Karzai slams West over crisis
Source: Agencies |
April 12, 2011, Tuesday
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Print Edition
Print Edition
AFGHANISTAN'S president strongly rebuked his international backers yesterday, saying Western financial advisers may be tried for contributing to the country's banking crisis and he would now dictate the terms of any future United States presence.
Fixing the banking system is seen as a major hurdle for the Afghan government following the near-collapse of the nation's largest private lender last year. Kabul Bank was taken down by allegations of mismanagement, cronyism and questionable lending that implicated many members of the Afghan elite with ties to the government.
The fiasco has led many international donors to question the stability of Afghanistan's financial system. Some Western allies are holding back aid until it is clear the banking system is solid. Afghanistan's central bank has taken over Kabul Bank but has not yet said if it plans to sell it. Kabul Bank plays a key role in the Afghan economy by handling payrolls for government workers and security forces.
A US government report said this month that at Kabul Bank, "fraudulent loans were used to divert US$850 million to insiders. This amount reportedly represented 94 percent of the bank's outstanding loans."
Hamid Karzai told reporters that all bank shareholders have been removed and those who do not return lent funds will face criminal investigation.
He also, however, blamed the crisis on international advisers who issued reports saying the bank was functioning normally. The president said the government is investigating these outside advisers and auditors and will follow up any indications of misconduct with a criminal trial. "Hundreds of millions of dollars have been paid to these individuals and organizations to help the banking system of the country and they failed in their task," he said.
Karzai also promised to put strict conditions on the continued US presence in the country as part of a compact currently being negotiated. "We have tied up their hands and feet," he said of the Afghan proposal for the strategic partnership agreement.
Karzai said the Afghan government has been studying the US-proposed agreement and will present a counter-proposal that includes rules for the conduct of soldiers, minimum funding levels and development priorities.
Fixing the banking system is seen as a major hurdle for the Afghan government following the near-collapse of the nation's largest private lender last year. Kabul Bank was taken down by allegations of mismanagement, cronyism and questionable lending that implicated many members of the Afghan elite with ties to the government.
The fiasco has led many international donors to question the stability of Afghanistan's financial system. Some Western allies are holding back aid until it is clear the banking system is solid. Afghanistan's central bank has taken over Kabul Bank but has not yet said if it plans to sell it. Kabul Bank plays a key role in the Afghan economy by handling payrolls for government workers and security forces.
A US government report said this month that at Kabul Bank, "fraudulent loans were used to divert US$850 million to insiders. This amount reportedly represented 94 percent of the bank's outstanding loans."
Hamid Karzai told reporters that all bank shareholders have been removed and those who do not return lent funds will face criminal investigation.
He also, however, blamed the crisis on international advisers who issued reports saying the bank was functioning normally. The president said the government is investigating these outside advisers and auditors and will follow up any indications of misconduct with a criminal trial. "Hundreds of millions of dollars have been paid to these individuals and organizations to help the banking system of the country and they failed in their task," he said.
Karzai also promised to put strict conditions on the continued US presence in the country as part of a compact currently being negotiated. "We have tied up their hands and feet," he said of the Afghan proposal for the strategic partnership agreement.
Karzai said the Afghan government has been studying the US-proposed agreement and will present a counter-proposal that includes rules for the conduct of soldiers, minimum funding levels and development priorities.
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