Given the current global recession, bank failures are not particularly newsworthy events. But the Kabul Bank in Afghanistan is on the brink of being done in not by the economy, but rather by good, old-fashioned corporate mismanagement. In the past few days, depositors have made a run on the Kabul Bank after infighting between the privately-held institution's two largest shareholders exposed a series of dubious real estate deals made with the Bank's holdings; so far $160 million has been sucked out of the Bank, with estimates of potential losses topping $300 to $400 million – a sum that exceeds the total worth of the Kabul Bank.
The situation is made worse by the fact that the Kabul Bank manages the payroll for Afghanistan's police and military, which puts the institution in that “can't be allowed to fail” category, meaning money to cover Kabul Bank's shortfalls will have to be found somewhere. Mahmoud Karzai, the Kabul Bank's third-largest shareholder and brother of Afghan President Hamid Karzai (though not to be confused with Hamid's drug-baron brother Wali) has an idea of where that money should come from – the United States. Mahmoud Karzai thinks a US-bailout of the mismanaged Kabul Bank is just fine, though he, and other Afghan officials, bristle at the idea that the Kabul Bank then be made to adopt basic international management standards for financial institutions – like installing an independent board of directors or allowing audits of the Bank's accounts – or even that anyone be punished for bungling the Kabul Bank to the brink of insolvency.
Afghan officials apparently are worried that any independent look at the Kabul Bank will show that its top stockholders used the rank-and-file deposits to fund lavish lifestyles for themselves, which included some seriously bad real estate deals in Dubai; and as a slush fund for Hamid Karzai's presidential campaign. The US-bailout deal apparently was being considered by the State Department before thankfully being dropped, on Wednesday, Afghanistan's Central Bank announced that they would step in to provide capital to the Kabul Bank, a good thing since riot troops also had to be called out on Wednesday to manage angry crowds that had gathered outside the Bank's main branch as depositors continue to try to salvage their life savings.
Lost in the shuffle of the Kabul Bank story is the fact that in ten days Afghanistan will be holding national parliamentary elections, elections that international observers fear will be riddled with fraud. Thanks to the deteriorating security situation across much of the country, there will be fewer polling stations and fewer election monitors than during the country's troubled presidential elections in August 2009 That election saw nearly a million ballots – mostly cast for Karzai – tossed out over suspicion that they were fraudulent, a move that infuriated Karzai. Speculation is that this upcoming election could see even more fraud committed than in March.
Shady elections, one brother of the country's President allegedly one of the nation's biggest druglords and now another brother a major shareholder in a bank used to fund lavish lifestyles for its top investors; it's the sort of mind-boggling corruption to make you question why after nine years the United States insists on remaining in Afghanistan propping up the same typr of government we condemn in other parts of the world? Time magazine tried to offer a graphic explanation this summer: since apparently if US forces leave then the Taliban will be free to cut the noses off of young women around the country, just as was tragically done to poor Aisha as her punishment for running away from her abusive husband.
In 2009, when United States forces were already occupying large parts of her country...