Mps concern over privatization of New Kabul Bank

Members of the parliament have expressed their concerns over privatization of the New Kabul Bank which is probably to be sold to a Pakistani Bank called Muslim Commercial Bank, fearing that Pakistan intelligent office will have longer hands into Afghanistan confidential information.

Earlier last week officials in Ministry of Finance had announced that MCB and the local firm, Join-Stock, are eligible buyers, the announcement had provoked many reactions within the Afghan Government and economy expert’s level.

Afghan economical expert Sayed Masoud said,” Muslim Commercial Bank is one of the Military Bank of Pakistan, Afghan President should considerate over the issue, since the New Kabul Bank has 80 agencies Nationwide only for Afghan military forces if the following Bank is owned it will disclose all the secret information of Afghan military forces to Pakistan.”

“Countries in the world in order to gain secret information spend millions of dollars to meet their goals , but Afghanistan Government is allowing Pakistan to access confidential information free of charge economy expert Azarakhsh Hafizi said,”

Mp Ghulam Farooq Majroh said,” Pakistan has been continuously working against Afghanistan’s National interests, we should let Pakistan to have hands in our Banking system.”

Meanwhile Ministry of Finance Spokesman Ajmal Abdulrahimzai said,” if any banks doesn’t have criminal cases in the past and can meet our requirement will be eligible to be one of the buyers.”

Kabul Bank is a commercial bank in Afghanistan that has its main branch in the capital of Kabul. Established in 2004, from the beginning the following main bank used to pay the salaries of the army and security forces.

The bank provides facilities to maintain accounts in Current, Savings Bank and Fixed Deposits; and offers its consumers branch and automated teller machine services.

The bank was under the supervision of Da Afghanistan Bank (DAB), the central bank of Afghanistan.

The scandal has not only earned bad image for the country but also pushed investors away. Even the bailout failed to address the economic crunch and restore customers’ trust over the country’s largest private bank. It is a biggest scandal in Afghanistan’s banking sector history.

Kabul Bank was badly shaken and almost collapsed in one of “the worst banking scandals in history,” according to The Guardian newspaper in late 2012, according to the Los Angeles Times, independent investigators and journalists uncovered widespread corruption in Kabul Bank.

The New York Times, in 2012, headlines indicate “Audit Says Kabul Bank Began as ‘Ponzi Scheme’” following investigation and judicial action in the aftermath of the Bank’s crisis and scandal.

In 2010, it was disclosed that its Chairman Sherkhan Farnood and other insiders were spending the bank’s US$1 billion for their own personal lavish style living and lending money under the table to family, relatives and friends.

The bank scandal also involved members of Afghan President Karzai’s family, including one of his brothers, Mahmood Karzai. In September 2010, one of the principal owners of the bank, said that depositors had withdrawn $180 million in two days and predicted a “revolution” in the country’s financial system unless the Afghan government and the United States moved quickly to help stabilize the bank.

In November 2010, reports appeared that Farnood and chief executive Khalilullah Frozi both had been sacked from duties.

As of early 2011 both were effectively under house arrest and could not leave the country, and in July 2011 both were formally arrested and detained in Kabul.

DAB stated in February 2011, it would seek to sell Kabul Bank within three years once it was rehabilitated, but both the International Monetary Fund and US officials subsequently pressed for a rapid wind down of the institution.

Several influential people were involved in the scandal. Therefore, the government failed to catch and punish the bigwigs. Sadly, the authorities were not serious to build confidence to investors. They tried to rebuild the bank’s image by adding ‘New’ to its name though the bank has nothing new to offer.

A USAID inspector general report estimated that fraudulent loans diverted $850 million to bank insiders.[8] By October 2011, more than a year after the government seized control, officials had recovered less than 10 percent of the nearly $1 billion that went missing.

After the huge scandal of New Kabul Bank the Afghan Government decided to start bidding process to sell the following Bank to any firms that can meet the conditions.