MEC Kabul Bank Update 2018

MEC continues to follow this case very closely, and in this report we provide an update of the developments since the establishment of the National Unity Government. The new Government was quick to condemn the scandal, and to open an investigation. President Ghani reopened the case on his second day in office through Presidential Decree Number (PD) 3 in September 2014. This Decree instructed the Attorney General to have the involved people arrested, prepares the indictment and ordered all other institutions to support in recovering the stolen public money through identification and freezing of the perpetrator’s assets. The Ministry of Foreign Affairs was instructed to assist in the cross-border recovery of assets through diplomatic means and the Ministry of Finance was assigned to draft a plan for the privatization of the successor New Kabul Bank (NKB) within 10 days. So, more than 3 years after the issuance of Presidential Decree Number 3, what has been the result? The National Unity Government states that the follow up has been successful, “we have jailed the two key culprits of the Kabul Bank and ... we have recovered $250 million back.” (President Ghani May 16th 2016). However, in reality much less progress has been made since the initial burst of effort. Since October 2014, only 32.7 million USD of “buddy loans” has been recovered in cash, and repayment agreements amounting to 30.9 million USD have been signed with the debtors, according to MEC’s analysis of the official recovery records. We provide an update on each of the three main elements of Presidential Decree Number 3.