A handful of individuals ran a scheme of "fraudulent lending and embezzlement" to siphon hundreds of millions of dollars of ordinary people's savings out of Kabul Bank, a key Afghan lender that ran into trouble in 2010, an independent report says.
The report, released Wednesday, catalogs the alleged wrongdoing at the bank and the apparent failure of authorities to tackle the problems before they reached a crisis point or effectively respond to and investigate the financial catastrophe that unfolded.
The scandal that engulfed Kabul Bank has severely damaged the reputation of the Western approach to banking that it embodied in Afghanistan, one of the least developed countries in the world. And its cost will be born by an Afghan government that still relies on funding from the United States and other countries.
The bank was meant to provide a transparent way for Afghan government employees -- soldiers, teachers and police officers -- to receive and retain their salaries without the age-old fear of corrupt superiors confiscating the money.
Instead, the crisis at the bank, which went into receivership last year, "led to a loss of confidence in an already fragile financial system," according to the report by the Independent Joint Anti-Corruption Monitoring and Evaluation Committee.
The committee, made up of three Afghan citizens and three overseas members, states that it is "wholly independent from the Afghanistan government and the international community." It is led by Drago Kos, a Slovenian who has headed a number of international anti-corruption organizations.
Although the sums of money involved are small compared with the hundreds of billions of dollars spent on the war in Afghanistan by the United States and its allies, Kos on Wednesday underlined the significance of the bank to the small, underdeveloped Afghan economy.
"At the time the crisis happened, Kabul Bank had 44% of the assets of this country," he said at a news conference presenting the committee's report in Kabul. "More than 1 million people had deposited their money in this bank."
The alleged fraud -- which has been linked to people with ties to the government of President Hamid Karzai, including one of his brothers -- led to Kabul Bank being deprived of more than $850 million, mainly from customer deposits, according to the report.
"Most of this money," the report says, "has been redirected for the benefit of a few individuals who perpetrated and participated in a fraud with reckless disregard for the country and the people of Afghanistan."