United Press International
09/03/2010
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KABUL - A major shareholder in a top Afghan bank says the government and the United States must help stabilize the bank to prevent "revolution in our financial system."

Ousted Kabul Bank CEO Khalilullah Ferozi (C) leaves after a news conference in Kabul September 1, 2010. (Photo: Reuters/Ahmad Masood)

In an interview with The New York Times, Khahil Frozi - one of the two largest shareholders in Kabul Bank - rejected suggestions the bank has lost as much as $300 million during the financial crisis that arose this week. However, the Times said depositors have taken out $180 million in the past two days and Frozi, the bank's chief financial officer, said if withdrawals persist at that rate the bank may well fail.

"If people lose their trust in the banks, then we will have revolution in our financial system," he told the Times. "We need the Afghan government and the U.S. government to support us."

The panic followed a demand by top Afghan banking officials that Frozi and Kabul Bank Chairman Sherkhan Farnood resign, the newspaper said. Afghan and U.S. officials concluded Frozi and Farnood engaged in reckless management of the institution, handing out millions of dollars to people connected to Afghan President Hamid Karzai and losing money on poor investments.

The Afghan banking system is relatively young, having been created with help from the United States after the Taliban regime was driven out in 2001.

Karzai told reporters in Kabul the government will guarantee all deposits at Kabul Bank, which administers payroll for about 250,000 public employees. Karzai said the government has given the bank more than $100 million to cover the payroll, the Times said.

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