Afghan government poised to bail out Kabul Bank

[Turborama]

Source: The Observer (UK)

Bank in corruption scandal to get $200m lifeline from state as thousands of customers queue to withdraw savings

Jon Boone in Kabul
guardian.co.uk, Sunday September 5 2010 18.23 BST

The Afghan government is preparing a $200m (£130m) bailout for the country's biggest commercial bank, which is mired in a corruption scandal that has prompted a rush by thousands of customers to close their accounts.

Officials at the country's Central Bank confirmed that regulators asked the Ministry of Finance on Saturday for permission to make the huge loan from the country's reserves to help prop up Kabul Bank. There are widespread suspicions that the payment has already been made. Large queues continued to form outside Kabul Bank branches across the country on Sunday as desperate customers tried to withdraw their money. Security guards put up razor wire in front of the largest branch in Kabul to prevent anxious customers getting in.

Although the Central Bank has reserves worth $4.5bn (£2.9bn), the $200m figure is an enormous amount for one of the world's poorest countries. The Afghan government's entire tax revenues are just $1.2bn a year.

At the weekend the US Treasury department insisted that no US money would go into the bailout of a bank that got into financial trouble in part by buying luxury properties in Dubai, which were then used as the private homes of shareholders and other friends of the bank's management.

Read more: http://www.guardian.co.uk/world/2010/sep/05/afghanistan-government-kabul-bank-bailout

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Loss of Faith in Afghan Leaders May Hurt Push Against Taliban

By NYT's DEXTER FILKINS
Published: September 4, 2010

KABUL, Afghanistan: The government of President Hamid Karzai may be awash in corruption, venality and graft, but if you walk the tattered halls of the ministries here, it is remarkably easy to find an honest man.

One of them is Fazel Ahmad Faqiryar, who last month took the politically risky course of trying to prosecute senior members of Mr. Karzai’s government. Two weeks ago, http://www.nytimes.com/2010/08/29/world/asia/29afghan.html">Mr. Faqiryar was fired from his job as deputy attorney general — on the order, it appears, of Mr. Karzai himself.

“The law in this country is only for the poor,” Mr. Faqiryar said afterward.

The ouster of Mr. Faqiryar illustrated not just the lawlessness that permeates Mr. Karzai’s government and the rest of the Afghan state. It also raised a fundamental question for the American and European leaders who have bankrolled Mr. Karzai’s government since he took office in 2001:

What if government corruption is more dangerous than the Taliban?

Much more of this very insightful article here: http://www.nytimes.com/2010/09/05/weekinreview/05filkins.html?partner=rss&emc=rss&src=ig

[IndianaGreen]

1. And the money in the reserves came from where?

Although the Central Bank has reserves worth $4.5bn (£2.9bn), the $200m figure is an enormous amount for one of the world's poorest countries. The Afghan government's entire tax revenues are just $1.2bn a year.

<snip>

(Abdullah Abdullah)said that those payments coincided with the decision to award to Kabul Bank the contracts to run the accounts of the country's soldiers and policemen, who have all been given accounts for the payment of their salaries.

The US is funding the Afghan police and military, so indirectly, we are the ones bailing out the Afghan Bank.

[totodeinhere]

2. The US also bailed out European banks. As usual, the fix is in. n/t

[sabrina 1]

3. 'Money for the Troops'? Was there ever a more disingenuous

ploy to force Congress into voting to fund these wars than to claim that the money was for the troops?

I remember in the 2004 election when Kerry was accused of 'being for it before he was against it'. He had asked for an accounting of where the money was going. The Bush administration had refused. He wanted a breakdown of how much money was actually being used for the troops, since the Right was using it to get support for the funding and the war.

I don't have numbers as I have not done the research, but considering the huge amount being paid to individual mercenaries, and how that private army has grown, I imagine that the troops' share of that money is far less than what goes to 'contractors' eg. Then there is the money paid in bribes to War Lords and even to the Taleban for their cooperation.

So it's not unreasonable to assume that a lot of the 'money for the troops' has gone to prop up not only this bank, but how many others? In Iraq eg?

What I do not remember is whether Kerry's request for a breakdown of the war funds, was ever considered. I know he backed away from it and finally voted for the funding at the time.

Isn't it time for Congress who are supposed to oversee these funds, to issue some reports on exactly where these billions of dollars have gone?