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U.S. Envoy: Kabulbank Was 'Vast Looting Scheme'

Outgoing U.S. Ambassador to Afghanistan Karl Eikenberry

Outgoing U.S. Ambassador to Afghanistan Karl Eikenberry

KABUL -- The outgoing U.S. ambassador to Afghanistan has described a corruption-ridden Afghan bank as being like a "giant looting scheme" at the time of its near collapse and said those responsible for fleecing depositors should be brought to justice.

Karl Eikenberry made the comments about Kabulbank in an interview with RFE/RL's Radio Free Afghanistan in Kabul.

Fraud and mismanagement at Kabulbank brought the country's largest private lender to the brink of collapse last year after it emerged that fraudulent loans worth hundreds of millions of dollars had been made to influential customers.

"Kabulbank was, before it went into receivership by the Afghan government, probably not to be categorized as a bank at all. It was a giant looting scheme, it was what we call a Ponzi scheme, just a shell game where money is looted from depositors," Eikenberry said.

"It's one of the most severe banking crises in global history given the size of the Afghan economy and the banking sector. On a relative basis it's a massive, massive scandal," he said.

"Clearly there were problems and deficiencies with the oversight of the bank, but the people who looted money from depositors -- those are the people who conducted criminal activities.

"Those people [need] to be brought to justice and they need to repay the money. Regardless of what their political affiliation is, they need to return the money. That's an obligation not only to the small depositors of the bank but also the people of Afghanistan."

U.S. officials say Kabulbank issued unsecured, undocumented loans of up to $850 million to some of its shareholders, including ministers, President Hamid Karzai's elder brother, and other powerful members of Afghanistan's elite.

Last month, the head of the Afghan central bank quit his post and fled to the United States, saying his life was in danger over his investigation into corruption at Kabulbank.

The Afghan authorities dismissed the claim, saying Abdul Qadir Fitrat himself was a fugitive from the law and that Afghanistan would seek his return to face prosecution over alleged bribe-taking.

RFE/RL asked Eikenberry if he thought the United States would hand over Fitrat to Afghanistan.

Eikenberry said Fitrat is a permanent resident of the United States and so Washington has no reason not to allow him to stay in the country.