The Afghan Bank Heist
A secret investigation may implicate dozens of high-ranking government officials.
A guard at Kabul Bank. “If this were America, fifty people would have been arrested by now,” one American official said.
In the spring of 2009, as the reëlection campaign of President Hamid Karzai was gathering momentum, a group of prominent Afghan businessmen met with the candidate for breakfast at the Presidential palace. Among them was Khalil Ferozi, the chief executive officer of Kabul Bank, a freewheeling financial institution owned by some of the most colorful and politically well-connected Afghans in the country, including one of President Karzai’s brothers.
Ferozi, a banking novice, had a history that seemed lifted from a Saturday-afternoon adventure movie. In the late nineteen-nineties, working for the legendary anti-Taliban commander Ahmed Shah Massoud, he sold emeralds mined in the crags of the Panjshir Valley and used the proceeds to pay an obscure Russian company to print truckloads of Afghan currency. In this way, he helped underwrite Massoud’s movement. But, according to a Massoud associate, the commander became enraged when he discovered that Ferozi was helping to print currency for the Taliban as well. Before Ferozi could be hauled in—“Tie his hands, tie his legs, and bring him to me,” Massoud reportedly said—Massoud was killed, on September 9, 2001, by Al Qaeda assassins. Ferozi denied the story and went on to become Kabul’s most improbable C.E.O. With a body like an oil drum, and a retinue of gunmen around him, he prowls the streets of Kabul looking less like a banker than like a footballer lost in a war zone.
“We’d like to contribute to the campaign,” Ferozi told President Karzai at the breakfast in 2009. “What can we do?” The President pointed Ferozi in the direction of his finance minister and campaign treasurer, Omar Zakhilwal.
Two days later, Zakhilwal told me recently, two men identifying themselves as Kabul Bank employees appeared bearing a briefcase containing two hundred thousand dollars in cash. “Two guys, one case,” he said. Zakhilwal said that he took the briefcase and passed it directly to his colleagues at Karzai’s campaign headquarters. Zakhilwal didn’t keep a record of the contribution, and no record of it was made available by the Independent Election Commission, either. “You will never ever find a record of a gift from them of any value, not even a dollar,” Zakhilwal said, denying any wrongdoing.
Now American officials say that Zakhilwal was one of many Afghan leaders and businessmen who, collectively, accepted tens of millions of dollars in gifts and bribes—some sources say as much as a hundred million dollars—from executives at Kabul Bank. The scandal is perhaps the most far-reaching in the nine years since Karzai took power.
Poring over stacks of documents, investigators at the American Embassy in Kabul have pinpointed dozens of instances in which Kabul Bank executives may have bribed Afghan officials, including a successful bid to process the salaries that the government pays its employees each month—at least seventy-five million dollars. Access to the salaries would give bank officials an opportunity to earn millions of dollars in interest in the course of a single year.
American officials say that Kabul Bank’s largesse extended to members of parliament and almost anyone whose silence would allow bank executives to embark on a spree of buying, lending, and looting. In addition, some current and former Afghan officials say, Kabul Bank became an unofficial arm of the Karzai government, bribing parliamentarians in order to secure votes for its legislative agenda.
The investigation into Kabul Bank was run by a remarkable but little-known group of Americans working at the Embassy called the Afghan Threat Finance Cell. Their findings are considered so sensitive that almost no one—generals, diplomats, the investigators themselves—is willing to talk about them publicly. The unit, made up of agents from the F.B.I., the Drug Enforcement Administration, the Treasury Department, and the Pentagon, has compiled extensive evidence of bribery. “If this were America, fifty people would have been arrested by now,” an American official told me.
Secretary of State Hillary Clinton was briefed on the investigation in January, but some people fear that the Obama Administration won’t do anything about what has been discovered. After months of sparring with Karzai, the Administration appears to be paralyzed. “We have to work with these people,’’ a senior NATO officer told me.
The Threat Finance Cell also has almost single-handedly demonstrated the degree to which the American-led war in Afghanistan is compromised by connections among the Taliban, drug traffickers, and Afghan officials. The group was set up, in 2008, to sever the links between Taliban insurgents and their financing, much of which was believed to come from the drug trade. Instead, the investigators found that the lines connecting the Taliban and the drug smugglers often ran through the Afghan government. They also uncovered one of the darker truths of the war: the vast armies of private gunmen paid to protect American supply convoys frequently use American money to bribe Taliban fighters to stand back. These bribes are believed by officials in Kabul and in Washington to be one of the main sources of the Taliban’s income. The Americans, it turns out, are funding both sides of the war.
By last summer, the Threat Finance Cell and its Afghan counterpart—a group called the Sensitive Investigative Unit—had begun looking into Kabul Bank, previously one of the most successful institutions in post-2001 Afghanistan. The American and Afghan investigators quickly realized that the bank was hugely overextended and headed for disaster. The bank, under the guidance of its top executives, Ferozi and Sherkhan Farnood, a world-class poker player, had begun to founder, in part owing to the collapse of the property market in Dubai. Farnood had spent tens of millions of dollars in depositors’ money to buy more than a dozen luxury villas on or near Palm Jumeirah, an exclusive man-made island. At the urging of Americans, the Central Bank of Afghanistan, which is charged with insuring that Afghan banks adhere to financial regulations, stepped in and replaced Ferozi and Farnood. Read more http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_filkins#ixzz1D8OkIcWD
A guard at Kabul Bank. “If this were America, fifty people would have been arrested by now,” one American official said.
