Afghan President Hamid Karzai is engaging in another war of words with Western officials active in his country, this time over the management of Afghanistan's financial sector. Last September, Kabul Bank, the country's largest private lender and the institution that handles government and military payrolls for Afghanistan, nearly collapsed. The Kabul Bank wasn't done in by the global recession and credit crunch, but rather by good, old-fashioned mismanagement: Bank insiders used a series of fraudulent loans to suck close to a billion dollars out of the bank, nearly its entire asset base. Western firms including PriceWaterhouseCoopers and Deloitte were suppose to be providing consulting services and oversight for Afghanistan's fledgling financial sector, so Karzai is now slamming the foreigners for not seeing the collapse of Kabul Bank coming and taking steps to prevent it. Of course it is worth noting here that Kabul Bank's third-largest shareholder was a man named Mahmoud Karzai, and before you ask, yes, he is the brother of Hamid Karzai.
So President Karzai's complaint boils down to this: The Western companies overseeing the Kabul Bank should have kept the Karzai family from ripping it off.
Once again I find myself asking, “is this guy serious?” in relation to Hamid Karzai (here it might be worth while brushing up on the activities of his other brother, Ahmed Wali). “Hundreds of millions of dollars have been paid to these individuals and organizations to help the banking system of the country and they failed in their task,” Pres. Karzai said on Monday. It is almost tempting to say that he has a point; USAID, the US government agency that oversees foreign aid ended their contract with Deloitte in March because Deloitte's inspectors at Kabul Bank failed to see all of the bogus loans being written that led to the institution's near collapse. But of you go back a little further to the original stories surrounding the September banking crisis, reports at the time said that Mahmoud Karzai and other Afghan officials at the bank actively opposed moves suggested by the consultants, such as adopting Western-style accounting standards at the bank and refused to allow an independent audit of the bank's books. In essence, Deloitte was asked to oversee a bank without access to its inner workings, a situation that seemed doomed to failure.
Karzai's critique of the Western agencies involved with his country's economic sector follow a recent pattern of behavior with him, which has been basically to launch a series of scathing attacks against the foreign forces (both military and civilian) active in his country. One could say that it is nothing more than a transparent ploy to shift attention away from his own corrupt and ineffective government and try to put the blame for his country's problems elsewhere. During Monday's address, Karzai promised that “whoever was involved in leading the bank into crisis, all those people will be brought to justice.” Somehow I doubt that Mahmoud Karzai will be among those people.
3 days ago