The old Kabul Bank collapsed in 2010. AP Photo / Musadeq Sadeq
The old Kabul Bank collapsed in 2010. AP Photo / Musadeq Sadeq

New Kabul Bank draws five possible bids



Five possible bids have come in for New Kabul Bank, the remnant of the Afghan financial institution at the centre 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.

It is not known if the UAE has responded.

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THE SPECS

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At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

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The smuggler

Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple. 
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.

Khouli conviction

Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.

For sale

A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.

- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico

- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000

- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950

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UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Name: Airev
Started: September 2023
Founder: Muhammad Khalid
Based: Abu Dhabi
Sector: Generative AI
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
 
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Hili 2: Unesco World Heritage site

The site is part of the Hili archaeological park in Al Ain. Excavations there have proved the existence of the earliest known agricultural communities in modern-day UAE. Some date to the Bronze Age but Hili 2 is an Iron Age site. The Iron Age witnessed the development of the falaj, a network of channels that funnelled water from natural springs in the area. Wells allowed settlements to be established, but falaj meant they could grow and thrive. Unesco, the UN's cultural body, awarded Al Ain's sites - including Hili 2 - world heritage status in 2011. Now the most recent dig at the site has revealed even more about the skilled people that lived and worked there.

Leap of Faith

Michael J Mazarr

Public Affairs

Dh67
 

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Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
  • Drones
  • Animals
  • Fireworks/ flares
  • Radios or power banks
  • Laser pointers
  • Glass
  • Selfie sticks/ umbrellas
  • Sharp objects
  • Political flags or banners
  • Bikes, skateboards or scooters
The specs

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Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

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