An Afghan tribunal sentenced two top executives to five years in prison Tuesday for misappropriating hundreds of millions of dollars from the nation's largest bank in a scandal that caused it to fail and threatened the country's fragile economy.
Observers called the sentences remarkably light given the crime, raising questions once again about the Afghan government's commitment to rooting out corruption. The Kabul Bank's collapse and subsequent bailout represented more than 5 percent of Afghanistan's gross domestic product, making it one of the largest banking failures in the world in relative terms.
The scandal has become a test case for President Hamid Karzai's pledge to clean up the notoriously corrupt government. Karzai has been regularly accused of prosecuting low-level graft while ignoring massive thievery on the part of friends or powerful allies. A report in November by the Independent Joint Anti-Corruption Monitoring and Evaluation Committee said political interference has stymied much of the Kabul Bank investigation.
The Afghan government is almost entirely funded by foreign donors, many of whom have threatened to pull or curtail financing if they do not see proof that Karzai's administration is ensuring that the money reaches Afghan citizens as intended.
Judge Shams-ul-Rahman Shams said the bank's former chairman Sherkhan Farnood and former chief executive officer Khalilullah Ferozi were guilty of misappropriating $278 million and $530 million, respectively. Farnood and Ferozi were also ordered to pay back these funds.
At the hearing, Farnood said he became the scapegoat for the real culprits at the bank. Ferozi spoke more gently, saying he did not accuse anyone but felt there needed to be a fuller accounting of the money. He swore to pay back any funds he was shown to have stolen.
The two were among 21 Kabul Bank and government employees found guilty of wrongdoing on Tuesday -- the first convictions from a debacle that erupted in 2010 and saw $861 million in fraudulent loans disappear into the pockets of friends and relatives of the powerful men behind the bank.
November's report said Kabul Bank was run like a Ponzi scheme with deposits used to fund lavish villas in Dubai and other luxury purchases. Hundreds of millions of dollars were sent out of Afghanistan -- some in airplane food trays, according to the report.
The chairman of the independent monitoring group, Drago Kos, called Tuesday's ruling "a disappointment."
"International standards require sanctions that are proportionate, dissuasive, and effective. We feel that this is lacking in the judgment issued today," Kos said in a statement.