Hamid Karzai's brother made £500,000 on Kabul Bank property deal - Telegraph

Hamid Karzai's brother made £500,000 on Kabul Bank property deal - Telegraph


Hamid Karzai's brother made £500,000 on Kabul Bank property deal


The brother of the Afghan President Hamid Karzai made a half-million pound profit in eight months on a luxury villa in Dubai bought with a loan from the bank at the centre of a financial and political crisis in Kabul.
Mahmoud Karzai made a half-million pound profit in eight months on a luxury villa in Dubai Photo: DUNCAN CHARD
Mahmoud Karzai, a high-profile businessman in Afghanistan, borrowed seven million UAE dirham (£1.23 million) from Kabul Bank, in which he is also the third-largest shareholder, in July 2007.


He used the money to buy a villa in Palm Jumeirah, the artificial island in the Gulf off the coast of Dubai. The seller was the bank's former chairman, Sher Khan Farnood, who had used the bank to buy a $140 million (£91 million) property portfolio in Dubai which he registered in his own name.

Mr Karzai sold the house eight months later for 10 million dirham (£1.76 million), a profit of 3 million dirham, or just over £500,000.


"Making a profit on a house is beautiful," Mr Karzai told The Daily Telegraph in an interview yesterday. "I was so happy to make that profit."


He said the question of whether it was a conflict of interest for a shareholder to be lent money to buy a property that was already financed by the bank should be referred to Mr Farnood.


"In my opinion if you borrow money it's not a major issue," he said. "It's not as if you are taking money for free. He lent it to me – you would have to ask him why he did that."


Mr Karzai said he had bought the house so he could apply for a residency visa in Dubai, where his youngest daughter was about to enrol at school.


The house deal is one of a series of loans made to Mr Karzai and others by the bank, Afghanistan's largest. Its operations are now being examined by the Afghan Central Bank.


Western officials are said to be concerned about allegations that money spent on aid is ending up, via the bank's depositors, in property speculation in places like Dubai rather than reinvested. Mr Karzai has not been accused of any illegality.


Hundreds of millions of dollars have been withdrawn in a run on the bank by ordinary depositors since details of the investigation were revealed.


Mr Karzai also has investments in a cement factory in Afghanistan, and property developments in Kabul and Kandahar. The former also involved a loan from Kabul Bank, though he said that had now been repaid. The property developments were backed with a $5.5 million loan he obtained in the United States.


Mr Karzai said that he and Mr Farnood had fallen out over Mr Farnood's running of the bank. "The thing is, he's not sophisticated enough for today's global economy."


He said he had reported his concerns to the Central Bank himself, but added he did not want to go public for fear of causing the sort of crisis that has now happened.


He also denied his business empire in Afghanistan was acquired improperly due to his relationship with his brother.


"It is very hard to make money in Afghanistan," he said.

"If you do the right thing, you don't become a millionaire overnight. If I were involved in impropriety I would be the richest man around."


http://www.telegraph.co.uk/news/worldnews/asia/afghanistan/7989594/Hamid-Karzais-brother-made-500000-on-Kabul-Bank-property-deal.html