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Nov 11, 2014 7:28 AM

Senior officials of collapsed Afghan bank jailed

The Associated Press

KABUL, Afghanistan (AP) Two senior officials of an Afghan bank that collapsed beneath almost $1 billion in debt were sentenced in a Kabul court on Tuesday to 15 years prison each for embezzlement and fraud.

The scandal in 2010 shook confidence in Afghanistan's tiny banking sector, and the loss accounted for around 5 percent of the country's economy, making it the biggest banking collapse in history.

The government bailed out the bank and brought in receivers who, officials say, have traced most of the missing funds.

The scandal struck at the heart of the Kabul political establishment, involving relatives of the former president Hamid Karzai and one of his deputies, Marshall Mohammad Qasim Fahim.

President Ashraf Ghani has put the case at the center of his anti-corruption campaign, and within days of taking office in September ordered it resolved within 45 days.

The Kabul Bank's former chairman Sherkhan Farnood and former chief executive officer Khalillulah Ferozi were sentenced live on television, after a two-day appeal against earlier sentences of five years in prison. They have already served more than four years of the original sentence.

A panel of five judges at the Kabul Appeals Court also fined Farnood more than $237 million.

The court also ordered the assets of Mahmood Karzai and Hasin Fahim, brothers respectively of the former president and deputy president, along with 17 other defendants, frozen until their debts are repaid.

"If there is any delay in returning all the outstanding debt, they will be dealt with by the courts," the judgment said.

The bank was one of the country's flagship institutions and until its collapse had been responsible for paying salaries of government employees, army and police across the country.

It was split into two, with the offshoot, the New Kabul Bank now responsible for the salary payments, and holding around $400 million in customer deposits, officials said.


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