Ex-Kabul Bank chiefs slapped with prison sentences, huge fines

Former Kabul Bank CEO Khalilullah attends at a court in Kabul on March 5, 2013.

Story highlights

  • Two former Kabul Bank officials are sentenced to five years in prison
  • They must pay $278 million and $530 million to a recovery fund for victims
  • 19 others face sentences of between six months and four years
  • The bank was intended to help alleviate concerns about corruption

Two former Kabul Bank executives accused in a scheme that siphoned hundreds of millions of dollars now face years in prison and massive fines.

Investigators say the scheme cheated ordinary people's savings out of Kabul Bank in a case of "fraudulent lending and embezzlement."

Former Chief Executive Officer Khalilullah Ferozi was sentenced to five years and ordered to pay $530 million to a recovery fund to help the fraud victims, prosecutor Nasrrullah Hemad said Tuesday.

Former Kabul Bank Chairman Sherkhan Farnood was also sentenced to five years and must pay $278 million to the fund.

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.

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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.

Nineteen others face sentences of between six months and four years, Hemad said Tuesday.

The sentences can be appealed.