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Afghanistan

Afghan government backs biggest bank over corruption allegations

Afghanistan's government will never allow the country's biggest financial institution, the Kabul Bank, to collapse, the bank's governor Abdul Qadir Fitrat vowed on Wednesday, following US media allegations of corruption within the firm.

Reuters
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Major US newspapers say the central bank has replaced the two top executives, who were also shareholders, at Kabul Bank, which is partly owned by President Hamid Karzai's brother.

It has also ordered its chairman to hand over 125 million euros' worth of luxury property purchased in Dubai for himself and his cronies.

Reports say Kabul Bank has more than 780 million euros in deposits, and handles the pay of hundreds of thousands of Afghan soldiers, police and teachers.

A run on the bank or interruption to the flow of pay cheques could seriously harm the US-led war effort.

Asked if the central bank was investigating large loans taken out by Kabul Bank shareholders, the central bank said it would investigate all irregularities.

The New York Times reports that after the implosion of Dubai's property bubble, Kabul Bank is now saddled with estimated losses exceeding 234 million euros, while its assets stand at only about 94 million.

Kabul Bank also reportedly figures in a major fraud inquiry targeting New Ansari Exchange, the biggest of Afghanistan's hawala money-transfer firms which play an even bigger role in the country's economy than commercial banks.

The Wall Street Journal says the bank has secretly transferred almost 780 million euros out of Afghanistan via New Ansari - which is accused of handling billions of ill-gotten gains for corrupt officials, drug lords and the Taliban.

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