An investigation by TOLOnews shows that Afghanistan Commercial Bank, commonly known as ACB, went bankrupt last year, being the third bankrupted private bank in the country after Kabul Bank and Afghanistan Development Bank.
The Central Bank information shows that the problem in the ACB goes back to 2012 when the bank was operating under the name of BRAC Bank, providing small loans to its customers.
The BRAC Bank was founded by a Bangladeshi investor in 2006.
The ACB owner, Jawed Andish, said he bought all shares of the bank in 2015 for $22 million. But he claims that a bankrupted bank was handed to him through a compromise between former shareholders of the ACB and some members of the state-owned Central Bank, also known as the Da Afghanistan Bank.
Three investors, including Jawed Andish, Zabihullah Ziarmal and Tariq Emadi had decided to submit their proposals to the Central Bank in 2015 to buy the shares of Afghanistan Commercial Bank, according to Andish.
However, after submitting their proposals to the Central Bank, Emadi’s proposal was rejected but Zabihullah Ziarmal withdrew from the tender due to unknown reasons and finally, Andish had no option but to buy the shares.
Andish says that at that time, he was informed that the bank has Afs1.25 billion plus an additional $11 million on its assets but later he found that the Central Bank had given him “wrong information” about the BRAC Bank in collaboration with its former shareholders.
“There is a building inside the Afghanistan Commercial Bank’s compound which does not worth more than $200,000, but the price of the building was estimated Afs234 million [$2.9 million] in the overall capital of the bank. It is in contravention of the law. They violated the law before I opted to purchase the bank,” Andish said.
The Central Bank governor Khalil Sediq said the BRAC Bank shareholder made an unclear decision to abandon their activities.
The TOLOnews findings show that the shares of the BRAC Bank were bought by two Afghan nationals, Aryan Azimi and Salim Azimi, for $3 million and they immediately got a license for it, with a new name: Afghanistan Commercial Bank.
The Central Bank governor admitted that providing a license to Afghanistan Commercial bank, without assessing the required capital of the investors, was a “mistake”.
“We saw that they could not do it. We decided based on the law but I want to tell you that if I were the governor of the bank [at the time], I would not have given a license to the bank,” Sediq said.
“Afghanistan’s laws are allowing all investors to invest in banking, therefore, the investor was from Bangladesh who founded the BRAC Bank in Afghanistan but after a while, he decided to sell his shares. The bank has not been sold, its shares have been sold. There is a contrast between these two,” said Khan Afzal Hudwal, former deputy governor of the Central Bank.
Another reason that resulted in the bankruptcy of Afghanistan Commercial Bank is a number of violations by the bank, the Central Bank officials said.
The officials said that some of the violations in Afghanistan Commercial Bank include a $2 million loan provided by the bank by taking a public school in Kabul as a guarantee, providing big loans with the help of the shareholders and the sudden disappearance of at least $700,000 from the Mazar branch of the bank.
However, the defense lawyer of the former shareholders of the ACB, Shafiqullah Saighani said that the bank faced problem after it was sold out to Mr. Andish.
He said that Mr. Andish owes $12 million from the purchase of the shares of the bank from the former shareholders.
“This is not the Central Bank’s fault. This is not the Central Bank’s authority to do assessments for someone who wants to buy a bank. We are not the analyzer of the banks, we are the controller of the banks,” the Central Bank governor said.
TOLOnews findings show that the Central Bank has made conflicting reports from its assessments on Afghanistan Commercial Bank since it was handed to the new shareholder.
A document of the Central Bank’s assessment shows that the ACB has been ranked at “grade three” which show it is in good condition, while in other assessment, the bank was ranked at “fourth grade” which shows it is in a critical condition.
“I shard the information [about the loans] with the Central Bank so that the bank will help us in this regard, but the Central Bank [officials] did not cooperate because they have been involved in the ‘violations’,” said Andish.
Another big problem in the purchase of the bank, according to TOLOnews findings, is that Mr. Andish, who claims he has bought all shares of the ACB, got up to 55 percent of the shares even until the last days of the bank’s operation.
However, the Central Bank officials said that the transfer of the shares from the former shareholders of Afghanistan Commercial Bank to its new shareholder “was not shared with them”.
This means that the remained assets will be divided between Mr. Andish and former shareholders of the bank once the case is cleared.
“It is the right of the shareholders to have a share in the money which is left after clearance in the bank,” Sediq said.
Article 21 of Afghanistan’s banking law says that no person may, without the prior written authorization of Da Afghanistan Bank, acquire a qualifying holding, 20% participation, 30% participation, or control of a bank. Legal persons having qualifying holdings in banks must be financial institutions.
Meanwhile, Hudwal said the Central Bank cannot be unaware of a deal on shares of Afghanistan Commercial Bank.
“The Central Bank has been aware of all these,” he reiterated.
He said that based on the banking law, there are 15 stages for saving a bank from bankruptcy.
“The banking law says this, not me. When a bank faces a problem, The first stage is the preparation of a balance sheet for the bank to know about its assets. It means that this bank can be revived and if the assets are less, then the government takes other measures,” Hudwal said.
Critics say that the conflicting remarks by the Central Bank officials are aimed at keeping their “fault” secret when it comes to issues around the bankruptcy of the ACB.
“The Central Bank is trying to keep its mistakes under the table,” said Ahmad Shah Reka, former head of Afghanistan Commercial Bank.
The Deputy Head of Afghanistan Chamber of Commerce and Industries, Khan Jan Alokozai, said the problems in the ACB are connected with inattention by the Central Bank.
“Violations should be prevented when they happen in a bank. It is ‘frustrating’ when the license of a bank is canceled,” Alokozai said.
A banking expert, meanwhile, said the Central Bank has not paid the required attention to save Afghanistan Commercial Bank from bankruptcy.
“The Central Bank is responsible to monitor a bank when it wants to start operation and then it should make clear how much capital does it have,” said Abdulwase Haidari, an expert.
“I think the problem [in Afghanistan Commercial Bank] is the outcome of four matters: lack of good banking, lack of good monitoring and lack of attention,” said Mohib Sharifi, a banking expert.