Kabul Bank fraud: Sherkhan Farnood and Khalilullah Ferozi jailed

ASTANA. March 5. KAZINFORM Two former chiefs of Afghanistan's Kabul Bank have been sentenced to five years in jail for the multi-million dollar fraud that almost led to its collapse in 2010.

Founder and former chairman Sherkhan Farnood and ex-CEO Khalilullah Ferozi were tried in a special court.

Revelations of massive corruption led to a run on the bank in 2010, BBC reported.

Foreign donors bailed it out fearing its failure could lead to the collapse of Afghanistan's fragile economy.

The country's future aid contributions could have been jeopardised if no action had been taken against those responsible for the fraud, reports the BBC's Quentin Sommerville in Kabul.

Farnood has been fined $288m (£190m) and Ferozi $530m (£350m) by the Kabul Bank Special Tribunal. More than 20 other employees were also being tried.

The bank handled most of the government payroll, including salaries for policemen and teachers.

But in fact this was a sham, reports our correspondent, as its main purpose appears to have been to ferry hundreds of millions of dollars out of Afghanistan.

A report by an independent auditor leaked in November 2012 showed that the vast majority of the bank's loans - almost $900m (£561m) - were made to just 19 people and companies.

An earlier finding by Afghanistan's anti-corruption office said that $467m (£290m) of outstanding loans had been made without appropriate collateral.

Our correspondent says that much of the stolen money is unlikely to be recovered.

The two men have the right to appeal, reports the Associated Press news agency.