Afghan President Hamid Karzai has banned US government advisers from the Afghan central bank, where they have worked for years to help develop the country's financial sector, a US watchdog said on Wednesday.
The atmosphere at the bank had become "hostile" for US government advisers helping to train Afghan bank regulators and identify money laundering and other financial crimes, said an audit by the Special Inspector General For Afghanistan Reconstruction, known as SIGAR.
The special inspector general was created by Congress to scrutinise how US aid to Afghanistan is spent. The pushback from Karzai was part of a pattern of uneven Afghan co-operation with US efforts to bolster Afghanistan's fledgling financial institutions and safeguard billions in US cash that has poured into the country during the Afghan war, the SIGAR audit said.
Congress has appropriated over $70 billion since 2002 to implement security and development aid projects in Afghanistan, the audit said. But it said neither the United States nor Afghanistan has done everything possible to ensure the money is not siphoned off to militants or swindled out of the country.
"The United States has poured billions of aid dollars into a country plagued by corruption, insurgency and the narcotics trade," Herbert Richardson, the acting special inspector general, said in a press release accompanying the audit.
"It is essential that we use all available tools to ensure that US dollars are protected from fraud and diversion to the insurgency," he said.
The Afghan central bank has been at the centre of controversy since at least last month, when the bank's governor, Abdul Qadir Fitrat, said he was resigning for fear for his life. The Afghan government called his resignation "treason" and charged Fitrat was partly responsible for a fraud scandal that led to the collapse of Kabulbank, the country's biggest private lender.
But Fitrat, who chose to announce his resignation in the United States, said "high political authorities" in Kabul had undermined the central bank's effort to investigate Kabulbank.
Karzai first postponed allowing US Treasury advisers to work at the Afghan central bank in May, while negotiations related to the International Monetary Fund's aid to Afghanistan were under way, the SIGAR audit said.
"Subsequently, he (Karzai) decided that US government advisers were no longer welcome," it said. "According to US Embassy officials, they have no plans to reengage" with the central bank.
Afghanistan's talks with the IMF did not go well. They broke down in June as the fund rejected Afghanistan's plans to deal with Kabulbank, leaving millions of dollars of aid to Afghanistan in limbo.
The SIGAR audit found a clear lack of enthusiasm by the Afghan government for prosecuting financial crimes. Of 21 leads that were forwarded to the Afghan government by the Financial Transactions and Records Analysis Center of Afghanistan, only four were pursued to prosecution by the Afghan Attorney General's office, the audit said. US Treasury officials had helped the Afghan records centre identify the people suspected of financial crimes.
SIGAR also discussed US efforts to set more controls over US funds that enter and leave the country after officials learned that huge amounts of cash were being flown out of Kabul International Airport.
Treasury officials reported that about $1.3 billion in outbound cash was declared to Afghan Customs Department personnel at the Kabul International Airport during 2010, including about $482 million in US dollars, SIGAR said.
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