[Congressional Record (Bound Edition), Volume 158 (2012), Part 3]
[House]
[Pages 3174-3175]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       END THE WAR IN AFGHANISTAN

  (Mr. McGOVERN asked and was given permission to address the House for 
1 minute and to revise and extend his remarks.)
  Mr. McGOVERN. Mr. Speaker, today's New York Times headline: 
``Intractable Afghan Graft Hampering U.S. Strategy''; the subtitle: 
Elite group is known for corruption, but high level trials have been 
absent.
  Mr. Speaker, another story about corruption, another story about 
Afghan President Karzai's complicity in corruption. This story appears 
while American servicemen and -women continue to die in Afghanistan, 
while the American people continue to send billions of dollars each day 
to Afghanistan to sustain the Afghan Government.
  Mr. Speaker, I've had it; the American people have had it. This war 
is not worth another American life. It is not worth another taxpayer 
dollar. I urge the President to bring our troops home now. I urge the 
President to end this war now. Enough is enough.

                [From the New York Times, Mar. 7, 2012]

            Intractable Afghan Graft Hampering U.S. Strategy

                (By Matthew Rosenberg and Graham Bowley)

       Kabul, Afghanistan.--For the past few months, possibly the 
     most intriguing poker game in Kabul has been taking place in 
     the sprawling pink sitting room of the man at the center of 
     one of the most public corruption scandals in the world, the 
     near collapse of Kabul Bank.
       The players include people tied to President Hamid Karzai's 
     inner circle, many of whom have profited from the crony 
     capitalism that has come to define Afghanistan's economic 
     order, and nearly brought down Kabul Bank. The game's stakes 
     ``aren't too big--a few thousand dollars up or down,'' one of 
     the participants said.
       Betting thousands of dollars a night in a country where 
     most families live off a few hundred dollars a year would 
     seem like a bad play for Sherkhan Farnood, the founder and 
     former chairman of Kabul Bank, the country's biggest. His 
     assets are supposed to be frozen, and he is still facing the 
     threat of prosecution over a scandal that could end up 
     costing the Afghan government--and, by extension, the Western 
     countries that pay most of its expenses--almost $900 million, 
     a sum that nearly equals the government's total annual 
     revenues.
       But Mr. Farnood, who in 2008 won about $143,000 at a World 
     Series of Poker event in Europe, appears to know a good wager 
     when he sees one. Despite years of urging and oversight by 
     American advisers, Mr. Karzai's government has yet to 
     prosecute a high-level corruption case. And now many American 
     officials say that they have little expectation that Mr. 
     Farnood's case will prove to be the exception--or that 
     Washington will try to do much about it, especially after 
     violent anti-American protests in recent weeks have sowed 
     fresh doubts in the Obama administration over the viability 
     of the mission in Afghanistan.
       As Americans pull back from Afghanistan, Mr. Farnood's case 
     exemplifies how the United States is leaving behind a problem 
     it underwrote over the past decade with tens of billions of 
     dollars of aid and logistical support: a narrow business and 
     political elite defined by its corruption, and despised by 
     most Afghans for it.
       The Americans and Afghans blame each other for the 
     problem's seeming intractability, contributing to the 
     deterioration in relations that now threatens to scuttle 
     talks on the shape of ties between the countries after the 
     NATO combat mission ends in 2014. What is clear is that the 
     pervasive graft has badly undercut the American war strategy, 
     which hinged on building the Karzai administration into a 
     credible alternative to the Taliban.
       Still, the Obama administration has concluded that pressing 
     the fight against corruption, as many American officials 
     tried to do in recent years, could further alienate Mr. 
     Karzai and others around him whom Washington is relying on as 
     it tries to manage a graceful drawdown.
       ``It's a little late in the game to worry about 
     anticorruption measures because what in the world is the 
     alternative going to be?'' said Anthony H. Cordesman, a 
     military analyst at the Center for Strategic and 
     International Studies in Washington. ``If you find people who 
     aren't corrupt, it is largely because they haven't had the 
     opportunity.''
       Some of the corruption will fade organically, as America 
     and its allies cut back on their aid to Afghanistan, which is 
     likely to have a harsh impact on the Afghan economy, Mr. 
     Cordesman said. Efforts by the American-led coalition to 
     better monitor the billions it spends each year in 
     Afghanistan continue and are having an effect, although it 
     remains slight largely because billions of dollars keep 
     pouring in and are likely to do so for years to come.
       The limits of the coalition's efforts to police its own 
     spending--and the newfound reluctance of top American 
     officials to push back against Afghan intransigence over 
     prosecuting corruption--were laid bare in December when Mr. 
     Karzai's office demanded that the coalition provide evidence 
     if it wanted the government to prosecute the Afghan Army's 
     former surgeon general, Gen. Ahmad Zia Yaftali.
       Coalition officials had in fact provided the evidence a 
     full year earlier. General Yaftali was suspended in December 
     2010 after Gen. David H. Petraeus, then the coalition 
     commander, told Mr. Karzai that NATO investigators had found 
     that the Afghan officer had stolen tens of millions of 
     dollars' worth of drugs from the country's main military 
     hospital, an institution he ran and where Afghan soldiers 
     regularly died from simple infections because they could not 
     afford to bribe nurses or doctors to treat them.
       The running of the hospital, like much of the Afghan Army, 
     is financed by the United States, which last year spent $11.2 
     billion to pay, train and equip Afghanistan's security force.
       But after the suspension of the politically connected 
     general, the investigation into his conduct remained in 
     limbo--until Mr. Karzai on Dec. 29 unexpectedly demanded to 
     see the evidence he had already seen.
       The American officer in charge of the inquiry, Brig. Gen. 
     H. R. McMaster, was furious. The investigation of General 
     Yaftali and the Dawood Military Hospital was one of the major 
     initiatives undertaken by General McMaster's task force, a 
     high-profile coalition effort set up in 2010 to go after 
     corruption that was being financed by coalition spending. Now 
     it appeared as if an officer who was accused of letting his 
     own soldiers die so he could enrich himself would never be 
     tried.
       General McMaster and his staff quickly pulled together 
     their evidence and wrote a statement to counter Mr. Karzai's 
     demand. Their draft, a copy of which was obtained by The New 
     York Times, struck both accusatory and conciliatory notes.
       It bluntly stated that the coalition had provided the 
     evidence Mr. Karzai was now demanding. It said efforts to 
     investigate had been met with ``interference, obstruction, 
     and delay.'' It quoted a pledge Mr. Karzai had made in 
     December at an international conference in Germany to end a 
     ``culture of impunity.''
       The statement was never released. According to two NATO 
     officials, the commander of

