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Afghan calls grow for answers on Kabulbank crisis
September 5, 2010 / 3:34 PM / in 7 years

Afghan calls grow for answers on Kabulbank crisis

KABUL (Reuters) - A senior opposition leader on Sunday urged Afghanistan’s government and central bank to give clear answers about troubles at the country’s top private bank after its top two directors resigned.

Stopping short of calling for a formal inquiry, Abdullah Abdullah said answers were needed to avert a crisis at Kabulbank, whose customers include about 250,000 state employees.

Long queues of jittery investors have formed at Kabulbank branches since it became known last week that chairman Sher Khan Farnood and chief executive officer Khalilullah Fruzi had quit.

President Hamid Karzai and Finance Minister Omar Zakhilwal, seeking to avert a run on the bank, have both said the pair stepped down because of new banking rules forbidding shareholders from holding senior management positions at a bank.

Farnood and Fruzi each own a 28 percent share of the bank, which is also partly owned by one of Karzai’s brothers.

Abdullah Abdullah, runner-up to Karzai in fraud-marred presidential elections last year, urged the government, Kabulbank officials and the central bank to provide “clear answers.”

“In order to avoid a big crisis in this country, the best way to deal with it is to be transparent with the citizens,” Abdullah said at a news conference at his home in Kabul.

The Washington Post and other U.S. media reported last week that the central bank had taken control of Kabulbank, forcing Farnood and Fruzi to resign and ordering the chairman to hand over $160 million worth of luxury villas purchased with bank funds in Dubai.

Karzai, Zakhilwal and central bank governor Abdul Qadir Fitrat have all said the pair were not forced to quit over graft and that the central bank had not intervened. Fitrat described the reports as “baseless information and rumors.”

Abdullah, however, said he had been contacted by Afghans demanding information about the bank, whose customers include the staff of the Afghan army and police, whose salaries are paid through it.

“Thousands of citizens are contacting us and contacting government people as well as reaching out to the banks in order to know what will happen to the little money that they have deposited, and nobody is giving them an answer,” Abdullah said.

“The question is, if there was misconduct by the bank itself, what was the regulatory supervisory role of the government of Afghanistan and the central bank? Why wasn’t it dealt with earlier?” he said.

In Washington, a senior U.S. Treasury Department official backed action taken by Afghan authorities so far, but also made clear no U.S. funds would be used to support the bank.

“This is an Afghan issue. They are taking immediate steps to ensure the stability of Kabulbank and to protect the financial assets of the Afghan people,” Deputy Secretary Neal S. Wolin said in a statement.

“While we are providing technical assistance to the Afghan government, no American taxpayer funds will be used to support Kabulbank,” he said.

Additional reporting by Ross Colvin in Washington; Editing by Paul Tait and Peter Graff

Our Standards:The Thomson Reuters Trust Principles.
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