A Karzai in a storm of controversy

Chris Burke for The National

Mahmoud Karzai, an older brother of the Afghan president, Hamid Karzai, has found himself at the centre of a tempest over his relationship to Kabul Bank. But trouble relating to his finances does not end there: it extends to the US and to Dubai, where he lives. Bradley Hope reports T stoprsten years ago, Mahmoud Karzai spent his days trying to make sure that his kofta kebabs were not overcooked. As a businessman with a growing number of restaurants across the US, he had little time to concern himself with politics. Now that his brother is president of Afghanistan and he has invested his savings in fledgling projects in the country, he has bigger worries.

Mr Karzai, 54, has found himself for the past month at the centre of an international firestorm about his family connections and alleged cronyism. He is allegedly being investigated by federal prosecutors in New York on suspicion of violations that may include tax evasion and racketeering. "I know myself," he says. "These charges are ridiculous. I'm not involved in anything that will hurt me or my family."

His only mistake, he says, was failing to report more than Dh3 million (US$817,000) of income to the US Internal Revenue Service, money that he earned after flipping a property on the island development the Palm Jumeirah with a loan from Kabul Bank - in which he is the third-largest shareholder. Two weeks ago, he transferred one third of the profits back to the US government in an amended tax return.

The sale of the Palm Jumeirah property emerged after the top two executives of Kabul Bank - the largest bank in Afghanistan - were ousted from the company over investments in Dubai property, including 16 homes on the Palm Jumeirah. The Afghan government took over the bank after thousands of depositors queued up to withdraw their savings. "If you make a mistake on your taxes in the US, that's not a criminal offence," he says.

The attacks against him, Mr Karzai says, are politically motivated and meant to hurt his brother's attempts to stabilise Afghanistan, which the US invaded nine years ago in the aftermath of the September 11 attacks on US soil. Mr Karzai's rise from restaurateur in the US to business kingpin in Afghanistan has paralleled the US and NATO military presence in the country. Life for the Karzais, who were born into an aristocratic family within the Popalzai tribe of the Pashtun, had become difficult under the Taliban, which controlled Afghanistan before the 2001 invasion.

Mr Karzai left Kandahar in 1976 for the US state of Maryland, where he took a job washing dishes. Nine years later, he and his brother Qayum Karzai set up a restaurant called Helmand, named after the longest river in Afghanistan. Mahmoud's wife, Wazhma, worked in the bustling kitchen. With business booming over the next two decades, Mr Karzai opened restaurants in Chicago, San Francisco, Cambridge, Boston and Baltimore. The portfolio eventually expanded beyond Helmand. At the peak of his US business, he had four restaurants. Other family members set up around the US, becoming scientists, entrepreneurs and academics.

All the while, Mahmoud Karzai kept in touch with his younger brother Hamid, who remained behind to "fight for the cause" of Afghanistan from Pakistan. Hamid lived in Quetta with their father, Abdul Ahad Karzai, who was outspoken against the Taliban. In 1999, the elder Karzai was fatally shot while returning home from a mosque. When Hamid was appointed interim leader of Afghanistan in late 2001, it was Mahmoud who fielded calls from foreign journalists.

"It's really great and I wish him luck," Mahmoud said in an interview published in the San Francisco Chronicle in December 2001. "I'll be happy for all the poor people who have suffered for so long if he is able to improve the condition of the lives of the Afghan people and bring them back to civility." Mahmoud described himself at the time as the "Adam Smith of my family", who had financially supported Hamid during his exile in Pakistan in the years before the invasion and tried to convince Hamid to give up a life of struggle for one of relative ease in the US. Hamid used the remittances to support Afghan refugees in Pakistan and plot his eventual return to his homeland to take control of the country from the Taliban.

As the war in Afghanistan wore on after 2001, Mahmoud and other Karzai family members enjoyed a steadily increasing role in Afghan politics and in a new economy built on foreign aid money. Qayum Karzai moved to Kabul and became a political adviser to Hamid, while more than a dozen family members took up posts in the government or opened businesses to take advantage of the reconstruction. Mahmoud Karzai, along with the former US congressman Don Ritter, wrote in a 2004 op-ed in The Washington Times: "Business is the only force that cut through ethnic, tribal and religious barriers. It unifies by virtue of being blind to such differences. Yes, it can make warlords richer, but it also provides them with incentives for civility. Plus, it creates new centres of power."

Mahmoud dedicated himself to setting up businesses in Afghanistan in 2007 to be a part of the new centre of economic power. After selling all but one of his US restaurants, he became a shareholder of Kabul Bank - using a loan from the bank itself to buy a 7.4 per cent stake. He also became a part-owner of a cement factory and property developments in Kandahar and Kabul. "I am a major businessman, but I am not wealthy," he says. "Everything I had from the US I invested in Afghanistan. I have taken great risks."

His net worth is $6.6m, compared with total assets of $5.4m before moving to Dubai, he says, citing an audit he has undertaken to prove his business integrity. "Maybe in five years I will make more money, but that depends on my projects and if they succeed," he says. "I do not have returns on my investments yet." But he did not want to move his family into Afghanistan, where there were frequent threats against the Karzai family. The natural choice was Dubai, only a two-hour flight from Kabul and safe from the daily battles and bombings that are part of everyday life in the Afghan capital. Even the buying and selling of a property on the Palm Jumeirah was rooted in his desire to obtain a Dubai residency visa so his four daughters could attend school in the UAE.

Other family members, including Ahmed Wali Karzai - a half-brother of Hamid who has been accused of drug trafficking and corruption - use Dubai as a place to escape for short periods, Mahmoud Karzai says. "Kandahar is a harsh climate," he says. "[Ahmed Wali] comes for vacation. This is the only place he comes for vacation." Lately, Mahmoud Karzai has found himself spending time alone pondering what he considers the untimely demise of his business career. And increasingly his views on the future of Afghanistan have been diverging from those of his brother, the president.

"His priorities are politics," he says of Hamid. "This, in my opinion, is the biggest failure of the country." The country needs economics without ideology, Mr Karzai says. "My brother is a good guy, but when it comes to policies, economics, politics, social issues and all that, we are not on the same page."