By Steve Hynd
DUBAI, United Arab Emirates - Struggling to contain asset-stripping at Afghanistan's biggest bank, Afghan authorities have barred the sale of Kabul properties held by the troubled bank's principal owners. But the freeze excludes President Hamid Karzai's brother, who is the third largest Kabul Bank shareholder.
The Afghan Central Bank ordered the property-sale ban in a letter reviewed by The Washington Post. Sent to Kabul municipal authorities, it targets five people, including Kabul Bank's two biggest shareholders - who were ousted last Monday as executives of the bank - and the brother of Afghanistan's vice president, who is both a shareholder and major borrower.
No restrictions were placed on the president's own brother, Mahmoud Karzai, who has also borrowed money from Kabul Bank, including $6 million that he used to buy a 7 percent stake in the now crumbling bank.
"They couldn't freeze my property because I don't have it," said Mahmoud Karzai in a telephone interview from Kabul. "I don't have a single house or parcel of land in my name in Afghanistan."
They loaned him millions, without collateral of any meaningful kind, to buy a stake in their own bank?
The crisis at Kabul Bank, which still has over a million customers and handles salary payments for soldiers, police and teachers, flows from a tangle of murky loans by shareholders to themselves and from risky investments in Dubai real estate. With so many people's savings, salaries and political fortunes at stake, what began as a financial mess has morphed into a serious challenge to the credibility of President Karzai and also of his American backers.
Washington has ruled out using any American money for a bail-out, despite fears that the collapse of Kabul Bank could leave soldiers unpaid and set back the fight against the Taliban, a struggle in which the United States has already lost more than 1,100 troops and has spent billions of dollars. During their own years in power in Kabul from 1996 to 2001, the Taliban banned private banks.
...Some Afghan officials want the Central Bank to seize shares in Kabul Bank that were not paid for in cash. Around half the shares - including those of the president's brother and also of the brother of the vice president - were purchased with Kabul Bank loans. These loans, said Kabul Bank's founder and former chairman, are all still outstanding. Transferring the shares would lead in effect to the partial nationalization of Kabul Bank.
"I'm not in favor of nationalization," said Mahmoud Karzai, who suggested that the government simply lend Kabul Bank cash "when our money is finished."
Holy hells, I bet he's not!
The Kabul Bank's money is expected to run out by early next week. I'm guessing Mahmoud Karzai isn't expecting to be one of the losers.
With a report earlier today that the Karzai elite's corruption is the single thing most likely to push Afghans into the arms of the insurgency, and the wheels finally coming off financially, Obama's strategy - what little there was of it to begin with - is looking more and more like an impending car-wreck.
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