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Afghan President's Brother Denies Business Success Built On Family Ties

Mahmoud Karzai, unlike his better-known brother, has sought to stay out of the political limelight.
Mahmoud Karzai, unlike his better-known brother, has sought to stay out of the political limelight.
In a recent profile of Mahmoud Karzai, "The New York Times" described the 54-year-old brother of Kabul's preeminent politician as "one of Afghanistan's most prosperous businessmen."

But Karzai sees himself a bit differently, as a hardworking and law-abiding businessmen who is investing in his country's future and wouldn't even count himself among the top 1,000 wealthiest Afghans.

Uncovering anyone's assets in a country whose business and ownership structures are as murky as Afghanistan's is difficult, and

But the nature of the allegations, particularly against the backdrop of President Hamid Karzai's bid for reelection later this year, appear to have struck a nerve with Mahmoud Karzai, who concedes it's "very difficult to legally make a profit in Afghanistan" but attributes them to political sniping.

Many of his critics say that Mahmoud Karzai -- who in addition to a car dealership and coal mining is involved in numerous real-estate deals and has interests in the country's only cement factory -- got where he is through his ties to his brother.

"The only millionaires here are those who abuse their connections with the government, who steal and engage in corruption," Mahmoud Karzai tells RFE/RL. "If my brother was not the president, my business interests in Afghanistan would still have moved forward. But I am very careful, because I don't want my brother to suffer politically because of my activities, and all these attacks and allegations are of a political nature."

Tallying Assets

Mahmoud Karzai, who holds a U.S. passport, owns four restaurants, a house, car lots, and other commercial and residential properties in California and Maryland -- all purchased before he returned to Afghanistan following the U.S.-led ouster of the Taliban in 2001.

He says his U.S. holdings have not changed since that time, and that any money he is making is being reinvested in long-term development projects to help rebuild his ancestral homeland.

Karzai says the scope of his business dealings and his personal fortune was greatly exaggerated in "The New York Times" report. He offers as an example his interests in Afghanistan's only cement factory, where he says he does not even draw a salary.

"The New York Times" listed among his assets "major interests in the country's only cement factory," and added that "[Karzai] and other investors assumed control...when they were the only bidders to show up with $25 million in cash."

"About the cement factory, I must tell you that I gave [the 'New York Times' correspondent] the list of all shareholders, which detailed how many shares were there and who owned them," Karzai says. "There are 4,500 shares in the cement factory and I only own 300, but he presents it as if I own the cement company, which is very wrong."

Down South

With millions of dollars in loans from Overseas Private Investment Corporation (OPIC), a U.S. federal agency that finances American businesses abroad, Karzai and his five business partners are building an ambitious real-estate project in the southern Afghan city of Kandahar.

Karzai was introduced to officials at OPIC by Jack Kemp, a former Republican congressman, with whom Karzai had established a friendship. "The New York Times" reported that Karzai was also able to secure 10,000 acres of land for the project from Kandahar officials virtually free of charge.

The land is technically owned by the Afghan National Army, which has protested the handover of the land. But Karzai says he and his partners got the land legally from the city administration in Kandahar.

"This is one of the best housing projects in Afghanistan," Karzai says of the endeavor, "and we are investing all its profits back into this project."

He says none of his business partners has "received anything so far."

"We're giving away these houses very cheap; prices range from $20,000, and a very big house costs $110,000," Karzai says. "The other good thing is that we sell some of the houses to people in need for half-price."

He adds that if his group hadn't launched its project, the land would have "fallen into other people's hands."

"What we're doing is legal, and we have all the papers. If the government decides it's not happy and doesn't want this housing project to be built, we'll give it back to them," Karzai says. "We're only doing this for Afghanistan's development, and we're ready to be held accountable."

Karzai has repeatedly insisted that he never used his connections with his brother the president to reward friends or business partners. He has also urged the Afghan government to more actively promote a better business environment so it can attract foreign investors.

Mahmoud Karzai says his country is moving in the right economic direction -- Afghanistan currently has 19 commercial banks, five mobile-phone operators, and 12 satellite TV stations -- but says more reforms are needed.

"People who are overly pessimistic are not right," he says. "Afghanistan is undergoing a period of interesting development. Yes, we need reforms, we need a new economic policy, and we need a new land-settlement system. The government of Afghanistan needs to provide its people with the means to help rebuild their country, because the government can't do it alone. And that is my struggle."