Not here obviously.
Afghan Court Convicts 21 in Kabul Bank Scandal
By MATTHEW ROSENBERG and AZAM AHMED, The New York Times
Published: March 5, 2013
In total, 21 defendants were found guilty on Tuesday of crimes for their roles in the failure of the bank, which investigators have described as little more than a Ponzi scheme.
Its main function was to funnel depositors’ money to its own shareholders and their cronies, and its owners masked their theft for years by creating fictitious companies, phony books and even smuggling cash out of the country in the food trays of a commercial airliner they owned.
According to Afghan and Western investigators, the regulators were actively deceived by the bank’s owners, who kept double books and engaged in other ploys to cover up their deceit. The owners even created fictitious companies, including fake letterheads and rubber stamps to leave a paper trail that would appear legitimate. The Karzai administration also stymied the regulators’ work, the investigators said before Tuesday’s verdicts. They had characterized the prosecutions as an effort to seek retribution.
Once celebrated by American and Afghan officials as a cornerstone of the Western project to rebuild Afghanistan, Kabul Bank was taken over by regulators in August 2010 after becoming perilously insolvent. At the time, 92 percent of its loan portfolio – $861 million, or about 5 percent of Afghanistan’s annual economic output at the time – had gone to 19 people or companies, according to a forensic audit by Kroll Associates, an international investigative firm.
All were part of a clique that was tied to Mr. Karzai’s government. Bailing out the bank cost the financially struggling Afghan government roughly $825 million, a sum that at that time represented most of the government’s annual revenues. Estimates of how much has been recovered from those who received loans vary from $200 million to $400 million, Afghan and Western officials have said.
Critics say Afghan court was lenient in bank corruption case
By Shashank Bengali, Los Angeles Times
March 5, 2013, 7:19 a.m.
The case was a major test for Afghanistan’s justice system, which had never before tried such a massive fraud case, or one that implicated powerful men with ties to President Hamid Karzai and other top officials – and critics judged the results to be disappointing. They noted that the three-judge panel convicted Farnood and Ferozi on a lesser charge of breach of trust, which carries a lighter sentence and didn’t include an order to confiscate millions from the disgraced executives’ offshore bank accounts.
Prosecutors had sought convictions for money laundering, embezzlement and other more serious crimes, which would have faciliated recovery of the stolen funds and together could have carried a maximum jail sentence of 20 years.
Executives and top shareholders looted the private Kabul Bank of $935 million – including some squirreled out of the country in food trays of a now-defunct airline – sparking one of the largest bank failures ever. The theft amounted to some 6% of Afghanistan’s gross domestic product, financed shopping sprees and overseas villas for leading shareholders while leaving ordinary account holders broke, and dealt a huge blow to international confidence in the country’s fledgling public institutions.