In the spring of 2009, as the reëlection campaign of President Hamid Karzai was gathering momentum, a group of prominent Afghan businessmen met with the candidate for breakfast at the Presidential palace. Among them was Khalil Ferozi, the chief executive officer of Kabul Bank, a freewheeling financial institution owned by some of the most colorful and politically well-connected Afghans in the country, including one of President Karzai’s brothers.
Ferozi, a banking novice, had a history that seemed lifted from a Saturday-afternoon adventure movie. In the late nineteen-nineties, working for the legendary anti-Taliban commander Ahmed Shah Massoud, he sold emeralds mined in the crags of the Panjshir Valley and used the proceeds to pay an obscure Russian company to print truckloads of Afghan currency. In this way, he helped underwrite Massoud’s movement. But, according to a Massoud associate, the commander became enraged when he discovered that Ferozi was helping to print currency for the Taliban as well. Before Ferozi could be hauled in—“Tie his hands, tie his legs, and bring him to me,” Massoud reportedly said—Massoud was killed, on September 9, 2001, by Al Qaeda assassins. Ferozi denied the story and went on to become Kabul’s most improbable C.E.O. With a body like an oil drum, and a retinue of gunmen around him, he prowls the streets of Kabul looking less like a banker than like a footballer lost in a war zone.
“We’d like to contribute to the campaign,” Ferozi told President Karzai at the breakfast in 2009. “What can we do?” The President pointed Ferozi in the direction of his finance minister and campaign treasurer, Omar Zakhilwal.
Two days later, Zakhilwal told me recently, two men identifying themselves as Kabul Bank employees appeared bearing a briefcase containing two hundred thousand dollars in cash. “Two guys, one case,” he said. Zakhilwal said that he took the briefcase and passed it directly to his colleagues at Karzai’s campaign headquarters. Zakhilwal didn’t keep a record of the contribution, and no record of it was made available by the Independent Election Commission, either. “You will never ever find a record of a gift from them of any value, not even a dollar,” Zakhilwal said, denying any wrongdoing.
Now American officials say that Zakhilwal was one of many Afghan leaders and businessmen who, collectively, accepted tens of millions of dollars in gifts and bribes—some sources say as much as a hundred million dollars—from executives at Kabul Bank. The scandal is perhaps the most far-reaching in the nine years since Karzai took power.
Poring over stacks of documents, investigators at the American Embassy in Kabul have pinpointed dozens of instances in which Kabul Bank executives may have bribed Afghan officials, including a successful bid to process the salaries that the government pays its employees each month—at least seventy-five million dollars. Access to the salaries would give bank officials an opportunity to earn millions of dollars in interest in the course of a single year.
American officials say that Kabul Bank’s largesse extended to members of parliament and almost anyone whose silence would allow bank executives to embark on a spree of buying, lending, and looting. In addition, some current and former Afghan officials say, Kabul Bank became an unofficial arm of the Karzai government, bribing parliamentarians in order to secure votes for its legislative agenda.
The investigation into Kabul Bank was run by a remarkable but little-known group of Americans working at the Embassy called the Afghan Threat Finance Cell. Their findings are considered so sensitive that almost no one—generals, diplomats, the investigators themselves—is willing to talk about them publicly. The unit, made up of agents from the F.B.I., the Drug Enforcement Administration, the Treasury Department, and the Pentagon, has compiled extensive evidence of bribery. “If this were America, fifty people would have been arrested by now,” an American official told me.
Secretary of State Hillary Clinton was briefed on the investigation in January, but some people fear that the Obama Administration won’t do anything about what has been discovered. After months of sparring with Karzai, the Administration appears to be paralyzed. “We have to work with these people,’’ a senior NATO officer told me.
The Threat Finance Cell also has almost single-handedly demonstrated the degree to which the American-led war in Afghanistan is compromised by connections among the Taliban, drug traffickers, and Afghan officials. The group was set up, in 2008, to sever the links between Taliban insurgents and their financing, much of which was believed to come from the drug trade. Instead, the investigators found that the lines connecting the Taliban and the drug smugglers often ran through the Afghan government. They also uncovered one of the darker truths of the war: the vast armies of private gunmen paid to protect American supply convoys frequently use American money to bribe Taliban fighters to stand back. These bribes are believed by officials in Kabul and in Washington to be one of the main sources of the Taliban’s income. The Americans, it turns out, are funding both sides of the war.
By last summer, the Threat Finance Cell and its Afghan counterpart—a group called the Sensitive Investigative Unit—had begun looking into Kabul Bank, previously one of the most successful institutions in post-2001 Afghanistan. The American and Afghan investigators quickly realized that the bank was hugely overextended and headed for disaster. The bank, under the guidance of its top executives, Ferozi and Sherkhan Farnood, a world-class poker player, had begun to founder, in part owing to the collapse of the property market in Dubai. Farnood had spent tens of millions of dollars in depositors’ money to buy more than a dozen luxury villas on or near Palm Jumeirah, an exclusive man-made island. At the urging of Americans, the Central Bank of Afghanistan, which is charged with insuring that Afghan banks adhere to financial regulations, stepped in and replaced Ferozi and Farnood. Read more http://www.newyorker.com/reporting/2011/02/14/110214fa_fact_filkins#ixzz1D8OkIcWD
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