Head Of Kabul Bank Resigns While In The U.S.

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Now, another twist in the story of Kabul Bank and the $900 million bailout of what was Afghanistan's premier lending institution: The head of Afghanistan's central bank has resigned while on a visit to the U.S., claiming that the government of President Hamid Karzai was not only thwarting his investigation into the failed bank, but that he was being threatened by politically connected shareholders.

MELISSA BLOCK, Host:

Now the latest twist in the story of Kabul Bank. Last year, it was revealed that Afghanistan's premier lending institution had been making dubious loans and required a $900 million bailout from the U.S. government. But the man appointed to investigate the scandal resigned this week while on a visit to the U.S. He claims the government of President Hamid Karzai was not only thwarting his investigation, but that he was being threatened by politically-connected shareholders.

NPR's Quil Lawrence has the story from Kabul.

QUIL LAWRENCE: The director of Afghanistan central bank, Abdul Qadir Fitrat, announced his resignation from the safety of Northern Virginia, claiming that his home country had become too dangerous for him since he began to criticize the delinquent shareholders of Kabul Bank; two of whom happen to be the brothers of President Karzai and Vice President Mohammad Fahim.

ABDUL QADIR FITRAT: The reason I was not able to resign in Kabul, because I was - my life was completely in danger. And this is particularly true after I spoke to the parliament and exposed some people who are responsible for the crisis of Kabul Bank.

LAWRENCE: Afghan Deputy Attorney General Rahmatullah Nazari responded by charging that Fitrat himself was to blame for the scandal of the bank, because he glossed over problems there when reporting to the government. Nazari also said that auditing firms, including Price Waterhouse Coopers, were being investigated for misleading government officials.

Nazari dismissed the allegations that anyone was threatening Mr. Fitrat.

RAHMATULLAH NAZARI: (Arabic language spoken)

LAWRENCE: I don't believe Mr. Fitrat faced any danger to his life, says the deputy attorney general, adding that some people who flee Afghanistan make up threats to their lives in order to seek asylum.

Kabul Bank has been on life support since last year when it was discovered that nearly a billion dollars of loans, granted with no interest, were not being repaid, including a large portion taken by politically-connected shareholders.

The International Monetary Fund has insisted the bank be put in receivership. But the government has been slow to act, triggering a hold on millions of aid dollars.

CANDACE RONDEAUX: In the Kabul Bank case, there are no angels. There are no heroes. Everybody is to blame here, including Fitrat.

LAWRENCE: Candace Rondeaux covers Afghanistan for the International Crisis Group. She says Fitrat had to have been aware of the problems at Kabul Bank long before he made it public. She says the banking crisis threatens to bring down Afghanistan's fragile economy, and other bank scandals may be coming soon. But she says the Karzai government's inaction is tied in some ways to tension with the United States, and what Kabul sees as heavy-handed interference.

Almost nothing is being done about corruption, says Rondeaux.

RONDEAUX: Well, I mean I think a lot of American officials in particular are just throwing up their hands. The level of frustration is so high right now because nothing is on track, not the least of which of course is the problems with the bank's here.

Quil Lawrence, NPR News, Kabul.

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