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Tue Nov 27, 2012, 09:16 AM

Audit Says Kabul Bank Began as ‘Ponzi Scheme’


The chief judge in the Kabul Bank case, Shams Rahman Shams, at center behind desk, listened to a defense lawyer during a hearing this month. The United States has pressed for prosecutions.

Audit Says Kabul Bank Began as ‘Ponzi Scheme’
Published: November 26, 2012

KABUL, Afghanistan — Kabul Bank became Afghanistan’s largest financial institution by offering the promise of modern banking to people who had never had a saving or checking account. What it really dealt in was modern theft: “From its very beginning,” according to a confidential forensic audit of Kabul Bank, “the bank was a well-concealed Ponzi scheme.”

Afghan and American officials had for years promoted Kabul Bank as a prime example of how Western-style banking was transforming a war-ravaged economy. But the audit, prepared this year for Afghanistan’s central bank by the Kroll investigative firm, gives new details of how the bank instead was institutionalizing fraud that reached into the hundreds of millions of dollars and obliterated Afghans’ trust after regulators finally seized the bank in August 2010 and the theft was revealed.

Going further than previous reports, the audit asserts that Kabul Bank had little reason to exist other than to allow a narrow clique tied to President Hamid Karzai’s government to siphon riches from depositors, who were the bank’s only substantial source of revenue.

At one point, Kroll’s investigators found 114 rubber stamps for fake companies used to give forged documents a more legitimate look. And the auditing firms used by the bank never took issue with loan books that were “almost entirely fraudulent,” Kroll found, recommending that the Afghan government explore suing the last such auditor, A.F. Ferguson & Co., a private Pakistani firm with a franchise under PricewaterhouseCoopers.

unhappycamper comment: If you were to read the article, you would find out 92% of the bank's funds ($861 million) went to 19 people and companies.

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Reply Audit Says Kabul Bank Began as ‘Ponzi Scheme’ (Original post)
unhappycamper Nov 2012 OP
jsr Nov 2012 #1
kenny blankenship Nov 2012 #2

Response to unhappycamper (Original post)

Tue Nov 27, 2012, 09:26 AM

1. "Our Man in Kabul" Karzai is an extremely wealthy man

courtesy of U.S. taxpayers.

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Response to jsr (Reply #1)

Wed Nov 28, 2012, 12:34 AM

2. Oh come on - be fair!

A lot of that money also came from his heroin trafficking family and associates. And now that his brother is dead, I would guess Hamid (Big H to his friends) has to devote even more time to the day to day of running the world's biggest heroin empire. I wouldn't go so far as to say he's a "self-made man", but I'm sure he puts in the hours - and reportedly he tests every batch himself. That's a hands-on manager where I'm from, and I think the US taxpayer can appreciate where their blood and money is going. If they don't like Hamid why don't they stand up and say so!

OK granted Obama wouldn't give a fuck - but still let them stand up and object if they object. Same thing with slashing the Safety Net. Silence is consent and so far they are silent.

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