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Afghan bank says it is on solid financial footing

Afghan bank says it is on solid financial footing

Afghan lawmakers demanded assurances Monday that a top Afghan bank is on solid financial footing and not facing collapse like the corruption-ridden Kabul Bank. Azizi Bank officials said rumors of problems at the bank were baseless and offered to open its books to auditors.
The financial condition of Azizi Bank is important because Kabul Bank's near-demise due to mismanagement and questionable lending has left the nation in financial crisis. The International Monetary Fund's displeasure over how the Afghan government has handled the Kabul Bank crisis has jeopardized billions of dollars flowing into a country at war and heavily reliant on foreign aid.
Fraidoon Mohtasheme, the bank's senior customer relations manager, told The Associated Press in an interview at the bank that accusations of liquidity problems were "baseless" and "politically motivated." He said the bank, which employs 2,500 people, has solid liquidity and was not involved in investments outside Afghanistan.
"Everything is fine and normal," he said.
Mohtasheme said the bank would comply with the IMF's earlier request for an independent audit if the Afghan central bank wanted it done.
"If the central bank says that a company needs to come and do an audit, we don't have any issues," he said.
Mohtasheme was responding to allegations _ which lawmakers made during a heated discussion in parliament _ that Azizi Bank had made illegal loans and was headed for the same crisis as Kabul Bank. Afterward, the parliamentarians demanded that the acting central bank governor appear at a weekend session to answer questions about the stability of Azizi Bank.
Abdul Zahir Qadir, a lawmaker from Nangarhar province in eastern Afghanistan, claimed he had been offered money to not talk publicly about suspected problems at the bank. Manar Shah Bahdery, a parliamentarian from Herat province in the west, claimed the bank had given illegal loans to a construction company, but didn't elaborate. Still another, Ahmad Bahzad, also from Herat, claimed the company had been told to keep quiet about its loans from the bank.
In an advertisement, aired Monday evening on local television, the bank said it was one of the "transparent banks" in Afghanistan and was working to expand its network of 74 branches around the nation.
"Azizi Bank is not involved in any political affairs and is trying to strengthen the banking system in the country by offering timely services," the televised ad said. "Today, one of the members of parliament at the parliament said that Azizi Bank has problems. The leadership of the Azizi Bank says that these are all baseless allegations and amounts to a conspiracy."
The ad went on to allege that the comments by lawmakers were based on "private hostility" and that they were an "attempt to weaken the banking system in the country."
The bank reported $562.5 million in assets and $513.5 million in liabilities in a statement of its financial position as of Dec. 31, 2010.
The Kabul Bank crisis began last year, as the public discovered the bank made hundreds of millions of dollars in questionable loans to shareholders and politically connected individuals. Some used the loans to buy luxurious mansions in Dubai, United Arab Emirates. Others used the money to invest in risky prestige projects like an airline and shopping malls in Kabul. Since then, Kabul Bank has became a symbol of the country's cronyism and deep-rooted corruption and is now considered a bellwether on attempts to root out patronage and show accountability to world financial institutions.
Late last month, the former governor of the Afghan central bank resigned after fleeing to the United States.
Abdul Qadir Fitrat said he left Afghanistan after receiving threats to his life. He complained that he was being made a scapegoat while the Afghan government had refused to charge politically connected individuals involved in making or receiving hundreds of millions of dollars in questionable loans.
Several days later, authorities arrested two former executives of Kabul Bank for allegedly bilking the bank of hundreds of millions of dollars. It was the first time that anyone has been arrested for activities at the bank. The Afghan attorney general's office has not disclosed details about the charges being faced by Sherkhan Farnood, former bank chairman, and Khalilullah Ferozi, the former chief executive officer, saying only that they are accused of together taking as much as $1 billion from the bank illegally.
A recent USAID inspector general report estimated that fraudulent loans diverted $850 million to Kabul Bank insiders.
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Associated Press writer Rahim Faiez contributed to this report


Updated : 2021-07-30 20:40 GMT+08:00