An AFGHAN court has handed down prison terms to 20 of 22 men convicted in a multi-million dollar bank fraud case seen as a test of Afghanistan’s commitment to fighting corruption.
The collapse of Kabulbank in 2010 triggered a financial crisis, civil disorder and a run on deposits, worrying foreign donors and embarrassing the US and Afghan governments, which had touted its credentials as a modern lender integral to developing a tiny economy crippled by war and mismanagement.
The two former heads of the bank, founder Sher Khan Fernod and former chief executive Haji Khalil Ferozi, convicted of taking $810 million (£536m) of the $935 million stolen, were both sent to jail for five years.
The case was viewed as a crucial barometer of Afghanistan’s commitment to stabilising the economy, less than two years before the withdrawal of most foreign troops and a winding down of billions of dollars in foreign aid. It appears to be the first major bank fraud trial in Afghan history.
Brothers of president Hamid Karzai and his first vice-president, Mohammad Qasim Fahim, who were both shareholders, were spared jail sentences in the rulings thanks to a presidential decree a year ago that granted immunity from prosecution to those who returned funds.
The remaining 18 men, four of whom are Indian nationals, received prison terms of four or five years.
The government was forced to bail out the country’s then biggest bank after it collapsed. It was later relaunched as the state-run New Kabul Bank.
In addition to jail time, Ferozi and Fernod are required by law to return the money to the government.