From the New York Times:
Audit Says Kabul Bank Began as Ponzi Scheme
Kabul Bank became Afghanistan's largest financial institution by offering the promise of modern banking to people who had never had a saving or checking account. What it really dealt in was modern theft: From its very beginning, according to a confidential forensic audit of Kabul Bank, the bank was a well-concealed Ponzi scheme.
Afghan and American officials had for years promoted Kabul Bank as a prime example of how Western-style banking was transforming a war-ravaged economy. But the audit, prepared this year for Afghanistan's central bank by the Kroll investigative firm, gives new details of how the bank instead was institutionalizing fraud that reached into the hundreds of millions of dollars and obliterated Afghans' trust after regulators finally seized the bank in August 2010 and the theft was revealed.
Going further than previous reports, the audit asserts that Kabul Bank had little reason to exist other than to allow a narrow clique tied to President Hamid Karzai's government to siphon riches from depositors, who were the bank's only substantial source of revenue.
At one point, Kroll's investigators found 114 rubber stamps for fake companies used to give forged documents a more legitimate look. And the auditing firms used by the bank never took issue with loan books that were almost entirely fraudulent, Kroll found, recommending that the Afghan government explore suing the last such auditor, A.F. Ferguson & Co., a private Pakistani firm with a franchise under PricewaterhouseCoopers.
And the rot is right at the top - more:
What Kroll's audit found is that on Aug. 31, 2010, the day the Bank of Afghanistan seized Kabul Bank, more than 92 percent of the lender's loan portfolio - $861 million, or roughly 5 percent of Afghanistan's annual economic output at the time - had gone to 19 related people and companies, according to the audit.
Among the largest beneficiaries were a brother of Mr. Karzai and a brother of First Vice President Muhammad Qasim Fahim who each owned stakes in the bank that had been bought with loans from the bank, according to the audit and regulatory officials. For their part, both have insisted that they never took part in any fraud at the lender.
Who'd a thunk it... We need to just get out and build a wall (economic wall) around that region and let them stew in their own juices. They have had the benefits of Western largess for 50 years and have done nothing except consolidate power, keep their citizens in grinding poverty with zero education and export terror and oil (both profitable and controlled by the top). Let them come to us, hat in hand with a contrite heart and then, maybe then, we will start to talk again.
