This has been a while coming… Afghanistan has just got a new independent report published into what has previously been described as a Ponzi scheme operated at Kabul Bank, the country’s biggest lender.
It’s grim, grubby stuff, detailing how the men at Kabul Bank and their friends and relatives got rich off $861m in bogus loans and sparked a bank run in 2010, while political interference has since hampered the clean-up of the mess. Read more
An Indian government-backed group that won rights to mine Afghanistan’s biggest iron ore deposit has sought $7.8bn in state aid and loans to develop the venture, Bloomberg says, citing two people with direct knowledge of the plan. The Indian steel ministry is said to be backing the proposal by the Afghan Iron & Steel Consortium, which comprises seven companies led by state-owned Steel Authority of India (SAIL). The ministry will seek approvals from the foreign and finance ministries, they said, without giving a timeframe. The consortium was last month awarded the rights to mine three out of four blocks of Hajigak, a series of rugged mountain ridges 100km west of Kabul which hold an estimated 1.8bn tonnes of ore. Read more
CNPC, the Chinese energy company, is poised to win the first oilfield to be tendered in Afghanistan since the US ousted the Taliban in revenge for sheltering Osama bin Laden a decade ago, reports the FT. China’s push into Afghanistan is part of a broader drive to secure resources to fuel economic growth that has seen its state-owned companies venture into increasingly risky countries. CNPC, China’s biggest oil and gas producer, beat rival bids from Australia’s Buccaneer Energy, London-based Tethys Petroleum and Shahzad International of Pakistan in a tender for three blocks in the Amu Darya basin in the relatively peaceful north-west. ConocoPhilips is likely to be far less buoyant on Monday — Chinese regulators have ordered it to shut down a troubled offshore oil field jointly owned with Cnooc, says the FT. Read more
Afghan prosecutors have announced they will charge the former head of the central bank with involvement in the country’s biggest financial scandal, a day after he said he had quit his post in fear of his life, the FT reports. Abdul Qadir Fitrat, who resigned as central bank chief on Monday, said he had received information his life was in danger after he revealed the names of borrowers who benefited from improper loans made by Kabulbank, the biggest lender. The crisis at Kabulbank, which extended huge loans to a coterie of well-connected businessmen, has revealed the scale of the corruption that has flourished under the government of Hamid Karzai, Afghanistan’s president. Rahmatullah Nazari, the deputy attorney-general, said Mr Fitrat and other central bank officials would be prosecuted for not acting on warnings they received about widespread corruption at the bank. Mr Fitrat, who is in the US, has denied wrong-doing. He says he has been forced to resign in part because Afghan authorities had failed to take steps to prosecute individuals responsible for the scandal at Kabulbank, which almost collapsed following a run in September last year. Read more
Writing the day before the second anniversary of Lehman Brothers’ fall, Gideon Rachman argues that ’9/15′ might matter more to America in the long run than 9/11.
While you can argue with that, there is now another parallel of sorts between the two dates, thanks to the Afghan central bank. Read more
The US and its Nato allies should begin an immediate large-scale withdrawal from southern Afghanistan, moving to a policy of “containment and deterrence” against the Taliban and al-Qaeda while focusing on narrower political goals for the country, says a leading foreign affairs think-tank, reports the FT. In an analysis of Afghan policy, which comes ahead of a critical US review at the end of this year, the International Institute for Strategic Studies said on Tuesday that Nato strategy was “too ambitious, too removed from the core security goals that need to be met, and too sapping of diplomatic and military energies needed both in the region and elsewhere”. Unveiling a blueprint for withdrawal of Nato forces from southern Afghanistan, the institute said it was unlikely al-Qaeda would return in force if Nato left. The think-tank said it was “not . . . axiomatically obvious that an Afghanistan freed of an international combat presence in the south would be an automatic magnet for al-Qaeda’s concentrated reconstruction”. Read more
Afghanistan’s financial institutions have stepped in to stop a run on Kabul Bank, the country’s largest private lender, as customers withdrew about 60% of the bank’s cash deposits after its two top executives resigned amid corruption allegations, the FT reports. News emerged last week that the central bank had taken control of Kabul Bank, forcing its senior two managers to resign. Bloomberg quotes Afghanistan’s central bank governor saying on Monday that Kabul Bank was “out of danger” and has enough liquid assets. Read more
Afghanistan’s financial institutions have stepped in to stop a run on Kabul Bank, the country’s largest lender, as customers withdrew about 60 per cent of the bank’s cash deposits after its two top executives resigned amid corruption allegations, the FT reports. Mahmoud Karzai, a shareholder of Kabul Bank and brother of Afghan president Hamid Karzai, told the Financial Times that “the government has stepped in to reassure people”. The Washington Post reported last week that the central bank had taken control of Kabul Bank, forcing its senior two managers to resign. Mahmoud Karzai, speaking from Dubai, said the situation at the ailing bank was improving. “Withdrawals have now almost stopped,” he said. “Almost $300m has been withdrawn, and [the bank] had about $500m in cash before, so they still have about $200m.” Read more
Afghanistan’s government on Sunday inched closer to bailing out the country’s largest bank, setting aside hundreds of millions of dollars that could be used to keep Kabul Bank solvent, reports the WSJ, citing Afghan officials. The move came as depositors continued to pull their money from the lender, mobbing branches in Kabul and other parts of the country. Reuters adds that an opposition leader on Sunday urged Afghanistan’s government and central bank to give clear answers on Kabul Bank after its top two directors resigned. Read more
The United States has discovered nearly $1,ooobn in untapped mineral deposits in Afghanistan, according to the New York Times. The figure is far beyond any previously known reserves in the area and enough to completely turnaround the Afghan economy and perhaps the Afghan war itself, according to senior American government officials cited by the NYT. However, experts believe it will take decades for Afghanistan to exploit its mineral wealth fully. Read more
International commodity explorers – send for your tin hats and Kevlar vests.
The New York Times reported on Sunday that the US has discovered nearly $1,000bn in untapped mineral deposits in Afghanistan. Read more
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