|Ismail Khan was dubbed by US officials as 'the worst' for his allegedly corrupt activities [EPA]
The Afghan leader has been defying US pressure to sack an allegedly corrupt minister for over a year, according to some of the latest diplomatic cables released by WikiLeaks, the whistleblower website.
Secret diplomatic records showed Ismail Khan - privately termed "the worst" by US officials - kept his job at an agency that controls $2bn in international projects.
The refusal to remove the official despite threats to end US aid highlights how little influence the US has over Hamid Karzai on issues such as corruption.
The state department correspondence was written as Karzai was assembling a cabinet shortly after his 2009 re-election.
Reining in corruption is seen as vital to Afghanistan's long-term stability.
Last month, Barack Obama, the US president, cited an urgent need for political and economic progress in Afghanistan.
But US aid to Afghanistan has continued despite the dispute over Ismail Khan.
Karl Eikenberry, the US ambassador, pressured Karzai to remove Khan, a once powerful military commander, from the top of the energy and water ministry, according to two state department reports written at the time by US embassy officials in Kabul.
They were disclosed last month by WikiLeaks.
A December 2009 memorandum distributed internally under Eikenberry's name described Khan as "the worst of Karzai's choices" for cabinet members.
"This former warlord is known for his corruption and ineffectiveness at the energy ministry," the memo said.
Even with US threats to withhold aid, Karzai rejected requests to replace Khan.
Asked earlier in 2010 about the corruption allegations, Khan told the Associated Press news agency that there were not any widespread problems of corruption or mismanagement.
"No money is missing from the ministry," he said. "All the income goes directly to the bank."
Khan said he was unaware of any complaints against him or the ministry. "If there have been complaints, nobody has come to me to tell me," he said.
Concerns about Khan and his ministry surfaced soon after he took over the agency in 2004.
Consultants hired to identify problems in the ministry estimated that corruption contributed to the loss of $100 million or more each year from the country's electricity system that should go back to the Afghan government, according to reports produced for the US Agency for International Development (USAID).|
Khan had a troubled history before heading the ministry. As governor of Herat province in 2003, he refused to turn over millions in monthly customs fees to the central government. Karzai has embraced several former regional commanders in his efforts to unify the country.
The ministry deals in tens of millions of dollars in cash annually.
Each year, however, it reports collecting far less in revenue than the retail value of the electricity it produces for customers.
Khan has explained the gap by saying it cost more to produce the electricity than customers pay.
As much as 20 per cent of the shortfall is the result of electricity lost due to a substandard distribution and transmission system, according to a report from USAID.
Nearly all transactions in Afghanistan take place with cash, so there are no personal checques or credit card trails to document utility payments.