[QODLink]
Central & South Asia
Scandal-tainted Kabul Bank to be sold off
Afghanistan responds to IMF pressure over financial institution at centre of corruption scandal.
Last Modified: 28 Mar 2011 17:31
A run on the bank was halted only after an injection of government funding [EPA]

Afghanistan's Kabul Bank is to be broken up and sold off at the demand of the International Monetary Fund, according to sources in Afghanistan.

Diplomats in Kabul said on Monday that government approval for placing Kabul Bank into receivership would be given in the coming days and that the process would be complete within two weeks.

The IMF has demanded that the bank be wound up and has made clear that a possible financial assistance programme for Afghanistan would be dependent on the bank being closed down or sold.

The UN warned last month that international donors "may have to suspend or redirect their assistance" if the government failed to reach an agreement with the IMF.

Kabul Bank came close to collapse last year and was taken over by Afghanistan's central bank following claims that former executives had granted themselves huge under-the-table loans.

US media reports have said Kabul Bank's former executives used depositors' funds to buy property including seafront mansions in Dubai, one of which was made available at no cost to Mahmoud Karzai, the Afghan president's brother.

A run on the bank was only halted after government assurances and injections of public money.

Corruption case

The Afghan government of Hamid Karzai, the Afghan president, has long been beset by accusations of corruption.

In an interview in the Washington Post on Saturday, Mohammad Mustafa Mastoor, Afghanistan's deputy finance minister, said that the bank's deposits and performing loans would be separated from loans unlikely to be repaid.

"We need to know how much the loss is so we can determine how to respond to the losses," he said. "This will lead to the strengthening of our banking system."

Afghanistan's central bank has said the bank is now stable and has argued that putting it into receivership might cause a run on it and other banks.

One Western diplomat based in Kabul said that negotiations on the bank would be concluded during the annual World Bank conference in Washington from April 11-18.

Separately on Monday, Inayatullah Qasimi, Afghanistan's former transport minister, was reportedly arrested on corruption charges.

The AFP news agency quoted a spokesman for the attorney general's office as saying that Qasimi, who was appointed minister in 2004 and served for less than two years, will face trial for misuse of public funds.

He is the first former member of Karzai's administration to face such charges.

Source:
Agencies
Topics in this article
People
Country
City
Organisation
Featured on Al Jazeera
The author argues that in the new economy, it's people, not skills or majors, that have lost value.
Colleagues of detained Al Jazeera journalists press demands for their release, 100 days after their arrest in Egypt.
Mehdi Hasan discusses online freedoms and the potential of the web with Wikipedia founder Jimmy Wales.
A tight race seems likely as 814 million voters elect leaders in world's largest democracy next week.
Featured
Since independence, Zimbabwe has faced food shortages, hyperinflation - and several political crises.
After a sit-in protest at Poland's parliament, lawmakers are set to raise government aid to carers of disabled youth.
A vocal minority in Ukraine's east wants to join Russia, and Kiev has so far been unable to put down the separatists.
Iran's government has shifted its take on 'brain drain' but is the change enough to reverse the flow?
Deadly attacks on anti-mining activists in the Philippines part of a global trend, according to new report.
join our mailing list