Whistleblower or fraudster? Afghan bank chief flees to America

Kabul issues arrest warrant as corruption scandal deepens

Officials in Kabul yesterday issued an arrest warrant for Afghanistan's former central bank governor who has taken refuge in the United States, amid a deepening corruption scandal that is jeopardising international aid for the Asian country and putting a new strain on already-frayed relations with its key ally.

The warrant was issued hours after Abdul Qadir Fitrat announced his resignation to Afghan radio stations and Western news agencies from a hotel in the Virginia suburbs of Washington – he claimed his life was in danger.

In a letter to reporters, Mr Fitrat accused the government of President Hamid Karzai of hindering and intimidating central bank staff in an investigation of the Kabul Bank, Afghanistan's largest private bank which came close to collapse in September 2010. As details have emerged about the scale of the fraud, the Kabul Bank – founded in 2004 by an international poker player, Sherkhan Farnood, but through which most government salaries are paid – has become an emblem of the corruption and cronyism at the heart of the regime. Some senior figures, including the brothers of Mr Karzai and his Vice-President, allegedly treated it like a personal piggy bank, claims which they deny.

When a run on the bank forced the authorities to step in, up to $900m (£565m) of dubious loans were discovered, some of them without collateral, interest or repayment schedules – in other words, outright gifts. Efforts to clean the bank up have became a litmus test of the sincerity of Mr Karzai's promises to fight corruption.

And the scandal could jeopardise foreign aid for the country. The International Monetary Fund withdrew its assistance programme last year, through which countries donate money to Afghanistan.

But the latest events have made a murky picture even murkier. Mr Fitrat said in interviews on Monday that he first asked the Karzai government last autumn to prosecute those involved in the fraud. Instead, "high-level political authorities" interfered, weakening the central bank's regulatory and supervisory functions. Two months ago, Mr Fitrat's position became even more precarious when the ex-governor went before parliament to name names.

At that point, the Kabul government launched a "counter-offensive", refusing to support the investigation and "using law-enforcement agencies against the staff of the central bank", Mr Fitrat said.

Mr Fitrat arrived recently in the US and said he left Afghanistan after "credible sources" warned him that his life would be in danger if he stayed. The arrest warrant appears to be a further escalation of the counter-offensive.

Azizullah Ludin, who was appointed by Mr Karzai to lead the government's anti-corruption taskforce, told The New York Times on Monday that Mr Fitrat was himself involved in the fraud and that charges had been brought against Mr Fitrat. "Mr Fitrat is the root of the problem and he knew everything," Mr Ludin said.

One thing at least seems sure: the former governor will not be returning to Afghanistan soon. The US State Department says it has received no request for asylum. But that would not even be necessary, because Mr Fitrat already has permanent-resident status in the US.

Everything else appears to be less certain about the matter. According to a State Department spokeswoman, Washington intends to keep up pressure on the Afghan government to mend its ways if there is a change at the helm of the central bank. But the circumstances of Mr Fitrat's departure make it unlikely that Mr Karzai will clean his house or that the suspect "loans" will be repaid.

In the meantime, the IMF and World Bank aid programmes will remain on hold, at least until a new central bank governor is appointed. The episode will also not do anything to ease tensions between Washington and Kabul; if anything, it will be used to bolster the case for a faster withdrawal from Afghanistan than the one Barack Obama announced earlier this month. His plan calls for 33,000 US troops to come home by September 2012, ahead of a full handover to Afghan security forces at some point in 2014.

Even so, come January 2013, there will still be some 68,000 American soldiers in Afghanistan.

Many in Congress – mostly Democrats but some Republicans as well – already argue that with Osama bin Laden dead and al-Qa'ida weakened, a larger and speedier pullout is in order.

The debacle of Mr Fitrat's departure will only add opposition to "nation-building" in Afghanistan, where American blood and treasure, to all appearances, are being used to prop up a corrupt and rapacious regime.

Corruption and aid

* The watchdog Transparency International ranks Afghanistan as one of the world's most corrupt nations, with only Somalia and Burma faring worse.

Billions of dollars for aid and reconstruction have been pumped into the country in the past 10 years, much of it disappearing. Last year, The Wall Street Journal alleged that more than $3bn (£2bn), much of it foreign aid, had been flown out of Afghanistan, possibly to safe havens overseas. A US diplomatic cable unearthed by WikiLeaks highlighted the staggering extent of the corruption, with an official writing that in a proposed new cabinet line-up the Agriculture Minister alone "appears to be the only minister ... about whom no allegations of bribery exist".

Despite Western pressure, President Hamid Karzai has struggled to crack down on corruption and few government officials have faced the courts.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Recruitment Consultant / Account Manager - Surrey / SW London

£40000 per annum + realistic targets: Ashdown Group: A thriving recruitment co...

Ashdown Group: Part-time Payroll Officer - Yorkshire - Professional Services

£25000 per annum: Ashdown Group: A successful professional services firm is lo...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before