Afghan central banker resigns, fears for life

Reuters News
Posted: Jun 27, 2011 12:55 PM
Afghan central banker resigns, fears for life

By Doug Palmer

CHANTILLY, Virginia (Reuters) - Afghanistan central bank Governor Adbul Qadir Fitrat said on Monday he has resigned his post because he feared for his life for his role in investigating a scandal surrounding Kabulbank.

"The reason I was not able to resign in Kabul was because my life was completely in danger," Fitrat told Reuters Insider in an interview at a hotel in a northern Virginia suburb of Washington.

"This was particularly true after I spoke to the parliament and exposed some people who were responsible for the crisis of Kabulbank," Fitrat said, adding he thought that move would bring closure to the corruption scandal at the bank.

Instead, "it brought more dangers and more conspiracies against me and my life," Fitrat said.

Corruption, bad loans and mismanagement cost the politically well-connected Kabulbank, Afghanistan's biggest private lender, hundreds of millions of dollars in what Western officials in Afghanistan openly call a classic Ponzi scheme.

Fitrat also said "high political authorities" in Kabul had undermined the central bank's effort to investigate Kabulbank.

"I do not want to continue as a figurehead. I want to be an effective central bank governor," Fitrat said.

Asked if he was referring to Afghanistan President Hamid Karzai, Fitrat answered: "I just refer to high political authorities of the country."

The bank doled out nearly half a billion dollars in unsecured, undocumented loans to a roster of Kabul's elite, including ministers, relatives of Karzai and a vice president, and a powerful former warlord, anti-corruption officials say.

The scandal has endangered future support for Afghanistan through the International Monetary Fund.

Last week, talks between Afghanistan and the IMF appeared to have broken down after Afghanistan's finance minister Omar Zakhilwal called them a "waste of my time.

Fitrat's resignation comes as a shock as, up until now, he had been eager to rehabilitate Kabulbank and had defended the central bank's role in the affair.


In February, he had brushed aside concerns Afghanistan's largest lender would have to be liquidated, telling Reuters in Kabul he hoped it would be privately owned again within two or three years.

However, the IMF is demanding action to ensure the type of problems that arose at Kabulbank are not repeated before it provides any further aid to Afghanistan. It has been adamant that the bank must be broken up and the remaining assets sold.

IMF backing is a crucial seal of approval for many international donors before they pledge assistance to aid-reliant Afghanistan. Tens of millions of dollars in scheduled aid payments have been delayed over the past three months because of the impasse between Kabul and the IMF.

Fitrat said last September the central bank had stepped in to take control of Kabulbank.

Despite Fitrat's optimism then, talks between the Afghan government and the IMF and international donors have faltered badly in recent weeks as authorities tried to agree on ways to wind up Kabulbank and bolster Afghanistan's fledging financial sector so such a scandal could not be repeated.

Fitrat told Reuters on Monday that talks between the Afghan government and the IMF were currently "stalled."

Fitrat took over as head of the central bank in 2007 after being nominated by Karzai. He also held the position briefly in 1996, the year the Taliban came to power in Afghanistan.

He served as an economic consultant to the IMF in Washington in the late 1990s, was in private banking in Northern Virginia after 2000 and then served as an adviser to the World Bank until 2007.

(Additional reporting by Paul Tait in Kabul; editing by Will Dunham and Vicki Allen)