28 Nov 2012

Afghanistan bank fraud profited elite, audit says

10:11 am on 28 November 2012

A leaked copy of an auditors' report on the failed Kabul Bank in Afghanistan suggests almost $US900 million in loans was funnelled to a handful of people linked to the political elite.

One of President Hamid Karzai's brothers, Mahmoud, is said to be a beneficiary. He denies any wrongdoing and says he has repaid all of the cash, the BBC reports.

Details of the audit were revealed in a leaked report seen by the New York Times newspaper.

Revelations of corruption led to a run on the bank in 2010. Foreign donors bailed it out fearing its failure could lead to the collapse of Afghanistan's fragile economy.

According to the report by Kroll Associates, when the bank's assets were seized, the vast majority of its loans were made to just 19 people and companies.

here is no indication in the 277-page audit report that President Karzai benefited from the fraud.

The BBC's correspondent in Kabul says little of the stolen funds is ever likely to be recovered.