KABUL— A major step toward resolving the loss of hundreds of millions of dollars from Kabul Bank began last week with the trial of nearly two dozen people, including the bank’s former chairman and former chief executive, who are accused of being the main architects of a colossal fraud.

The scandal at Kabul Bank, Afghanistan’s largest private financial institution, has laid bare the crony capitalism and corruption that has thrived here in the past decade. The bank was forced into receivership in 2010 under the weight of nearly $900 million in bad loans and missing funds.

With this long-stalled trial, the government is trying to demonstrate to Afghans and international donors that it is able to hold powerful people accountable in corruption cases.

International donors, including the United States, the European Union and others, had demanded that the Afghan government take a series of steps to combat corruption in the aftermath of the collapse of Kabul Bank.

One of the most important was to prosecute those who had perpetrated the fraud. For a year, the International Monetary Fund suspended Afghanistan’s program largely because of the government’s lack of progress in bringing to justice the people behind the bank debacle.

Now with the trial under way, donors privately say they are cautiously optimistic. And, as important, Afghans are watching as local television stations have begun to broadcast reports of the trial proceedings.
“The Afghans are working it through their legal system, which is what the international community has encouraged them to do,” said a senior American official, who asked not to be quoted by name because of the delicacy of the case. “And we will be watching for the result, as will the Afghans themselves.”

Another Western official said: “This is absolutely one of the two or three big-picture issues in Afghanistan today, along with the security and civilian transition. If this process is not credible, it puts into question a lot of the international commitments made to Afghanistan going forward.”

 

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