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Report: Afghans hampering US banking program

Report: Afghans hampering US banking program

July 21st, 2011 in News

WASHINGTON (AP) - Afghan officials are thwarting U.S. efforts to protect American aid from being stolen or diverted to Taliban insurgents, a new report said Wednesday, specifically naming President Hamid Karzai as part of the problem.

U.S. government agencies in Kabul also came in for criticism for not working closely enough with each other to track U.S. cash flowing to Afghanistan.

Amid a growing financial scandal, and after billions in aid have been sent to his country, Karzai has banned U.S. Treasury officials who were working as advisers at the central bank, according to the report from the top U.S. auditor for reconstruction in the war-ravaged nation.

The Treasury advisers won't return because working conditions at the bank have become too hostile, it said.

Raising a new alarm over a national banking scandal that's left Afghanistan in financial crisis, the report cites Karzai's move as one of a number of ways in which his government fails to cooperate with costly international efforts to improve the country's financial sector.

"The United States has poured billions of aid dollars into a country plagued by corruption, insurgency and the narcotics trade," acting Special Inspector General for Afghanistan Reconstruction Herbert Richardson said in a statement accompanying his report. "It is essential that we use all tools available to ensure that U.S. dollars are protected from fraud and diversion to the insurgency."

Among his recommendations is that Afghan banks and the U.S. should record the serial numbers of the huge bundles of cash that have been flowing into the country as part of a $70 billion American effort since 2002 to improve security and development there.

A spokesman for Karzai referred comment to the central bank.

Emal Ashor, a spokesman for the central bank, said he was not aware of any decision by Karzai to unilaterally ban all U.S. advisers from the bank.

The United States has a number of programs to help develop Afghanistan's central bank, regulate the nation's 17 commercial banks and strengthen how U.S. and Afghan law-enforcement authorities monitor the flow of U.S. aid through the economy. As part of that, Treasury had two advisers in the central bank, Richardson's office said.

But "President Karzai banned all U.S. government advisers" at the bank in May, a U.S. Embassy comment in Richardson's report said. "Treasury currently has no plans to re-engage at the central bank as the working conditions there for advisers have become hostile."