| | Pressure Rises on Shaken Afghan Bank The New York Times
09/01/2010
By Dexter Filkins
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KABUL — Afghanistan’s top bank official tried Wednesday to calm fears of a meltdown of one of the country’s largest financial institutions, while scores of ordinary Afghans lined up to empty their accounts and found the bank unwilling to comply.
The official, Abdul Qadir Fitrat, held a news conference to say that Kabul Bank was more stable than the huge financial losses revealed earlier this week suggested. Mr. Fitrat, the chairman of Afghanistan’s Central Bank, urged Afghans to keep faith in the country’s financial system — and to keep their money in Kabul Bank.
“The bank is solvent, the bank is solvent,” Mr. Fitrat said. “Kabul Bank has no cash problem.
“Kabul Bank would never have cash problems,” he said, “God willing.”
Mr. Fitrat spoke a day after the Kabul Bank, at the behest of the country’s Central Bank, changed its leadership after the discovery of losses approaching $300 million, an amount far exceeding its capital. The revelations prompted fears among American and Afghan officials of a stampede of withdrawals that could trigger of a collapse of confidence in Afghanistan’s financial system.
In a measure of just how seriously officials regarded Kabul Bank’s troubles, the Central Bank installed its own chief financial officer as the new head of the bank.
The other measure of the troubles could be seen Wednesday morning at the news conference, in the faces of the two Kabul Bank executives who had just resigned. Sherkhan Farnood, the former chairman, and Khalil Frozi, the former chief executive, flanked Mr. Fitrat, looking haggard, unkempt and ashen.
Mr. Fitrat, for all his efforts, failed to address some of the larger questions surrounding Kabul Bank, one of the country’s largest private financial institutions. He did not mention the $300 million in losses — compared to just $120 million in assets. Mr. Fitrat promised that the Central Bank would stand behind Kabul Bank “with all its means and power,” but he did not guarantee the depositors’ money.
Finally, Mr. Fitrat did not explain how Kabul Bank got into such trouble in the first place. Mr. Farnood, its former chairman and largest shareholder, borrowed at least $140 million to buy property in the United Arab Emirates for himself, shareholders say. And he lent $100 million to one of the bank’s other shareholders, Hameed Fahim, the son of Afghanistan’s vice president.
In addition, Mr. Farnood cultivated a close relationship to President Hamid Karzai, bankrolling his re-election campaign last year.
In the absence of a thorough explanation, many Afghans appeared to disregard Mr. Fitrat’s pleas. By Wednesday morning, the lobby of Kabul Bank was filled with people coming to take out their money. Many of them were told they could not — that the bank did not have any money to give them. Rumors swept the crowd that Kabul Bank had lost not $300 million, which was bad enough, but $1 billon.
“I have been waiting here since 8 a.m., and they keep telling me, ‘We do not have money, come back tomorrow,’ ” said Wahidullah, the owner of a construction company who came to cash a $50,000 check. He’d gone to two other Kabul Bank officers and got the same answer, he said.
“There are many people inside the bank, and most of them are worried about losing their money,” he said.
Mr. Wahidullah was not alone in his difficulties. Still, it was unclear exactly why he and other Afghan like him were not able to call on Kabul Bank for any money. The new chief executive, Masoud Ghazi, declined on Wednesday to answer questions.
The next few days are considered crucial by Afghan and American officials. Worries among depositors could spread, or they could subside.
¶ Also on Wednesday, officials said that at least two employees of the aid organization Oxfam had been killed when their vehicle struck a roadside bomb. The two employees, who were both Afghan, were killed Sunday in Badakhshan Province, the same region where 10 Western aid workers, including six Americans, were shot and killed last month.
Badakhshan, in the northeastern corner of the country, has historically been one of the most peaceful areas since the American-led war began here in 2001. That has been changing, as the Taliban have made inroads across the provinces of the north.
Mohammed Amin Suhil, a spokesman for Badakhshan’s governor, put the number of dead at three. He said an engineer, a cook and a driver had been killed while driving near the village of Dawand in Shar-e-Buzurg district. The discrepancy appeared to mean that one of those killed was not an Oxfam employee.
Mr. Suhil blamed the attack on the Taliban, whom he said was offering large payments to kill government officials and aid workers.
“The Taliban and other militants are paying serious attention to Badakhshan province,” Mr. Suhil said.
In a statement, Oxfam said it had temporarily suspended its operations in Badakhshan, but it promised to carry on.
“Oxfam has no plans to discontinue it’s work in Afghanistan,” the statement said.
Sharifullah Sahak and Sangar Rahimi contributed reporting.
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