[[Page 3175]]

     coalition forces, Gen. John R. Allen, decided there was 
     little to gain in picking a fight with Mr. Karzai over the 
     matter.
       A senior coalition officer who is involved with the case 
     said he believed that it would eventually proceed. NATO is 
     focused on preparing Afghan forces to take over the fight 
     against the Taliban, and will continue to try to clamp down 
     on corruption that undermines that goal, the officer said.
       The American officials tracking the bank investigation seem 
     similarly uninterested in challenging Afghan authorities over 
     the status of Mr. Farnood and his former partner, Khalilullah 
     Frozi.
       Under pressure from the United States and its allies, 
     Afghan authorities arrested both men in June. Kabul Bank was 
     taken over nearly 10 months earlier amid accusations that its 
     owners used it as their personal piggy bank.
       Mr. Farnood spent more than $150 million of the bank's 
     money on villas in Dubai purchased in his own name. Kabul 
     Bank money helped finance shell companies whose main function 
     was to win subcontracts from businesses doing work for the 
     American-led coalition, siphon a slice of the money and then 
     find other subcontractors to do the actual work, American 
     officials have said. Mahmoud Karzai, a brother of the Afghan 
     president, and Abdul Haseen Fahim, a brother of the first 
     vice president, Gen. Muhammad Qasim Fahim, both received 
     interest-free loans so they could buy stakes in the bank.
       News of the takeover prompted a run on the bank that almost 
     led to its collapse. Afghanistan's central bank spent nearly 
     $900 million to keep it afloat, an outlay that the Afghan 
     government, already short of cash, has since had to cover. 
     While some of that money is likely to be recovered, some 
     Western officials concede that donor funds will eventually be 
     needed to close the hole in the Afghan budget, even if 
     Western dollars do not go directly to cover Kabul Bank's 
     losses.
       Deputy Attorney General Rahmat-ullah Nazari said the 
     authorities this past fall gave permission to let Mr. Farnood 
     and Mr. Frozi out of prison during the daytime so they could 
     help recover assets owed to the bank. Mr. Farnood owes the 
     bank $467 million, he said; Mr. Frozi owes $78 million.
       Mr. Frozi has been helpful in tracking down missing assets; 
     Mr. Farnood less so, Mr. Nazari said, although some Western 
     officials disputed that characterization and said it was Mr. 
     Farnood who was being more helpful.
       But it is unclear how hard the Afghan government is pushing 
     either man. The villas and a pair of partly constructed 
     office towers in Dubai are still in Mr. Farnood's name, and 
     Mr. Nazari said the transfer of the property was being held 
     up by a 2 percent tax that the United Arab Emirates levy on 
     such deals. Some Western officials questioned why a routine 
     tax would hold up such an important transaction.
       Meanwhile, Mr. Farnood is collecting rent from tenants in 
     some of the villas, Mr. Nazari said.
       But, Mr. Nazari insisted, both will be prosecuted once the 
     asset recovery has been completed.
       American, European and even some Afghan officials say they 
     doubt that will happen. Despite Mr. Nazari's claim that both 
     spend their nights in prison, the two have rented separate 
     houses in Kabul and rarely, if ever, return to their cells, 
     said people close to the men.
       Mr. Farnood's spacious house stands behind high walls in 
     Kabul's most expensive neighborhood, around the corner from 
     the office of the International Monetary Fund, which is 
     overseeing a forensic audit of Kabul Bank.
       A pool table, a table for table tennis, a large Samsung 
     flat-screen television and a set of purple faux-leather 
     couches and arm chairs grace the cavernous pink sitting room. 
     A pair of late-model black Toyota Land Cruisers sit in the 
     driveway. The officer from Afghanistan's National Directorate 
     of Security, the country's intelligence agency, who mans the 
     front door functions more like a doorman than a guard.
       Mr. Farnood lunches regularly at the Kabul Serena Hotel, 
     where the buffet costs about $25 a head. Mr. Frozi has his 
     own spot, Boccaccio, an upscale Italian eatery popular with 
     well-heeled Afghans and foreigners, including American and 
     European diplomats.
       Lunching there on afternoon last month with four other men, 
     Mr. Frozi declined to talk to a reporter. He said the 
     American press had ``destroyed the bank,'' and he dismissed 
     his questioner with a wave of his hand.

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