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Kabul Bank bosses jailed for five years

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(Globalpost/GlobalPost)

An Afghan court on Tuesday sentenced two senior Kabul Bank executives to five years in jail for a staggering $900 million fraud that caused the country's largest bank to collapse in 2010.

Judge Shamsul Rahman Shams also said the men must pay back millions of dollars they gained from the sophisticated network of corruption in which cash was used to buy homes in Britain, Dubai, Switzerland and the United States.

The bank's former chairman, Sher Khan Farnoud, and its former CEO Khalilullah Ferozi were both in court to hear the verdicts, along with some of the 20 other accused who were jailed for between six months and four years.

The judge told Ferozi that he must re-pay $530 million and Farnoud $278 million.

Kabul Bank was seized by the government in 2010 after the exposure of the massive fraud, which led the International Monetary Fund to temporarily halt its hundreds of millions of dollars of loans to Afghanistan.

Renamed New Kabul Bank, the institution was later bailed out by the government.

The criminal proceedings into the bank's collapse are being watched closely by Western donors for signs that the country is finally tackling rampant government corruption.

Donors have pledged billions of dollars in aid after NATO combat troops withdraw in 2014, but have demanded that corruption is brought under control.

A number of well-connected people allegedly implicated in the scandal as shareholders, including a brother of President Hamid Karzai, were not charged by the special court.

Farnoud in court accused Haseen Fahim, the brother of Afghan Vice President Mohammad Qaseem Fahim, of being one of the key organisers behind the scheme.

"The real thieves in Kabul Bank are Haseen (Fahim) and Ferozi," he said, telling the court that he had already paid his debts as his properties in Dubai and Kabul had been confiscated.

"If this is not jungle law, let this count," he said from the dock.

Ferozi hit back, saying: "This is not Bollywood where one can act like a hero. Everything is on paper."

Farnoud and Ferozi were then taken into custody, though details of their location was not known.

"This is not a final verdict, the suspects have the right to appeal," the judge added.

Among those sentenced in abstentia Tuesday was Qadir Fitrat, the former governor of the central bank, who fled to the United States in 2011.

He was found guilty of abuse of authority and failing to report the scam, and was sentenced two years in jail.

Several other Kabul Bank and central bank officials were among those sentenced.

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http://www.globalpost.com/dispatch/news/afp/130305/kabul-bank-bosses-jailed-five-years