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Afghans pull money from major bank
Kabul Bank swamped by customers withdrawing deposits after reports in US papers alleging fraud among bank's executives.
Last Modified: 04 Sep 2010 22:12 GMT
Depositors continued to withdraw their money despite assurances that the bank was solvent [AFP]

Nervous Afghans have withdrawn their money from Afghanistan's largest bank after newspapers in the United States published news reports alleging corruption among the bank's executives.

The run on Kabul Bank, which began last week following articles in publications including the Washington Post, continued on Saturday despite assurances by Afghan officials that customers' money was safe.

"After we heard the news, [I] have come to Kabul Bank to close my account," Mohammad Nawaz, head of an Afghan aid group who had been trying for three hours to withdraw $15,000 on his account, said.

"But it is very busy here; a lot of people are here to withdraw their money."

Branches of the bank across the country were crowded as anxious depositors joined thousands of government employees queuing to collect their salaries, which were being paid through the bank.

Mohammad Habib Angar, a calligrapher, said he was taking out most of his Afghan and dollar savings, but was not ready to close his account.

"For the time being I want to withdraw my money and then I will wait to see what will happen next," Angar said.

"If the bank is able to create confidence, for sure I will put my money back in Kabul Bank because I do not want to close my account."

Large-scale corruption

The privately-owned bank has been the subject of reports alleging large-scale corruption by executives, including lending out tens of millions of dollars to politicians and their families for property investments.

But the government and the central bank have reassured customers that the bank is solvent and that there is no need to panic.

Adbul Qadir Fitrat, the governor of Afghanistan's central bank, dismissed reports in the Washington Post that the bank had been taken over.

Two other US newspapers - the New York Times and the Wall Street Journal - reported on Wednesday that the central bank had replaced  the bank's two top executives: chief executive Khalilullah Ferozi and Sher Khan Farnud, the chairman.

The papers added that Farnud had been directed to hand over $160m worth of luxury property purchased in Dubai for himself and for cronies.

Fitrat denied the reports, saying the men had resigned voluntarily as new regulations did not permit shareholders to hold executive positions.

Hazrat Omar Zakhailwal, the finance minister, reassured customers that the administration of Hamid Karzai, the Afghan president, had given its full backing and cash was being delivered to branches nationwide.

He said $100m had been deposited in the bank to cover government salaries, which were due to be paid on Saturday to police, army, teachers and many other civil servants.

The US newspaper reports said a cash crisis at the bank could undermine the stability of Afghanistan's financial system and efforts to fight the Taliban forces threatening the government.

Source:
Agencies
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