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KABUL: A court yesterday jailed 20 of 22 men accused of involvement in a multi-million dollar bank fraud, in a trial seen as a test of Afghanistan’s commitment to fight corruption.
The collapse of Kabulbank in 2010 triggered a financial crisis, civil disorder and a run on deposits, worrying foreign donors and embarrassing the US and Afghan governments, which had touted its credentials as a modern lender integral to developing a tiny economy crippled by war and mismanagement.
Two former heads of the bank — founder Sher Khan Fernod and chief executive Haji Khalil Ferozi — accused of taking $810 million of the $935m stolen, were given five years. Both were asked to return the money to the government.
The case was viewed as a barometer of Kabul’s commitment to stabilise the economy, less than two years before the withdrawal of most foreign troops and a winding down of billions of dollars in foreign aid. It appears to be the first major bank fraud trial in Afghan history.
Brothers of President Hamid Karzai and his first Vice-President, Mohammad Qasim Fahim, who were shareholders, were spared jail, thanks to a presidential decree a year ago that granted immunity from prosecution to those who returned funds.
“Ferozi and Fernod have been sentenced to five years each in jail for the theft of Kabulbank assets valued at $531m and $279m, respectively,” said Judge Shamsul Rahman Shams, head of a special court set up for probe.
The sentences were condemned as “relatively light” by the Independent Joint Anti-Corruption Monitoring and Evaluation Committee, “given the extent of the fraud and sentences handed down to others who appear to have had little or no involvement in the fraud” a statement said.
The remaining 18, four of whom are Indians, received prison terms of four to five years. All convicts face two more trials of appeal if they wish to go through the process, which entails additional charges that could increase or decrease their sentences.
If convicted of charges, which include money laundering and embezzlement, they could face more than 20 years behind bars.
The government was forced to bail out the-then biggest bank after it collapsed. It was then relaunched as the state-run New Kabul Bank. Last year, Karzai’s brother, Mahmoud, said he had paid back $22m and the vice-president’s brother, Haji Hasseen, reportedly returned $18m. Both had denied wrongdoing. Only 10 percent of the money was smuggled overseas and channelled into luxury villas. The rest was invested in Afghanistan, from an oil storage facility, a TV station and a gas firm to property developments, some of which Kabul had agreed to buy. Retuers