Kabul Bank ex-chiefs jailed for multi-million dollar fraud

PanARMENIAN.Net - 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, BBC News reported.

Founder and former chairman Sherkhan Farnood and ex-CEO Khalilullah Ferozi were tried in 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.

Farnood has been fined $288m and Ferozi $530m by the Kabul Bank Special Tribunal. More than 20 other employees were also being tried.

The bank handled most of the government payroll, including salaries for policemen and teachers. But in fact this was a sham, reports our correspondent, as its main purpose appears to have been to ferry hundreds of millions of dollars out of Afghanistan.

A report by an independent auditor leaked in November 2012 showed that the vast majority of the bank's loans - almost $900m - were made to just 19 people and companies.

An earlier finding by Afghanistan's anti-corruption office said that $467m of outstanding loans had been made without appropriate collateral.

The two men have the right to appeal.