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Run on Kabul Bank Spells Trouble for Embattled Karzai Administration

September 2, 2010

September 2, 2010 - San Francisco, CA - - The specter of a full-fledged run on the assets of Afghanistan's Kabul bank [the country's largest private financial institution] does not bode well for the reputation of Hamid Karzai and threatens to further destabilize the troubled nation at a time when its fate turns on the success of military operations now underway against the Taliban.

The bank was founded [and is now chaired] by Sherkhan Farnood, a world-class poker player, five years ago and now operates under the suspicion of what the few American news sources who have followed the matter call, "a crony capitalism that enriches politically connected insiders and dismays the Afghan populace." [source, Andrew Higgins, "In Afghanistan, signs of crony capitalism," Washington Post, February 22, 2010, dyn/content/article/2010/02/21/AR2010022104317.html]

Kabul Bank has well over 100 branches, though most of them are in and around Afghanistan's capital city and has made a practice of bestowing favors - in the form of sweetheart loans - on members of president Karzai's inner team.

Because of these irregularities, the bank's executive team has been shaken up, but instead of reassuring depositors, this action has instead seemed to have galvanized the feeling that the institution is on the verge of insolvency.

The bank is an intermediary in many of the financial transactions which occur in Afghanistan including paying the salaries of most of the country's soldiers. [source, Jon Boone, "Turmoil at Afghanistan's biggest bank puts security forces in firing line," Sydney Morning Herald,, September 3, 2010,]

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