I remain fascinated by this Kabul Bank story, for so many reasons. It shows the sharp contrasts between a pre-modern society moving into the modern world. But it also shows the easy corruption that can result from setting up civil society in a box, when the keys of civilization are handed over to people out for themselves. Seeing Afghanistan’s central bank try to manage monetary policy, when the crisis resulted from the brother of Hamid Karzai and several other cronies blowing the bank’s money on luxury villas in Dubai, is just too dissonant to even capture in words.
So far, the US has not committed taxpayer funds to save the bank, only providing “technical assistance” to the Afghan government. Did they put together this deal, then?
Struggling to contain an escalating crisis at Kabul Bank, Afghan authorities have barred the sale of Kabul properties held by the bank’s principal owners.
But the freeze excludes President Hamid Karzai’s brother, Kabul Bank’s third largest shareholder, who says he does not own property in the Afghan capital.
The Afghan Central Bank ordered the property-sale ban in a letter reviewed by The Washington Post. It was sent to Kabul municipal authorities and it targets five people, including Kabul Bank’s two biggest shareholders – who were ousted last Monday as executives of the bank – as well as the brother of Afghanistan’s vice president, who is both a shareholder and major borrower.
No restrictions were placed on the president’s own brother, Mahmoud Karzai, who has also borrowed money from Kabul Bank, including $6 million that he used to buy a 7 percent stake in the crumbling bank.
It’s pretty obvious that Mahmoud Karzai just has real estate in Afghanistan in another name. This is routine in Afghanistan. And it’s not much better that Mahmoud doesn’t own property in Kabul because his primary residence is one of those luxury villas in Dubai.
This goes back to a new strategy intimated over the weekend – that the US would tolerate more corruption from the Afghan government while focusing on fighting the Taliban. I think that really means they’ll tolerate the Afghan government, which is one big ball of corruption. And if this doesn’t sound like the same blunder as backing the corrupt governments of South Vietnam in preference to fight the “common enemy” in the north.
Military officials in the region have concluded that the Taliban’s insurgency is the most pressing threat to stability in some areas and that a sweeping effort to drive out corruption could create chaos and a governance vacuum that the Taliban could exploit.
“There are areas where you need strong leadership, and some of those leaders are not entirely pure,” said a senior defense official. “But they can help us be more effective in going after the primary threat, which is the Taliban.”
As Dexter Filkins explained this weekend, this is potentially a more dangerous view, and really seems to be one that the military and the Administration have talked themselves into. In fact, it is possible for Afghans to lose faith in their leadership, even if corruption is a recognized part of their society. You only have to look at the people queueing up every day in front of Kabul Bank to understand this. In fact, this is driving ordinary Afghans toward the Taliban. It’s not something to be tolerated.
You don’t have to look very hard to find an Afghan, whether in the government or out, who is repelled by the illegal doings of his leaders. Ahmed Shah Hakimi, who runs a currency exchange in Kabul, had just finished explaining some of the shadowy dealings of the business and political elite when he stopped in disgust.
“There are 50 of them,” Mr. Hakimi said. “The corrupt ones. All the Afghans know who they are.”
“Why do the Americans support them?” he asked.
They would say that they prefer them to the alternative. But you cannot force that on the population. And it shows the essential error of this entire project.
UPDATE: William Black has a great piece about Kabul Bank.




18 Comments

Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
Kabul Bank Mess Shows Error of Trusting Corrupt Officials in
AfghanistanUnited States ; )From your first paragraph:
And this is different than the S.O.P. in the United States how exactly?
*sigh*
Yeah, I had to laugh a bit when I saw the thing about freezing the accounts of property sales for everyone but those of Karzai.
Between shit like this, the overall corruption and the body counts that Spencer wrote about earlier, this is getting way too much like Vietnam Redux
Here is video of folks pulling their money out of the Kabul Bank….
http://www.newslook.com/videos/247457-afghans-withdraw-money-from-troubled-bank
Karzai wouldn’t last 5 minutes without US troops in Afghanistan. As Bill Black says, the US, ie. us will, one way or another, bailout the bank and its corruption. I mean why not? They have already done it for our banks.
At least when a “pre-modern society” is run by corrupt officials the damage tends to be limited to that country.
When a fully “modern society” like our own is corrupt, we export it around the world and take the whole global economy down with us.
Seems to me the only difference is the scale of the destruction.
It also shows the error of trusting bankers.
You get that latter clause is the precise condition of our very own government, and worse still that it’s fundamental to its make-up right?
This should indicate that the problem isn’t the “civil-society-in-a-box,” but rather that you can’t retard corruption when the system rewards shameless self-promoters.
Karzai is the U.S. version of the Soviets Najibullah. Karzai probably always has a plane idling at the Kabul Airport at all times.
Duh Freakin Obvious Duh!
Thats not fair to Afghanistan Karzai was picked by Bush and he wanted someone to create in Afghanistan what he was creating in America.
In other words Mission Accomplished.
I don’t want the world to judge us by Bush.
For anyone who matters in Afghanistan, which does not include the vast majority of the population, the American occupation has been a once a millenium opportunity to grab everything they can and get it safely out of the country. $80 billion in reconstruction money has been expended by the U.S. so far. In so primitive an economy that sort of spending should be evident everywhere you look. But of course you would actually have to look long and hard to find anything beyond a few canals cleared, a few miles of paved highway or maybe a ramshackle cinder block school. I suspect that most of the money went into the real estate bubble in Dubai.
Dubai built Islands shaped like all the countries of the world for the rich to build mansions on. Did Dubai ever get around to building Afghanistan?
Does Hamid or any of his cronies own it?
We’re supposed to believe that the US, which had no hesitation spending hundreds of billions to bail out US banks with US taxpayer funds, would hesitate one millisecond to bail out the Kabul bank which WAS chock full of US taxpayer dollars and IS essential (because it processes the pay for military, police and education personnel)to the high-priority US effort in Afghanistan?
And corrupt officials — that’s news.
WOW its so good to see that Afghanis are picking up on American “free market democracy” (as distinct from Democracy) so fast!. Like a bunch o’ little mini me’s runnin around over there
*g*
(*whispering* it’s Afghans, no “i”)
I laughed when I read that Karzai’s brother borrowed the money from Kabul bank to buy a 7% share in the same bank.
Then I remembered that’s basically how Donald Bren became the richest man in Orange County.
We’ve known for some time that billions of dollars are being secreted out of Kabul to help well-connected Afghans buy luxury villas in Dubai.
These properties are often only registered under the names of the individuals issuing the loans, such as Sherkhan Farnood, the founder and chairman of Kabul Bank.
Sherkhan Farnood has a past history of being linked to bank corruption back when Afghanistan was occupied by Russia, both he and Fruzi were involved. Since he received his license to open Kabul Bank he and Fruzi have been moving money for Karzai’s family, business and government associates.
How do they get bags and even pallets of money to Dubai? Fruzi and Farnood among others, own Pamir Airways. Company slogan — Fly with confidence. Their current fleet is five Boeing 737′s.
visit Dubai’s The World — http://www.theworld.ae/