[The U.S.
By Andrew Higgins and Ernesto Londoño
Thursday, September 2, 2010 ; 10:57 AM
"America
Kabul Bank handles salary payments for soldiers, police and teachers. It has scores of branches across Afghanistan United States
Action by the United States
"If the Treasury Department will guarantee that everyone will get their money, maybe that will work," said Karzai, who holds 7 percent of the bank's shares, making him the third-biggest shareholder. Karzai, who spends most of his time in Dubai Kabul
Treasury officials have said they have confidence in Afghanistan
But those moves may have spurred a panic: Depositors, said people familiar with the situation, yanked at least $90 million from Kabul Bank on Wednesday and the hemorrhaging of funds accelerated Thursday.
"Yesterday was not too bad, but today is worse," said a Kabul Bank insider. "It is a very bad situation."
At a press conference in Kabul
The finance minister acknowledged that fearful customers have flocked to Kabul Bank branches over the past two days to try to withdraw their savings. Withdrawals, he said, were "more than usual" but "it's not a crisis."
The Afghan government, he added, will "give back every last penny. People should not bother getting in line to withdraw their money." Banks had shorter than usual hours Thursday because of Ramadan, the Islamic holy month, and Friday is a holiday, which will give authorities some respite and could help calm public alarm.
The finance ministry issued a statement Thursday assuring all government employees they would be able to cash their paychecks at Kabul Bank. The Afghan Banks Association issued its own statement of support for Kabul Bank.
Earlier Thursday, throngs of customers swarmed tellers at Kabul Bank's main branch in central Kabul
At a nearby branch where many government workers cash their paychecks, tellers were giving out no more than $1,000 to each customer. Zaburzay, 40, a surgeon who works at a government hospital, said he gave up on trying to withdraw his money because the branch was too crowded and tellers were only giving out $20 notes.
"All these people are thieves and we don't trust them," he said. "Whether or not it collapses, I want to take my money out."
The U.S. Treasury Department has assigned a small team of experts to work with the Afghan Central Bank on the Kabul Bank mess, but it has so far given no hint of any readiness to step in more robustly. In an interview Wednesday, Treasury's Assistant Secretary for Terrorist Financing, David Cohen, said the United States
The fierce storm now hammering Afghan banking broke late Tuesday following news - first reported on the Web site of The Washington Post - that Afghanistan
The Central Bank has since presented its intervention as a routine affair aimed at bringing Kabul Bank into line with new regulations that bar shareholders from management.
But bank insiders give a more dramatic account of events. The Central Bank's move on Kabul Bank followed weeks of volatile feuding between Sherkhan Farnood, the bank's now ousted chairman, and Khalilullah Fruzi, its purged chief executive, as well as mounting concern over large and likely illegal loans to the bank's own shareholders and other well-connected insiders.
Finance Minister Zakhilwal said Thursday that Kabul Bank's lending was not excessive or particularly risky and amounted to a total of roughly $300 million. But it was not clear whether this figure included roughly $160 million that former Kabul Bank chairman Farnood sunk into real estate in Dubai
Before the crisis began, Kabul Bank had taken in about $1.3 billion in deposits and boasted liquid assets of $500 million, a substantial cushion that, in ordinary circumstances, would allow it to meet depositors' demands for cash. But the rush to withdraw money over the past two days has forced the bank to impose limits on withdrawals at some branches and strained the Central Bank's ability to release the cash it holds for Kabul Bank.
Londo??o reported from Kabul Kabul Washington
@ The Washington Post
Inside Corrupt-istan, a Loss of Faith in Leaders
By DEXTER FILKINS
KABUL, Afghanistan
THE government of President Hamid Karzai may be awash in corruption, venality and graft, but if you walk the tattered halls of the ministries here, it is remarkably easy to find an honest man.
One of them is Fazel Ahmad Faqiryar, who last month took the politically risky course of trying to prosecute senior members of Mr. Karzai’s government. Two weeks ago, Mr. Faqiryar was fired from his job as deputy attorney general — on the order, it appears, of Mr. Karzai himself.
“The law in this country is only for the poor,” Mr. Faqiryar said afterward.
The ouster of Mr. Faqiryar illustrated not just the lawlessness that permeates Mr. Karzai’s government and the rest of the Afghan state. It also raised a fundamental question for the American and European leaders who have bankrolled Mr. Karzai’s government since he took office in 2001:
Since 2001, one of the unquestioned premises of American and NATO policy has been that ordinary Afghans don’t view public corruption in quite the same way that Americans and others do in the West. Diplomats, military officers and senior officials flying in from Washington often say privately that while public graft is pernicious, there is no point in trying to abolish it — and that trying to do so could destroy the very government the West has helped to build.
The Central Intelligence Agency has carried that line of argument even further, putting on its payroll some of the most disputable members of Mr. Karzai’s government. The explanation, offered by agency officials, is that Mother Theresa can’t be found in Afghanistan.
