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Afghan bank officers' assets frozen

Afghanistan has frozen the assets of leading shareholders and borrowers at Kabul Bank, the country's leading private bank, in the wake of the crisis sparked by the resignation of two high-level directors.

Aimal Hashoor, the central bank's spokesman, said on Tuesday the Central Bank had ordered the assets of Sher Khan Farnood, Kabul Bank's former chairman, and Khalilullah Fruzi, the chief executive officer, to be frozen, together with those of several other shareholders and major borrowers.

"This basically stops the sale of their assets until the situation becomes clear," Hashoor said. 

Last week, US media reported that the central bank had taken control of Kabul Bank, forcing Farnood and Fruzi to resign and ordering the former to hand over $160 million worth of luxury villas purchased with bank funds in Dubai.

However, the Afghan government and the central bank governor have both rejected the allegations, denying that the central bank had stepped in and saying Farnood and Fruzi had stepped aside in line with new financial regulations.

Hamid Karzai, the Afghan president, and Omar Zakhilwal, the country's finance minister, both said Farnood and Fruzi stepped down because of new banking rules forbidding shareholders from holding senior management positions at the bank.

Karzai connection

One of Karzai's brothers and the brother of one of his two vice-presidents are major shareholders at Kabul Bank, whose customers include about 250,000 state employees.

An official, speaking on condition of anonymity, said Mahmoud Karzai, the president's brother, was not subject to the central bank's asset freeze because he does not have property registered in his name.

However, he said Mohammad Haseen, the brother of Mohammad Qasim Fahim, the first vice-president, was among them.

Corruption is one of the most common complaints from ordinary Afghans and Washington fears widespread corruption is boosting the Taliban-led armed campaign and complicating efforts to strengthen central government control so that US and other foreign troops can begin withdrawing.

Long queues of jittery customers have formed at the bank's branches since it became known last week that the two directors, who each own a 28 per cent stake in Kabul Bank, had quit.


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