Public Statement by Office of the Attorney General / 19 October 2011

Public Statement by Office of the Attorney General
On Progress in Prosecution of Economic Crimes in Afghanistan
And Development of Economic Crimes Strategy

The collapse in 2010 of Kabul Bank and the cost to Afghanistan to secure the funds of depositors in that bank has highlighted the need for the Government to implement a strategy to strengthen and enforce the laws of Afghanistan with respect to ensuring accountability for complex economic crimes.  The rapid growth of the Afghan economy, and its growing complexity, has given rise to criminal conduct that is equally complex, calling for a sophisticated response from law enforcement authorities.  The Government has begun implementation of this strategy in connection with the collapse of Kabul Bank.

Initiating this effort, on 7 Saratan 1390 (28 June 1390) H.E. President Hamid Karzai issued a decree directing the Anti-Corruption Unit of the Attorney General's Office to form a task force to prosecute economic crimes that may have been committed in connection with the Kabul Bank collapse.  The Anti-Corruption Unit is the most competent body in Afghanistan of this nature having benefited from years of international technical assistance.  The Unit will conduct its work according to the requirements of the Presidential Decree and “The Law on Supervision of Implementation of Anti-Corruption Strategies” (1387).  This law establishes the Anti-Corruption Unit as a distinct body within the Attorney General's Office with an independent mandate to investigate and prosecute both public and private corruption cases, including (but not limited to) money-laundering, racketeering, and administrative corruption.  The Unit has received specialized training in many of these areas.  Since, however, the Kabul Bank case represents one of the most difficult and complex cases ever presented to the Afghan legal system, the Anti-Corruption Unit has secured international assistance in the areas of forensic auditing support and international asset recovery.  A team of prosecutors has been assigned to the case, and they are working closely with the Kabul Bank Receivership, Central Bank, Ministry of Finance, Ministry of Interior Major Crimes Unit and other agencies to prosecute crimes that may have been committed and also to support civil and administrative asset recovery efforts.

The task force joined the ongoing investigation according to the order of the President, and the investigation is continuing.  Based upon facts uncovered in the course of the investigation, indictments have been handed down against a number of persons associated with Kabul Bank.  Charges at present relate to Forgery under Article 310 of Penal Code of Afghanistan, Embezzlement under articles 25 and 253 of Penal Code and money laundering under Article 3(1) of the Anti-Money Laundering and Proceeds of Crime Law.    More charges may also be brought, depending on the outcome of investigations.  Specifically, to date charge sheets have been handed down against 17 individuals, and 9 cases are progressing to the next level of prosecution Those 9 advanced cases all relate to shareholders or officers of Kabul Bank.. The two principal shareholders of Kabul Bank, Sherkhan Farnoud and Khalilullah Ferozi, were taken into custody on 11 Saratan 1390 (2 July 2011), and remain in custody.  They are periodically released during the day, under close supervision, to facilitate asset recovery efforts.  Once the case is fully prepared, the accused will be brought before the Primary Administrative Corruption Court for judgment and sentencing.

With respect to Kabul Bank, the strategy of the Government has two paramount objectives: (1) to strictly enforce the law of Afghanistan and punish violations of the law; and (2) to facilitate the recovery of funds that may have been misappropriated.  With these objectives in mind, the Government is requiring those suspects in custody to identify their assets and enter into repayment agreements or otherwise pay restitution for any wrongdoing.  Those suspects unwilling to cooperate with the authorities fully will be subject to the most severe penalties allowed by law.  The cases will be concluded when the investigations are complete and cases are fully prepared for judgment.   One key element of the investigation is the ongoing forensic audit being conducted by a leading international forensic audit firm.  We anticipate that the forensic audit will be completed in approximately 6 months, at which time we will know the full extent of losses and can make an informed decision on conclusion of the prosecutions.  Another key element is the filing of formal Mutual Legal Assistance  Requests, which are currently being prepared.  They may uncover new information, which will affect the time-line for conclusion of prosecution.

Looking forward, the Government is developing a comprehensive strategy to improve institutional structures and build capacity  to prevent or promptly respond to economic crimes.  This strategy, to be implemented over the next 12 months, includes a technical review of systemic failures that led to the Kabul Bank collapse, new legislation where necessary to protect the financial and other key economic systems, specialized training for Judges and Prosecutors so they are better able to deal with complex economic crimes, and strengthening coordination between all the different agencies responsible for financial and economic supervision.  Where necessary, we intend to secure international assistance to implement this plan.