Unregulated Banking In Kabul

The tale of the Kabul Bank keeps unfolding; relative to the size of the host nation’s economy probably the biggest Ponzi scheme of all time. All told, as much as $800 million was funnelled into the hands of just 12 people, and seven companies connected to them – all of them members of Afghanistan’s elite, including the brothers of President Hamid Karzai and Vice-President Mohammad Fahim. Most will never see trial and most of the stolen money will never be recovered, leaving the poor common people of Afghanistan to pick up the tab.

Sounds familiar – like a version of the US bank failure scripted by Quentin Tarantino. And just like in the US, the main actors were all obviously dodgy to begin with, but evaded even the most basic of scrutiny because they were rich and powerful people connected to other rich and powerful people.

The founder of a failed Afghan bank that operated as a $900m (£560m) Ponzi scheme was wanted by Interpol for money-laundering and illegal banking, but Afghan authorities ignored his arrest warrant for years, leaving him free to plunder his home country, a special court investigating the scandal has found.

…”Interpol sent out an arrest warrant for him for illegal banking activities, organising a criminal group, money-laundering, which means basically he did the same thing there,” said Drago Kos, chair of the joint Afghan and international anti-corruption committee behind the public inquiry.

“Then he came over here, and what was funny was that since 2007, Interpol Afghanistan knew about it and did nothing. Even today they do nothing and he is still wanted by the Russians.”

Farnood and the bank’s CEO, Khalilullah Ferozi, both went on trial earlier this month for their part in the bank’s collapse, but the hearings were suspended after the first week. The head of the special court said it was not clear when the trials would resume.

This is robber-capitalism with the veil of respectability torn off. The only difference between Kabul Bank and the West that I can see, though, is that Western banksters are more subtle, spend a bit more time on keeping up appearances.

Still, in all the reporting about this I’m not seeing any discussion of two questions I would think would be obvious. Firstly, given Interpol’s request why didn’t senior Western civilian officials and military officers – all with huge infuence in Afghanistan, and all of whom has to be aware of Interpol’s request via their intelligence agencies – not speak up and force some earlier response from the Afghans? Secondly, given that they didn’t and given the vast sums of temptingly-easy money involved, why is no-one wondering aloud whether any of those same Western senior officials and military officers had their own hands in the till?

Bonus Read: Wall Street Professionals Admit: Yes, Lots of Us Are Corrupt

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Steve Hynd

Most recently I was Editor in Chief of The Agonist from Feb 2012 to Feb 2013. My blogging began at Newshoggers and I’ve had the immense pleasure of working with some great writers there and around the web ever since, including at Crooks & Liars. I'm a late 40′s, Scottish ex-pat, now married to a wonderful Texan, with Honours in Philosophy from Univ. of Stirling, UK 1986. I worked most of life in business insurance industry (fire, accident, liability) including 12 years as a broker/underwriter/correspondent at Lloyd’s of London. Being from the other side of the pond, my political interests tend to focus on how US foreign policy affects the rest of the planet. Other interests include early and dark-ages British history, literature and cognitive philosophy/science.

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