Our assessment of the Ministry of Finance (MoF) and Da Afghanistan Bank (DAB) disclosed that the financial management systems and procedures of the MoF and DAB are adequate for purposes of accounting for and managing funds that may be provided directly to the Government of the Islamic Republic of Afghanistan (GIRoA) by USAID. With regard to the Control and Audit Office (CAO), our review disclosed that the CAO has limited capacity to audit donor funds. This limitation, however, could be sufficiently mitigated by providing technical assistance to the CAO and through USAID/Afghanistan’s direct contracting for audit services as well as in-house Financial reviews performed by USAID/Afghanistan staff or RIG-approved audit firms.
In May 2011, the USAID Office of the Inspector General published a report on the agency’s supervision and oversight of assistance activities in Afghanistan and the Kabul Bank crisis. This report was quickly withdrawn and the Federation of American Scientists’ Steven Aftergood quoted a USAID official as saying that “At the time our report was issued, it was written utilizing information from non-classified sources. After our report had been issued, USAID subsequently classified two documents that were cited in our report. This action resulted in the report becoming classified and we removed it from the web site.” Now that an “Unclassified” version of the report has been released, a comparison of the two versions reveals the “classified” portions of the report that were concealed by USAID. These sections of the report indicate that a material loss review was commissioned by USAID/Afghanistan and completed in May 2010 indicating that $850 million, or 94 percent of the value of the bank’s outstanding loans, had been fraudulently diverted to “insiders” connected with the bank. The concealed sections also indicate that Deloitte and Da Afghanistan Bank failed to provide this report to USAID for nearly six months.
Dubai real estate led depositors to rush to withdraw funds from Kabul Bank, the largest bank in Afghanistan. According to the Report of Kabul Bank in Conservatorship dated October 30, 2010, cited in a draft material loss review commissioned by USAID/Afghanistan, fraudulent loans were used to divert $850 million to insiders. This amount reportedly represented 94 percent of the bank’s outstanding loans.
Overall the banking system is profitable and well capitalized for the month ending August 2010. So far, however four banks were in loss for the month under review. Liquidity and FX positions are in accordance with the ratios set by the Central Bank, except for five banks that crossed the set limit on overall and individual currency basis. Total loans and total deposits of the banking system have positive growth, while total assets of the system have a negative growth for the month ending August 2010.
ISAF Da Afghanistan Bank (DAB) Profile and Branch Locations, August 2009.
In order to assist Canadians, and particularly financial institutions, in continuing to cooperate with authorities and in complying with the United Nations Suppression of Terrorism Regulations and the United Nations Afghanistan Regulations, the Government of Canada has prepared the attached consolidated list of individuals and entities whose property should be frozen and reported to the relevant authorities.