CORRUPTION IN CONFLICT

By the time of Salehi’s arrest and release, a pattern had been established: Highlevel
Afghan officials who were suspected of corruption often evaded arrest or
prosecution. For example, ATFC and SIU investigators had been preparing a
bribery case against Sediq Chekari, the former Minister for Hajj and Religious
Affairs. According to the former director of the ATFC, U.S. officials had targeted
Chekari because the United States wanted a high profile case—and U.S. officials
judged it would be difficult for Karzai to protect someone who was stealing
money from Hajj pilgrims, taking bribes from hotels in Mecca and Medina, and
embezzling money from the ministry. 293 In addition, Chekari had been a critic of
Karzai. But the day he was to be arrested, the Deputy Attorney General (DAG)
received a call from Karzai’s chief of staff, who ordered the DAG to allow Chekari
to leave the country. Chekari fled to the UK. Following this, the ATFC helped
FinTRACA recover more than $1 million of stolen money. 294
In another example, Hajji Rafi Azimi, the vice chairman of a bank closely
connected to New Ansari, was allegedly a key player in Chekari’s corrupt
scheme. Though Afghan prosecutors sought to arrest Azimi, political interference
prevented them from doing so. 295 A U.S. official was quoted in the New York Times
in 2010 as saying the Obama administration was “pushing some high-level public
corruption cases right now, and [Afghan government officials] are just constantly
stalling and stalling and stalling.” 296
A 2010 Washington Post article cited a shift of viewpoint at the White House
toward the idea that serious corruption cases should be broached with Karzai
privately to avoid public confrontations that could sour cooperation on a host of
other issues. 297 This hesitation at high levels of the U.S. government to push too
hard on corruption issues was confirmed in several interviews with former senior
U.S. officials, one of whom noted, “We can’t be in the business of undermining the
government we were supporting.” 298 Another former senior official said, “There
were a million things we were trying to do, and all of them depended on the Karzai
regime as an effective partner.” 299
The Near-Collapse of Kabul Bank: Fraud on an
Unprecedented Scale
In July 2010, a second, much larger crisis began to unfold. Sherkhan Farnood was
the chairman of Kabul Bank, at the time Afghanistan’s largest private bank, and a
major financier of Karzai’s presidential campaign. Farnood confided in the ATFC
that the bank was in serious financial trouble. 300 There were two rival factions in
the bank struggling for control; Farnood led one faction, while CEO Khalilullah
Ferozi led the other. President Karzai’s brother, Mahmoud Karzai, and First Vice
President Fahim’s brother, Haseen Fahim, sided with Ferozi. 301 Farnood began
cooperating with U.S. officials, likely seeking an edge over the rival group. 302
Farnood admitted the bank operated as a massive pyramid scheme; hundreds of
millions of dollars had been fraudulently lent to fictitious companies, with no loan
ever paid off. These hundreds of millions benefitted politically connected Afghan
shareholders. Meanwhile, U.S. government funds for ANA and ANP salaries
regularly moved through the bank. The bank used those funds to cover customers’
withdrawals whenever it had inadequate reserves. This practice masked the
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SIGAR I CORRUPTION IN CONFLICT I SEPTEMBER 2016