Two Indians involved in Kabul Bank fraud case: Report

Fraudulent lending and embezzlement by officials, including at least two Indian citizens, led to failure of Afghanistan's Kabul Bank resulting in misuse of about USD 935 million Afghan public money, according to an independent report released today.

The 87-page 'Report of the Public Inquiry into the Kabul Bank Crisis', prepared by the Independent Joint Anti-Corruption Monitoring and Evaluation Committee, was released in Kabul.

As per the report, the bank's controlling shareholders, key supervisors and managers led a sophisticated operation of fraudulent lending and embezzlement, mainly through a loan-book scheme.

"This resulted in Kabul Bank being deprived of approximately USD 935 million funded mostly from customer's deposits," it said.

Further, the report stated that shareholders, related individuals and companies as well as politically exposed people were the ultimate beneficiaries of the fraud.
In September 2010, Kabul Bank ran into trouble and was later taken over by the Afghanistan's central bank.

"On September 5, 2010, the ex-Governor wrote to the Ministry of the Interior to seek a travel ban for Kabul Bank's Internal Audit Manager and Credit Manager who are citizens of India.

"A letter was also sent that day to Kabul Airport headquarters informing the airport authority that the two were attempting to flee. They were later arrested," the report said.

However, specific details about the executives or their current status were not disclosed.

It was found that the bank's Credit Department opened loan accounts for proxy borrowers on instruction from senior management and also forged supporting documents such as applications and financial statements. Moreover, fake business stamps were used to "lend authenticity to the documents".

About USD 861 million -- over 92 per cent of the bank's loan book -- has been extended to 19 related individuals and businesses, including a USD 270.3 million liability for the ex-Chairman, a USD 94.3 million liability for the ex-Chief Executive Officer and two politically exposed people with liabilities of USD 74.1 million, the report said.

Going by the report, Attorney General's office has sent letters to jurisdictions including India seeking mutual legal assistance regarding assets of the bank that are likely to be held or through which funds are laundered.

"Letters were only recently sent out in September 2012 to Switzerland, France, the United Kingdom and India requesting assistance pursuant to the United Nations Convention Against Transnational Organised Crime and the United Nations Convention Against Corruption," the report said.