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As Gold Is Spirited Out of Afghanistan, Officials Wonder Why

Most of the gold is being carried on commercial flights destined for Dubai, according to airport security reports and officials. The amounts carried by single couriers are often heavy enough that passengers flying from Kabul to the Persian Gulf emirate would be well advised to heed warnings about the danger of bags falling from overhead compartments. One courier, for instance, carried nearly 60 pounds of gold bars, each about the size of an iPhone, aboard an early morning flight in mid-October, according to an airport security report. The load was worth more than $1.5 million.

The gold is fully declared and legal to fly. Some, if not most, is legitimately being sent by gold dealers seeking to have old and damaged jewelry refashioned into new pieces by skilled craftsmen in the Persian Gulf, said Afghan officials and gold dealers.

But gold dealers in Kabul and current and former Kabul airport officials say there has been a surge in shipments since early summer. The talk of a growing exodus of gold from Afghanistan has been spreading among the business community here, and in recent weeks has caught the attention of Afghan and American officials. The officials are now puzzling over the origin of the gold — very little is mined in Afghanistan, although larger mines are planned — and why so much appears to be heading for Dubai.

“We are investigating it, and if we find this is a way of laundering money, we will intervene,” said Noorullah Delawari, the governor of Afghanistan’s central bank. Yet he acknowledged that there were more questions than answers at this point. “I don’t know where so much gold would come from, unless you can tell me something about it,” he said in an interview. Or, as a European official who tracks the Afghan economy put it, “new mysteries abound” as the war appears to be drawing to a close.

Figuring out what precisely is happening in the Afghan economy remains as confounding as ever. Nearly 90 percent of the financial activity takes place outside formal banks. Written contracts are the exception, receipts are rare and statistics are often unreliable. Money laundering is commonplace, say Western and Afghan officials.

As a result, with the gold, “right now you’re stuck in that situation we usually are: is there something bad going on here or is this just the Afghan way of commerce?” said a senior American official who tracks illicit financial networks.

There is reason to be suspicious: the gold shipments track with the far larger problem of cash smuggling. For years, flights have left Kabul almost every day carrying thick wads of bank notes — dollars, euros, Norwegian kroner, Saudi Arabian riyals and other currencies — stuffed into suitcases, packed into boxes and shrink-wrapped onto pallets. At one point, cash was even being hidden in food trays aboard now-defunct Pamir Airways flights to Dubai.

Last year alone, Afghanistan’s central bank says, roughly $4.5 billion in cash was spirited out through the airport. Efforts to stanch the flow have had limited impact, and concerns about money laundering persist, according to a report released last week by the United States Special Inspector General for Afghanistan Reconstruction.

The unimpeded “bulk cash flows raise the risk of money laundering and bulk cash smuggling — tools often used to finance terrorist, narcotics and other illicit operations,” the report said. The cash, and now the gold, is most often taken to Dubai, where officials are known for asking few questions. Many wealthy Afghans park their money and families in the emirate, and gold dealers say more middle-class Afghans are sending money and gold — seen as a safeguard against economic ruin — to Dubai as talk of a postwar economic collapse grows louder.

But given Dubai’s reputation as a haven for laundered money, an Afghan official said that the “obvious suspicion” is that at least some of the apparent growth in gold shipments to Dubai is tied to the myriad illicit activities — opium smuggling, corruption, Taliban taxation schemes — that have come to define Afghanistan’s economy.

There are also indications that Iran could be dipping into the Afghan gold trade. It is already buying up dollars and euros here to circumvent American and European sanctions, and it may be using gold for the same purpose.

Yahya, a dealer in Kabul, said other gold traders were helping Iran buy the precious metal here. Payment was being made in oil or with Iranian rials, which readily circulate in western Afghanistan. The Afghan dealers are then taking it to Dubai, where the gold is sold for dollars. The money is then moved to China, where it was used to buy needed goods or simply funneled back to Iran, said Yahya, who like many Afghans uses a single name.

Article source: http://www.nytimes.com/2012/12/16/world/asia/as-gold-is-spirited-out-of-afghanistan-officials-wonder-why.html?partner=rss&emc=rss

Afghanistan Steps Up Efforts to Recover Kabul Bank’s Losses

The development may hearten the Afghan government’s international backers, like the United States, by showing that the government is trying in good faith to recover money from those accused of bilking Kabul Bank of some $900 million.

A delegation of the government’s Financial Disputes Resolution Commission is visiting Dubai in the United Arab Emirates, where many favored borrowers bought real estate with cheap loans from the bank. The delegation is to hire a representative company there to oversee the sale of assets repossessed from borrowers, the central bank said.

In addition, Pamir Airways, an airline that received millions of dollars in loans from Kabul Bank, which foundered in the fall of 2010, would be reorganized and sold off, the central bank said.

The central bank said its governor, Noorullah Delawari, reported on the efforts to recoup the lost money in a visit to the United States last month, where he met with officials from the International Monetary Fund and the World Bank, as well as Daniel Feldman, the State Department’s deputy special representative for Afghanistan and Pakistan.

The State Department confirmed that the meeting with Mr. Feldman had taken place, but it offered no details and declined to comment on whether the Afghan government’s attempts to recoup money from politically connected figures in the country were sufficient.

In October, the monetary fund said it was renewing its credit program with Afghanistan, bringing some much-needed relief and stability to the nation’s shaky financial system. It had suspended the program in 2010, in large part because of the fraud at Kabul Bank and a general lack of oversight of the banking system. Under the deal to renew the program, the government must show to the monetary fund’s satisfaction that it is working hard to recover the losses.

Said Ishaq Allawi, an adviser to Mr. Delawari, confirmed that the delegation had visited Dubai, but he gave no details about the assets to be sold there or how much the government expected to recoup. Nor was it clear how much could be realized from selling Pamir’s small fleet of aging airplanes.

Though some of the money lost in the bank’s collapse has been recovered, the government will still probably have to cover hundreds of millions of dollars in losses. The bank’s receivers and the Finance Ministry have said that sales of seized assets might recoup nearly half the total.

Kabul Bank offered loans to its shareholders, allowing them to borrow much more than Afghanistan’s banking laws allowed and charging very low rates. It made risky loans on property in Dubai that turned sour when the market there collapsed, and it lent a brother of the Afghan president $6 million for a town house there.

The bank’s chairman at the time, Sherkhan Farnood, used bank money to buy property in his wife’s name and in his own, offered shares in the bank to politically connected figures, and approved large loans to relatives and friends of bank executives with little or no assurance of repayment.

In its investigations into the collapse, the central bank found that Kabul Bank’s management maintained two sets of books — a false set in Kabul and a genuine set in Dubai, at the Shaheen Currency Exchange, which was run by Mr. Farnood. Beyond the central bank’s announcement, it was not clear what progress the Afghan government was making in settling the problems relating to Kabul Bank.

Mr. Farnood and the bank’s former chief executive, Khalilullah Frozi, were detained and placed under investigation by the attorney general’s office, but they have not been tried.

After the government stepped in to guarantee Kabul Bank’s debts, the bank was overhauled; it has been divided into a “good” bank, with the deposits, performing loans and other viable assets of Kabul Bank, and a “bad bank” that holds the hundreds of millions of dollars in bad loans.

Matthew Rosenberg contributed reporting from Kabul.

Article source: http://www.nytimes.com/2012/01/04/world/asia/afghanistan-steps-up-efforts-to-recover-kabul-banks-losses.html?partner=rss&emc=rss

As Gold Is Spirited Out of Afghanistan, Officials Wonder Why

Afghanistan Steps Up Efforts to Recover Kabul Bank’s Losses

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