Afghan authorities take over biggest bank to avoid meltdown
By Joshua Partlow and Andrew Higgins
Washington Post Staff Writers
Tuesday, August 31, 2010
KABUL - Afghanistan's Central Bank has taken control of Kabul Bank, a politically potent financial institution partly owned by President Hamid Karzai's brother, and ordered its chairman to hand over $160 million worth of luxury villas and other property purchased in Dubai for well-connected insiders, according to Afghan bankers and officials.
The Central Bank's intervention aims to shore up Afghanistan's largest private bank, whose faltering finances threatened to wreak both economic and political havoc. Kabul Bank handles salary payments for Afghan soldiers, police and teachers, and has taken in more than $1 billion in deposits from ordinary Afghans.
U.S. officials have long worried that trouble at Kabul Bank could trigger financial mayhem, a prospect that would leave Afghan security forces without pay, threaten unrest by angry - and often armed - depositors, and gravely undermine President Obama's entire Afghan strategy.
The decision to move on Kabul Bank was made by Karzai after evidence was presented to him about the bank's illicit dealings by the Central Bank governor, Abdul Qadir Fitrat, at a meeting about a month ago. Top U.S. commander Gen. David Petraeus was present for the meeting, according to Kabul Bank insiders, who spoke on condition of anonymity and said that Petraeus urged Karzai to take action.
(More here.)
Washington Post Staff Writers
Tuesday, August 31, 2010
KABUL - Afghanistan's Central Bank has taken control of Kabul Bank, a politically potent financial institution partly owned by President Hamid Karzai's brother, and ordered its chairman to hand over $160 million worth of luxury villas and other property purchased in Dubai for well-connected insiders, according to Afghan bankers and officials.
The Central Bank's intervention aims to shore up Afghanistan's largest private bank, whose faltering finances threatened to wreak both economic and political havoc. Kabul Bank handles salary payments for Afghan soldiers, police and teachers, and has taken in more than $1 billion in deposits from ordinary Afghans.
U.S. officials have long worried that trouble at Kabul Bank could trigger financial mayhem, a prospect that would leave Afghan security forces without pay, threaten unrest by angry - and often armed - depositors, and gravely undermine President Obama's entire Afghan strategy.
The decision to move on Kabul Bank was made by Karzai after evidence was presented to him about the bank's illicit dealings by the Central Bank governor, Abdul Qadir Fitrat, at a meeting about a month ago. Top U.S. commander Gen. David Petraeus was present for the meeting, according to Kabul Bank insiders, who spoke on condition of anonymity and said that Petraeus urged Karzai to take action.
(More here.)
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