KABUL, Afghanistan — Kabul Bank became Afghanistan’s largest financial institution by offering the promise of modern banking to people who had never had a saving or checking account. What it really dealt in was modern theft: “From its very beginning,” according to a confidential forensic audit of Kabul Bank, “the bank was a well-concealed Ponzi scheme.”Further details at the New York Times. Someone remind me please why we're still pursuing nation-building in this country.
Afghan and American officials had for years promoted Kabul Bank as a prime example of how Western-style banking was transforming a war-ravaged economy. But the audit, prepared this year for Afghanistan’s central bank by the Kroll investigative firm, gives new details of how the bank instead was institutionalizing fraud that reached into the hundreds of millions of dollars and obliterated Afghans’ trust after regulators finally seized the bank in August 2010 and the theft was revealed.
Going further than previous reports, the audit asserts that Kabul Bank had little reason to exist other than to allow a narrow clique tied to President Hamid Karzai’s government to siphon riches from depositors, who were the bank’s only substantial source of revenue...
What Kroll’s audit found is that on Aug. 31, 2010, the day the Bank of Afghanistan seized Kabul Bank, more than 92 percent of the lender’s loan portfolio — $861 million, or roughly 5 percent of Afghanistan’s annual economic output at the time — had gone to 19 related people and companies, according to the audit.Among the largest beneficiaries were a brother of Mr. Karzai and a brother of First Vice President Muhammad Qasim Fahim...
29 November 2012
Kabul bank was a big Ponzi scheme
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Nooo, a bank robbed its customers?! You mean like what happened to make it easy for Saddam to drive a semi-trailier out of Baghdad packed with US dollars, hauled out of Iraq's bank vaults when he ran?! You mean like Wall Street?!ReplyDelete
Ah, good ol' blow back strikes again.. sigh.. welp, out of all the candidates to prop up in power, Karzai, seemed at the time, the least noxious. What is a government on the hunt for its most sought enemy to do with such a tiny stinky pool to pick from in order to improve cooperation? Corruption is so rampant there, it's not even seen as corruption, but just an aspect of getting things done. That kind of mindset takes generations to change. And considering how many generations have tolerated and perpetuated the way it has always been, we won't see it happen in our lifetime, or many more lifetimes, not without a massive sea change. I know we keep thinking that if we show them how to do it differently, by example, they'll see how much better it is and they will follow our example. Except, they don't. And while the level of corruption in US government is less pronounced, it is still present. It's a part of human nature and I don't know of any method 100% effective at straining it out of us. Hence, more regulations, laws, oversights. All regarded as oppressive and needlessly expensive by those who wish to conduct business without interference or fee. And they usually win the lobby. --A.