June 29, 2011
In what may be the most prophetic news of the day, we learn that the head of Afghanistan’s central bank, Abdul Fitrat (what an oddly appropriate name for a central banker), has escaped the country, emigrated to the US and “isn’t expected to return because he fears for his safety after investigating fraud allegations at the country’s largest lender, according to two Western officials.” It gets funnier. From the WSJ: “Mr. Fitrat said he left the country because his life had been threatened and that the Karzai government was refusing to prosecute those allegedly involved in fraudulent loans, the Associated Press reported. “My life has become completely endangered,” he told the AP. “Since I exposed the fraudulent practices on April 27 in parliament I have received information about threats on my life.” Mr. Fitrat’s family lives in the Washington suburbs, and he has permanent resident status in the U.S., according to a person close to the banker.” Surely, Mr. Fitrat had nothing to do with the $850 million in “suspect loans” made by Kabul Bank which is at the core of the scandal. After all, central banks are never involved in such things as massive money laundering schemes and fund flows that are respectable fractions of a host country’s GDP. Oddly enough, when it comes to matters of central bank kleptocracy, we are willing to side with the position of the so called despotic domestic regime: “Mr. Fitrat “has escaped Afghanistan and is in the list of those responsible for wrongdoing at Kabul Bank,” Mr. Karzai’s spokesman Waheed Omer said on Monday. “This is not a resignation but [an] escape from legal implication of his having failed to act responsibly as the head of the Central Bank.” Fear not, Mr. Karzai, we can assure you that when our own ponzi scheme unravels, you can be the host of our own central bank head. Then at some point, an exchange can be effected.
More from the WSJ:
“This is not a surprise given the immense pressure Fitrat was under and he didn’t want to be a scapegoat,” said a Western diplomat.
The Afghan government hasn’t prosecuted any official in the Kabul Bank scandal, and has blamed regulators for the $850 million in suspect loans made by the bank.
Mr. Fitrat “wasn’t sticking around Kabul to take the fall” for the Kabul Bank scandal, a U.S. official said.
During a news conference this year, Mr. Karzai also blamed the international community and its advisers to the central bank for the Kabul Bank crisis.
The IMF submitted a package of financial reforms in Aprilâ€”including winding down Kabul Bankâ€”which have yet to be approved by Afghanistan, potentially putting billions of dollars of international donor money in jeopardy.
Once the plan is approved, the assistance program will be renewed and aid can flow from other countries.
“We take note of Governor Fitrat’s decision to step down as Central Bank governor,” said IMF spokesperson Raphael Anspach. “We look forward to continue discussing with his successor ways to improve the Afghan banking system in the period ahead.”
If nothing else, this is a good reminder of the kind of responsible behavior one can expect from those who (even if symbolically) run the world’s printing presses. And while everyone escapes to the US, which is the headquarters for the cartel, what happens when the cartel itself begins the process of dissolution. Where will they go next?
This article was posted: Wednesday, June 29, 2011 at 3:15 am