KABUL - Five possible bids have come in for New Kabul Bank, the remnant of the Afghan financial institution at the center of a storm over fraud allegations in the country.
At a recent presentation in Dubai, potential buyers of the bank were given information about its current financial state of health, after the collapse of the old Kabul Bank in 2010.
A source close to the new bank said one North American lender and four Afghan banks had expressed interest in New Kabul.
There is a deadline of next month for possible bidders to come forward. If it remains unsold by the end of 2013, it will be liquidated.
Despite the alleged fraud at the old bank and the disappearance of about US$900 million (Dh3.3 billion) of depositors' cash, the new bank has clean assets, amounting to between $400m and $500m of deposits, as well as property and equipment assets.
The bank has not been allowed to make loans since its collapse that led to the arrest of its former chairman, Sherkhan Farnood, and other executives. But it is regarded as a viable business, though currently a loss-making concern.
Possible interest in a purchase of the new bank came as the Kabul authorities released an independent report on the affair, which has prompted allegations of corruption and fraud at the highest levels in Afghanistan, and deepened the country's economic problems.
"The importance of the collapse of Kabul Bank cannot be overstated. At the time of its failure, Kabul Bank was a central institution in the lives of millions of Afghans, and for many represented their first experience with formal banking structures," the report of the joint anti-corruption monitoring and evaluation committee said.
The report called the bank a billion-dollar "Ponzi scheme" arranged for the benefit of a small number of individuals associated with the governing elite in Kabul.
The report was based in part on an investigation by consultants from the Dubai office of Kroll, the investigations firm.
"Kabul Bank's controlling shareholders, key supervisors and managers led a sophisticated operation of fraudulent lending and embezzlement predominantly through a loan-book scheme. This resulted in Kabul Bank being deprived of approximately $935m funded mostly from customer deposits," the report stated. "Over 92 per cent of Kabul Bank's loan book - or approximately $861m - was for the benefit of 19 related parties [companies and individuals]."
It is alleged that funds from the bank were transferred - via legal money exchanges and by air in cash - to a number of jurisdictions around the world, including the UAE.
Some of the cash was used to build a portfolio of property assets in Dubai estimated to be worth $151m that is currently being auctioned by New Kabul to replace lost deposits.
The report identifies 11 separate properties, believed to be villas and houses on the emirate's Palm Jumeirah development, valued together at between $42m and $47m. Of these, one has been sold, two are under offer, and memoranda of understanding are being prepared on another two. The remaining six will be sold at a later date, the report said, "to avoid flooding the Dubai real estate market".
The Afghan authorities have approached the UAE Central Bank, which acts against alleged money-laundering in the Emirates via its Suspicious Cases Unit, with a letter of request for assistance to track down other assets possibly in the Emirates. (Agencies)