“What is acceptable to the Afghans is different than what is acceptable to you or me or our people,” a Western official here said recently, discounting fears of fraud in the coming parliamentary elections. He spoke, as many prominent Western officials here do so often, on the condition of anonymity. “They have their own expectations, and they are slightly different than the ones we try to impose on them.”
Perhaps. But the official’s premise — that the Afghans are more tolerant of corruption than people in the West — has fulfilled itself. Afghanistan is now widely recognized as one of the world’s premier gangster-states. Out of 180 countries, Transparency International ranks it, in terms of corruption, 179th, better only than Somalia.
The examples are too legion to list. Take a drive down the splendorous avenues of Palm Jumeira in the United Arab Emirates, where many Afghan leaders park their money, and you can pick out the waterfront villas where they live. Or look at the travails of Kabul Bank, whose losses threaten the Afghan financial system; officials say the bank’s directors spent lavishly on Mr. Karzai’s re-election campaign and lent tens of millions to Mr. Karzai’s cronies.
Worse, the rationalization offered by the Western official — that Afghans are happy to tolerate a certain level of bribery and theft — seems to have turned out terribly wrong. It now seems clear that public corruption is roundly despised by ordinary Afghans, and that it may constitute the single largest factor driving them into the arms of the Taliban.
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.
Mr. Hakimi, a shrewd businessman, seemed genuinely perplexed.
“What the Americans need to do is take these Afghans and put them on a plane and fly them to America — and then crash the plane into a mountain,” Mr. Hakimi said. “Kill them all.”
You hear that a lot here — that the kleptocrats are few in number; that most Afghans know who they are; and that the country would be better off if this greedy cabal met a violent end. Why not get rid of them?
Sometimes, it seems, American and Afghan leaders exhibit a kind of willful blindness. In June, President Karzai flew to Kandahar to speak to a gathering of about 400 local tribal elders about a pending military operation. He was accompanied by Gen. Stanley McChrystal, then the commander of American and NATO forces.
Mr. Karzai may have been in Afghanistan, but his appearance seemed to have been scripted by the same people who run political campaigns in the United States. The Afghan tribal elders assembled in a large room, most of them sitting on the floor, and Mr. Karzai, after much delay, strode in, gave a quick and rousing speech, and promptly left the room. Neither Mr. Karzai nor any of his aides — nor any of the Americans — seemed especially interested in what these tribal leaders had to say.
As it happened, they had plenty to say. In interviews afterward, one after the other told stories that were both disheartening and remarkably similar. None of the men (they were all men) harbored any love for the Taliban. But they had even less love for their Afghan leaders.
Typical of the Afghans was Hajji Mahmood, a tribal leader from a village west of Kandahar. Earlier this year, Mr. Mahmood explained, he bought a plot of land from the local administration and invested several thousand dollars to build some shops on it.
Then, a few months later, government agents arrived, bulldozed Mr. Mahmood’s shops and reclaimed the land. The local agent Mr. Mahmood had paid, it turned out, had pocketed the money and failed to record the sale.
Retelling the story, Mr. Mahmood shook his head.
“Not many people support the Taliban, because they don’t really have a program,” he said. “But believe me, if they did, many people would.”
It’s not as if the Americans and their NATO partners don’t know who the corrupt Afghans are. American officers and anti-corruption teams have drawn up intricate charts outlining the criminal syndicates that entwine the Afghan business and political elites. They’ve even given the charts a name: “Malign Actor Networks.” A k a MAN.
Looking at some of these charts—with their crisscrossed lines connecting politicians, drug traffickers and insurgents — it’s easy to conclude that this country is ruled neither by the government, nor NATO, nor the Taliban, but by the MAN.
It turns out, of course, that some of the same “malign actors” the diplomats and officers are railing against are on the payroll of the C.I.A. At least until recently, American officials say, one of them was Ahmed Wali Karzai, the president’s brother. Mr. Karzai has long been suspected of facilitating the country’s booming drug trade.
Ahmed Wali Karzai denies taking any money from the C.I.A. or helping any drug traffickers. But consider, for a second, the other brother: President Karzai. When he receives that stern lecture from the American diplomat about ridding his government of corruption — and he receives a lot of them — what must President Karzai be thinking?
One possibility: That the Americans aren’t really serious.
The real difficulty, American commanders say, is that taking down the biggest Afghan politicians could open a vacuum of authority. And that could create instability that the Taliban could take advantage of.
American officers have every right to worry about stability. But the trouble with this argument is that, increasingly, there is less and less stability to keep. And, if Afghans like Mr. Mahmood and Mr. Hakimi are to be believed, it’s the corruption itself that is the instability’s root cause.
As for Mr. Faqiryar, he has become, at age 72, a national icon. A recent editorial in Kabul Weekly, a local newspaper, urged Mr. Faqiryar to carry on his fight against the gangster-state that his country has become. But the editorial struck a tone that was less angry than poignant, as if time were running short.
“We are a nation,” the editors said, “in desperate need of more heroes.”
