Kabul Bank fraud: Sherkhan Farnood and Khalilullah Ferozi jailed

Two former chiefs of Afghanistan’s Kabul Bank have been sentenced to five years in jail for the multi-million dollar fraud that almost led to its collapse in 2010.

Founder Sherkhan Farnood and ex-CEO Khalilullah Ferozi were found guilty of theft at a special court.

Revelations of massive corruption led to a run on the bank in 2010.

Foreign donors bailed it out fearing its failure could lead to the collapse of Afghanistan’s fragile economy.

The country’s future aid contributions could have been jeopardised if no action had been taken against those responsible for the fraud, reports the BBC’s Quentin Sommerville in Kabul.

 

It’s hard to underestimate the threat that the Kabul Bank scandal posed to the country. When it broke there was a worry that it could bring down the entire Afghan economy and bring the international mission here to a standstill.

It ranks, at around 5% of the Afghan economy, as one of history’s biggest ever banking scandals. Bringing those responsible to justice has been a slow process, but prosecutions were seen as essential.

It barely functioned as a bank, its prime purpose appeared to be funnelling money out of the country, into the hands of the richest, best connected, in Afghan society.

Even though Tuesday’s sentences are relatively light, and there’s much scepticism that they will be served in full, they will allow the international community, which bailed out the bank, to begin to draw a line under the scandal.

It was seen as a test of Afghanistan’s commitment to addressing corruption and stabilising the economy. 

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