Eight more arrested in inquiry over insider-loans scandal at Kabul Bank

Eight people, including three Indian nationals, have been detained over their alleged links to an insider-loans scandal at Kabul Bank.

The bank doled out nearly half a billion dollars in unsecured and undocumented loans to the country's elite, including to sitting ministers and a powerful former warlord, before the bank's collapse last year.

"Our office was instructed to make the detentions to investigate them in connection with the Kabul Bank crisis but I can't say any more on this," the Deputy Attorney-General, Rahmatullah Nazari, said yesterday.

The detention of three Indians and five Afghans came three days after the bank's former chairman, Sher Khan Farnood, and former chief executive officer, Khalilullah Fruzi, were arrested on embezzlement charges. Mr Nazari said that both would go on trial within a month but did not say on what charges. Kabul Bank was taken over by the Afghan central bank after corruption, bad loans and mismanagement cost it hundreds of millions of dollars in what Western officials in Kabul describe as a classic Ponzi scheme.

Last week, the central bank's governor, Abdul Qadir Fitrat, left his job and fled to the US, saying he was in fear of his life for his role in investigating the scandal. The Afghan government has issued a warrant for his arrest.

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