CORRUPTION IN CONFLICT

fact that its reserves were constantly diminishing, while ordinary Afghan
citizens’ deposits were used to fund the fraudulent loans. 303 Two of the principal
beneficiaries of the fraudulent loans were Mahmoud Karzai and Haseen Fahim. 304
In September 2010, Kabul Bank nearly collapsed as publicity around the bank’s
insolvency led to a panic among its depositors and more than $180 million
was withdrawn. 305
Ultimately, the extent of the theft was estimated to be roughly $982 million. 306
As a portion of GDP, this amount would be equivalent to nearly $1 trillion in the
U.S. economy. The international community, including the United States, was
shocked at the brashness and scale of the theft. In subsequent years, the Kabul
Bank scandal remained at the top of the agenda for donors’ engagement with the
Afghan government. The latter repeatedly failed to take adequate steps to recover
assets and hold accountable the bank executives and shareholders, who were
politically connected at the highest levels.
Summary: Dilemmas for U.S. Anticorruption Efforts
Overall, in 2009 and 2010, U.S. agencies began to develop a more sophisticated
understanding of systemic corruption and the threat it posed to the mission
in Afghanistan. The U.S. government also recognized that its own spending
exacerbated the problem. As a result, agencies stepped up efforts to build
Afghan capacity to investigate and prosecute corruption cases, and established
organizations to improve U.S. contracting practices.
The Salehi and Kabul Bank events, however, demonstrated that when Afghan
political commitment to fight corruption really mattered, such commitment failed
to materialize. The United States’ most significant anticorruption capacity-building
efforts to date ran up against entrenched criminal patronage networks whose
interests ran counter to U.S. objectives.
Corruption thus presented the United States with a profound dilemma. The
U.S. COIN strategy rested on building a credible Afghan government, able to
protect and deliver services to its citizens. However, corruption eroded not
only the state’s legitimacy, but its very capacity to function. And any successful,
sustainable fight against corruption needed the full participation—and ideally,
leadership—of GIROA.
Therefore, U.S. officials grappling with corruption faced three key questions:
(1) How much political capital should they invest in pressuring the Afghans for
reform, while maintaining access to the Karzai administration? (2) How should
they pragmatically invest in anticorruption efforts when leaders within the Afghan
government were actively undermining those efforts? (3) How could they best
leverage other U.S. government tools to make progress against corruption? These
dilemmas would shape the U.S. experience in countering corruption in the 2010 to
2014 period.
SIGAR I CORRUPTION IN CONFLICT I SEPTEMBER 2016
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