Tuesday, September 7, 2010

Our Afghan ally bails out corrupt president's corrupt brother's bank

The Afghan government is preparing a $200m (£130m) bailout for the country's biggest commercial bank, which is mired in a corruption scandal that has prompted a rush by thousands of customers to close their accounts.

Officials at the country's Central Bank confirmed that regulators asked the Ministry of Finance on Saturday for permission to make the huge loan from the country's reserves to help prop up Kabul Bank.

There are widespread suspicions that the payment has already been made. Large queues continued to form outside Kabul Bank branches across the country on Sunday as desperate customers tried to withdraw their money.

Security guards put up razor wire in front of the largest branch in Kabul to prevent anxious customers getting in.

Although the Central Bank has reserves worth $4.5bn (£2.9bn), the $200m figure is an enormous amount for one of the world's poorest countries. The Afghan government's entire tax revenues are just $1.2bn a year.

At the weekend the US Treasury department insisted that no US money would go into the bailout of a bank that got into financial trouble in part by buying luxury properties in Dubai, which were then used as the private homes of shareholders and other friends of the bank's management.

Earlier, Mahmoud Karzai, a brother of the president, who owns 7% of the bank's shares, had called for a US financial guarantee. Today the bank's spokesman said he had no information about a bailout.


The U.S. Treasury department insisted that no U.S. money would go into any bailout of the bank.

That's double talk. Without constant infusions of U.S. dollars, the Afghan government would be broke. When Afghanistan spends money, it's our money.

Our tax dollars are going to bail out the corrupt president's corrupt brother's bank.

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