Kabul Bank fraud profited elite, leaked audit says

Afghanistan's failed Kabul Bank was involved in a fraud that funnelled almost $900m into the pockets of a small number of the political elite, an independent auditors' report says.

One of President Hamid Karzai's brothers, Mahmoud, is said to be a beneficiary. He denies any wrongdoing.

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.

But according to the report by Kroll Associates, when the bank's assets were seized, the vast majority of its loans - almost $900m (£561m) - were made to just 19 people and companies.

Investigators from Kroll found 114 rubber stamps for fake companies used to give forged documents a more legitimate look, the Times reported.

Among those who benefited from illegal loans was Mahmoud Karzai, the report says. However, he has always denied any wrongdoing and says he has repaid all of the cash.

He told the BBC: "If they have one iota of evidence, Kroll or anybody... that I gave a signature of mine anywhere in the Kabul Bank decision making, that I have taken a dollar in misused... or hidden the money, I am challenging anyone in the world to come up with that and I will take full responsibility."

Asked if he regretted his involvement in Kabul Bank, he said: "Absolutely. I think it was the worst mistake I ever made in my life."

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

A spokesman for President Karzai said Kroll had been "assigned to identify countries, banks and accounts where the money has been chanelled to from Kabul Bank".

"In the report of their first phase of audit investigations, these details were not reflected. We hope that they incorporate these key details in their final auditing report," the spokesman, Aimal Faizi, told the BBC.

He repeated an Afghan government demand for the US to extradite former Afghan Central Bank head Abdul Qadeer Fitrat who he accused of making "false statements".

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

However, he says that with so much foreign money continuing to flow through Afghanistan's fragile financial system, experts fear a similar crime could be possible again.

Kabul Bank's founder and its former chairman Sherkhan Farnood and ex-CEO Khalilullah Ferozi are among several people charged in connection with the bank's collapse.

Western countries demanded the forensic audit along with another report, due later this week, by an Afghanistan-based anti-corruption watchdog.

The US and its allies have also threatened to cut legal aid to Afghanistan unless legal action is taken against those responsible.