Afghan central bank calls on UAE for help in freezing assets

The Afghanistan central bank is looking for help from the UAE in freezing assets related to properties former Kabul Bank officials bought in Dubai, the bank's governor says. The central bank took control of Kabul Bank on Tuesday to secure deposits held by Afghanistan's largest private financial institution. Customers have been nervous since Kabul Bank's top two directors resigned late last month amid rumours of corruption.

Using the bank's money, the two directors bought more than US$150 million (Dh550.9m) worth of Dubai property, starting in late 2006, including 16 properties on the Palm Jumeirah and two plots in Business Bay. The two men, the former chairman Sherkhan Farnood and the former chief executive Khalilullah Ferozi, were forced to resign and the property was signed back to the bank. According to Reuters, an independent audit this year showed the two were paid $500,000 bonuses for last year.

Abdul Qadir Fitrat, the Afghan central bank governor, confirmed on Tuesday the men were under investigation for financial irregularities, along with a brother of Afghanistan's first vice president, Mohammed Qasim Fahim. It is not clear what role the UAE will play in helping the Afghanistan central bank. Officials in the Afghanistan and UAE governments declined to comment yesterday. Last week, The National reported Mr Farnood had been trying to sell some of his villas for more than six months but was asking for prices "higher than the market rate", according to a Dubai broker.

Most of the villas bought with Kabul Bank funds were registered under the name of Mr Farnood, who owns 28.16 per cent of Kabul Bank, while at least five of the properties were registered in his wife's name. Mrs Farnood owns 6.68 per cent of the bank's shares. Two of the villa sales were brokered by Masood Naseeb, the chief executive of Elysian Properties in Dubai. Mr Naseeb's uncle is Ghulam Farooq Naseeb, who owns 2.96 per cent of Kabul Bank.

Also on Tuesday, Mr Fitrat reiterated that Mahmoud Karzai, who owns 7 per cent of Kabul Bank and is a brother of the Afghan president Hamid Karzai, was not under investigation. Mr Karzai made Dh3 million from the sale of a villa in 2008 that he had bought less than a year earlier. Mr Fitrat insisted Kabul Bank was still solvent and that its troubles would not spread to Afghanistan's other private lenders.

"Fortunately, in other banks mostly professionals are in charge. The good thing is that the other banks follow the rules," he said. @Email:[e-mail]