Skip to comments.The Bank Bust That Nearly Took Down Afghanistan
Posted on 12/27/2012 2:48:48 PM PST by Lorianne
... new details about how a small group of men profited from fraudulent loans. It called out local authorities for succumbing to political pressure and the international community for not doing enough to stave off the catastrophe which led to a near-complete meltdown of Afghanistans banking system in 2010.
The report, partly compiled from the results of a nine-month-long audit conducted by Kroll, a global investigations firm, said that the crisis was brought on by a well-hidden Ponzi scheme. More than 92% of the banks loan book, or $861 million, was extended to 19 related individuals and businesses, which ultimately benefitted 12 people. The remaining $74 million was extended to legitimate customers in loans, the report said. The report noted that the failure of Kabul Bank and the subsequent government bailout represented around 5% to 6% of Afghanistans gross domestic product, makingKabul Bank one of the largest banking failures in the world, Drago Kos, the committees chair told TIME.
Kos committee went on to detail how the fraud was committed. According to its report, The Financial Transactions and Reports Analysis Centre of Afghanistan was advised in late 2009 that Kabul Bank was moving money through food trays on Pamir Airway flights, claiming that 10 Pamir Airways pilots were paid for the service. It also noted that the banks credit department opened loan accounts for proxy borrowers on instruction from senior management, and forged supporting documents including applications, financial statements and registrations, and employed fake business stamps to lend authenticity to the documents.
Beyond the $861 million, the committees report also said that there was an estimated $66.2 million in non-loan disbursements for lavish cars, shopping, travel and houses, as well as paying the salaries of non-existent employees.
(Excerpt) Read more at world.time.com ...
Next time the Afghani's need to tell the US govt that the bank's too big to fail. Then we'd dump a 3/4 of a trillion into it! We'd call it TARP. Troubled Afghani Rescue Fund!
The US govt has a history of that kind of thing.