Karzai unveils action on troubled Kabul Bank

Hamid Karzai announced action against bad loans and rogue shareholders in the troubled Kabul Bank.

Last Updated: Apr 11, 2011, 14:43 PM IST

Kabul: Afghan President Hamid Karzai
on Monday announced action against bad loans and rogue
shareholders in the war-torn country`s troubled Kabul Bank,
which came close to collapse last year.

The bank had to be taken over by the country`s central
bank after claims that former executives granted themselves
huge loans off the books which were used partly to buy luxury
properties in Dubai.

"They (the rogue shareholders) will not have shares in
the bank and the loans they have taken they must pay back
within one month," Karzai told a press conference.

"If they are paid back within one month, excellent. If
not, they`ll be legally pursued by the government of
Afghanistan."

He added that the rogue shareholders "have been
expelled from the bank totally". Their shares are now in state
hands.

Karzai insisted that deposits by ordinary Afghans who
had money in Kabul Bank were safe. Some 80 per cent of
government employees are thought to receive their wages
through Kabul Bank, Afghanistan`s biggest commercial lender.

The bank was founded in 2004 by Sherkhan Farnood, a
leading international poker player, and other co-owners
included Mahmood Karzai, a brother of the president.

The crisis was triggered last September when reports
that former executives had granted themselves loans off the
books led to fears that it could collapse.

A run on the bank was only halted after government
assurances and injections of public money.

The International Monetary Fund (IMF), which is
considering a financial assistance programme for Afghanistan,
recommended in February that the bank be placed in
receivership before being sold or closed.

"They (the rogue shareholders) will not have shares in
the bank and the loans they have taken they must pay back
within one month," Karzai told a press conference.

"If they are paid back within one month, excellent. If
not, they`ll be legally pursued by the government of
Afghanistan."

He added that the rogue shareholders "have been
expelled from the bank totally". Their shares are now in state
hands.

Karzai insisted that deposits by ordinary Afghans who
had money in Kabul Bank were safe. Some 80 per cent of
government employees are thought to receive their wages
through Kabul Bank, Afghanistan`s biggest commercial lender.

The bank was founded in 2004 by Sherkhan Farnood, a
leading international poker player, and other co-owners
included Mahmood Karzai, a brother of the president.

The crisis was triggered last September when reports
that former executives had granted themselves loans off the
books led to fears that it could collapse.

A run on the bank was only halted after government
assurances and injections of public money.

The International Monetary Fund (IMF), which is
considering a financial assistance programme for Afghanistan,
recommended in February that the bank be placed in
receivership before being sold or closed.

PTI