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Afghanistan Issues Arrest Warrant for Central-Bank Chief

28 June 2011 18:56 (UTC +04:00)

Baku-APA. Afghanistan’s attorney general’s office issued an arrest warrant to the U.S. Embassy and Interpol for Afghanistan’s central-bank governor, claiming he was involved in systemic fraud at the country’s largest lender, APA reports quoting The Wall Street Journal.

Bank Gov. Abdul Qadir Fitrat fled to the U.S. about 10 days ago, saying he feared for his life after exposing corruption at Kabul Bank. Earlier this year, he produced a list of what he said was nearly $800 million in fraudulent loans taken out by the lender’s politically connected management and shareholders.

Mr. Fitrat has denied wrongdoing. Neither he nor a spokesman for the central bank could be reached Tuesday.

Deputy Attorney General Rahmatullah Nazari said the regulator’s banking supervision and financial-risk departments will be "legally prosecuted" as well, for allegedly hiding corruption at Kabul Bank.

"Central Bank officials didn’t oversee the activities of private banks and their actions have caused more than a $900 million loss for the government and people of Afghanistan," Mr. Nazari said. "We have sent an arrest warrant to Interpol and the U.S. embassy in Kabul to bring him back home for further questioning."

Officials at the central bank, including Mr. Fitrat, ignored warnings about widespread corruption at Kabul Bank from the country’s intelligence service and the High Office of Oversight, an antigraft body, Mr. Nazari said. Instead, Mr. Fitrat gave glowing reports for Kabul Bank, Mr. Nazari said at a news conference Tuesday.

Kabul Bank’s politically connected insiders, including management and shareholders, are suspected of taking 94% of the lender’s total loans, or $850 million, according to a March report from the U.S. Agency for International Development.

The Kabul Bank saga jeopardizes billions of dollars of international aid money to Afghanistan, unless the country dissolves the lender as part of a package of International Monetary Fund reforms. The IMF withdrew its assistance program to Afghanistan last year over the scandal and many nations cannot individually donate funds to the Afghan government in the absence of it.

The attorney general’s office in the past had been criticized for being politicized and bending to the will of Afghan President Hamid Karzai. Mr. Karzai’s brother, Mahmood, owned a 7% stake in Kabul Bank before it was placed in receivership this year. The brother of the country’s first vice president also is a shareholder.

Western officials have said Mr. Fitrat escaped because he believed the government was shifting the blame away from Kabul Bank’s politically connected shareholders to the regulators and auditors and that the governor didn’t want to become a scapegoat.