extraordinary insight into the scale of corruption in Kabul and its direct link with President Hamid Karzai’s Western-backed Government.

A week ago, unnoticed in the world’s media, the Governor of the Afghan Central Bank fled the country in fear for his life. Today he is holed up in Northern Virginia. He has been tracked there by the FT who have spoken to him.

Abdul Qadeer Fitrat was appointed to head the bank in 2007. Mr Fitrat is a brave man. On the heels of the well known but perhaps by now “boring” story of the collapse of the Kabul Bank last September, Mr Fitrat appeared in Parliament in Kabul in April and read out a list of people who, he said, had benefited from Kabul Bank loans. His reading of this list of Kharzai cronies and other figures at the centre of Afghanistan’s burgeoning capitalist life, was broadcast on television.

It was after a run on the Kabul Bank last September that Mr Fitrat had seen to it that the entire management of the bank was replaced, declaring that the whole bank little more than a Ponzi scheme. It was a scheme, he said, from which well connected businessmen, Karzai relatives, and Afghan Ministers benefited.

When the Kabul Bank collapsed there were £900m in outstanding loans to these people – a mere £62m has ever been recovered. Mr Fitrat detailed these allegations on the floor of the Afghan Parliament. He tells the FT his life is in “imminent danger”.

‘These people will go unpunished, the ex-Governor has said.

“I have seen no co-operation from the law, ten months after the collapse,” he said.

To abuse Shakespeare, there is something rotten in the heart of Afghanistan. Mr Fitrat has dared to expose it. Now the very forces that are battling to sustain President Karzai and his crew, have had to assist in the flight and protection of the man once at the very heart of the financial governance of the “democratic Afghanistan” that Afghan, British, American, and other Nato forces have lost their lives trying to build.

Boring? Or is it time we explored the implication of the flight from Afghanistan of the Governor of the Afghan Central Bank “in fear for his life”?

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12 reader comments

  1. Tanya Spooner says:

    The saddest part of this information is that it will be ignored, brushed under the carpet and generally expunged from the awareness of the British Parliament and the US government. They will have known about it before now.
    Remember, Jon, that arms are one of our biggest exports and there is very little work at home for young unskilled men, so the two factors promulgate the continuing farce of “waging war for freedom” in other countries who can’t seriously fight back.

  2. adrian clarke says:

    Its not boring Jon ,merely an insight into corruption in Afghanistan.A way of life in many other countries too,be they Asian African S.American.I do not believe it is a new phenomena but how they run their countries.
    It shows the farce of us pouring aid into many of these countries where we attempt to help the so called poor.We can not,as much as we would like , change the mindset of other nations.It is yet another reason why we should not interfere on foreign soil.We can no longer export our so called democracy and in reality should nothave in the past .Our so called colonisation was merely trade exploitation.We may have exported some of our ways but in the end we can not change national thinking in foreign climes.
    We try to lecture the Chinese leader on human rights .We remove Saddam Hussein , We threaten Gadaffi with war crimes ,whilst helping his opposition in fighting.The Western attitude that everyone should act like us is totally hypocritical.
    You highlight corruption in Kabul,yet we had it in Westminster and it is still going on in the European Union.It is time we became a little more Insular and just look at foreign corruption with a nod and a wink.

    1. Victor Lyons says:

      Not all aid is bad. Some aid is very very good. I participated in a UK Government aid project which taught over 50,000 poor illiterate women in India to read and write. This made a huge difference to many of their lives and the lives of their families. Every penny was spent under the watchful eye of Price Waterhouse, and nothing was mispent.

    2. adrian clarke says:

      Victor in some ways that is excellent news.Having said that ,the schooling of Indian women should be down to India.The money would have been far better spent ensuring our children leave school literate.
      As for Price Waterhouse,i wonder how much they made out of it.They do not work from the goodness of their hearts.Did you see that Ernst and Young charged £990 an hour to close focus this last seven weeks raking in a 12th of the takings

  3. margaret brandreth-jones says:

    Is this just Afghanistan or is it a similar story elsewhere Jon? The people who were the recipients of the loans would have probably invested in something where they could get a return for their money. The loans could have been from a collection of business men who shared the profits and re invested .Only speculation of course.If he didn’t have such a prominent position he may have been accused of madness or joking , however they can’t do that with a high profiled person , so I suppose the only alternative is ‘ off with his head’

    When corruption involves a majority against one honest person, the case against the one will be proved of course and the corruption continue. Well done for speaking out Mr Fitrat.

