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The Bank Bust That Nearly Took Down Afghanistan
TIME ^ | 30 November 2012 | John Wendle

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 Afghanistan’s 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 bank’s 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 Afghanistan’s gross domestic product, making”Kabul Bank one of the largest banking failures in the world,” Drago Kos, the committee’s 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 bank’s 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 committee’s 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 ...

TOPICS: Foreign Affairs; Government
KEYWORDS: afganistanbank; bankfailure; kabul; kabulbank; porkmoney

1 posted on 12/27/2012 2:48:50 PM PST by Lorianne
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To: Lorianne
I suppose that Uncle Sugar dumped so much $$$ into it that it became too big to fail. Uncle Sugar's good at that kind of thing. But a paltry few billion? that's for amateurs.

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.

2 posted on 12/27/2012 3:22:23 PM PST by HeartlandOfAmerica
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