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Kabul Bank bosses jailed for five years: Court

Two former heads of Afghanistan's largest savings and loan bank face five-year sentences for fraud and embezzlement

AFP , Tuesday 5 Mar 2013
Kabul
Soldiers stand guard in front of Kabulbank in Kabul, September 2012 (Photo: Reuters)
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An Afghan court on Tuesday sentenced two senior Kabul Bank executives to five years in jail for a staggering multi-million-dollar fraud that caused the country's largest bank to collapse in 2010.

Judge Shamsul Rahman Shams also said the men must pay back millions of dollars they gained from the sophisticated network of corruption in which cash was used to buy homes in Britain, Dubai, Switzerland and the United States.

The bank's former chairman, Sher Khan Farnoud, and its former CEO Khalilullah Ferozi were both in court to hear the verdicts, along with some of the 20 other accused who were jailed for between six months and four years.

Kabul Bank was seized by the government in 2010 after the exposure of the massive fraud, which led the International Monetary Fund to temporarily halt its hundreds of millions of dollars of loans to Afghanistan.

Renamed New Kabul Bank, the institution was later bailed out by the government.

The criminal proceedings into the bank's collapse at a special court in Afghanistan are being watched closely by Western donors for signs that the country is finally tackling rampant government corruption.

Donors have pledged billions of dollars in aid after NATO combat troops withdraw in 2014, but have demanded that corruption is brought under control.

The judge told Ferozi that he must re-pay $530 million and Farnoud must re-pay $278 million.

A number of other well-connected people allegedly implicated in the scandal as shareholders, including a brother of President Hamid Karzai, were not charged by the special court.

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