    In this country if fraudulent loans taken out by a collaborative of local high flyers was taken out against firms and collapsing firms( who could have also been deliberately targeted)
    then any of the innocent parties made to pay for the wrong doings would not of course be killed( I hope) but their life made a misery, accused of impaired mental health whilst they watch the criminals grow on the fruits of the innocent.Many of standing can’t face the truth

  4. Tom Wright says:

    I am reminded of the scandal of our MPs claiming for second homes they don’t have, of the ‘donations’ to parties of all stripes and the naivety that believes this doesn’t influence policy.

    I am reminded of the scandal of senior union leaders taking unsecured loans from union funds that attracted wide coverage in Private Eye and the men who continue to live in their own version of grace and favour accommodation at the expense of the poor.

    Then there is our own media, the secret back door deals with political leaders – the PR power brokers of the public opinion that decides elections, and the deliberate trashing of the BBC for daring to tell the truth on WMD.

    We have our own banking scandals which need no comment.

    There are plenty of things to criticise the Afghans for. Till we put our own house is order, corruption isn’t one of them.

  5. Philip says:

    You can see why, for all their brutality & repression, Afghans had time for the less corrupt Taliban

  6. Meg Howarth says:

    And now on Twitter from BBC’s economics ed, Paul Mason: ‘Ad running at my (Athens) end of Guardian website: “Moving Offshore? HSBC expat solutions…” (Adrian, you’re in my thoughts as you savour a critique of one of your hated newspapers.)

    LVT tax on land will end this tax evasion/avoidance, both equally unethical. The law’s an ass in this as so much else.

    Mason goes on to say that Moodys estimate 8% of Greek deposits gone in 2011. Bet it’ll be more before the year’s out as the rich sequester their tax-evaded ill-gotten gains.

    Slam the tax on land, the ‘austerity’ measures become unnecessary and Greece can be a beacon to the world. Wish Papandreou would read Snowblog!

    1. Meg Howarth says:

      More from Paul Mason re Guardian’s off-shoring ads: ‘I think the ads are aimed at Brit expats not Greeks – there are 100ks of Brits leaving every year so some1 has to bank for them!’

      And off-shoring expats keep their publicly funded state pensions – in short, underpaying on tax owed while also taking from the taxpayer.

  7. Mudplugger says:

    The key difference between corruption in Afghanistan (and any other ..stan you care to name) is only in the quality of its current disguise.

    As nations mature with apparent democracies, the corrupt simply recognise the need to be smarter about concealing their deeds from the people.

    Yet even when, so very rarely, it is blatantly revealed, as in the UK’s ‘Cash for Honours’ scandal, the cabal of corruption simply closes ranks and shuffles the issue out of the news, using all the agencies at its disposal, in its disposal.

    The Third World’s people are not inherently any more corrupt than others, but they have not yet reached that level of societal maturity when it beomes necessary to draw a veil of structured silence over it, so we find out about it.

    It could be argued that our additional acts of deliberate and orchestrated cover-up make the developed world, in truth, one stage more corrupt than Afghanistan and rest. A point to ponder.

  8. jaybee says:

    British , American and NATO troops were not there to ‘democratise Afghanistan’ – that came later. This adventure was an American war of vengeance for September 11 . A weak , basically undemocratic sovereign state was invaded to go after the perpetrators . The Taliban and Al Qaeda were conflated .The Taliban took to the hills whilst Al Qaeda took to Pakistan . This left a country without a government . So it was decided to set up a puppet regime ( we didn’t want to seem like conquerors after all) and democratisation became the spin. Now , years , lives , limbs and billions later we are quitting – leaving behind a weak , basically undemocratic , corrupt sovereign state . Yes they have been bequeathed the very model of a western Democracy .

  9. Moonbeach says:

    You mean to say that there are people in Afghanistan that made fortunes that led to a banks collapse!

    A bit like here then. It’s a pity that the so called leaders of those banks that needed our bail out and their political cronies didn’t also head for the hills!

    But a word of caution. The US definition of corruption is often confused with normal business practice in other parts of the world!

    I have written before and will doubtless write again that we have no right to be in Afghanistan. The North West Frontier has never been worth a single UK soldier’s life nor a pound of our taxes.

    Mr Gove should educate his colleagues about the history of the Region. I assume that Eton ignored East of Ascot!

    Interesting too that the single service critics of our PM, David Blair, have been given the ‘bums rush’ off the Defence Committee within days of comment. Coincidence or UK political corruption?

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