Kabul Bank fraud: Sherkhan Farnood and Khalilullah Ferozi jailed

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 Sherkhan Farnood and ex-CEO Khalilullah Ferozi were found guilty of theft at a special court.

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

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.

It was seen as a test of Afghanistan's commitment to addressing corruption and stabilising the economy.

'Not Bollywood'

In addition to the jail sentence, Farnood has been fined $288m (£190m) and Ferozi $530m (£350m) by the Kabul Bank Special Tribunal - the value of the assets they are deemed to have stolen from the bank. They have the right to appeal.

Twenty-one other employees were also sentenced by the court to between two and four years. Of those, five are considered to be missing or to have left the country.

One of those who fled was the former head of Afghanistan's central bank, Abdul Qadeer Fitrat, who arrived in the US in 2011 saying his life was in danger.

He was sentenced to two years in prison for misusing his authority and failing to inform the government of what was happening inside Kabul Bank.

At the time he fled he denied any wrongdoing and said he was under threat because he had named prominent figures in connection with the scandal.

There were also dramatic exchanges in court between the two main defendants Farnood and Ferozi, the Agence France-Press news agency reported.

Farnood insisted that he had already paid his debts, as his properties in Dubai and Kabul were confiscated. He also accused Ferozi of being the prime culprit.

"If this is not jungle

Ferozi replied, saying: "This is not Bollywood where one can act like a hero. Everything is on paper."

The two men have the right to appeal.

The brothers of Afghan President Hamid Karzai and Vice-President Mohammed Fahim were among the shareholders of the bank, but they have not been prosecuted and have consistently denied any wrongdoing.

'Sham'

These are the first convictions handed down by the tribunal since it began proceedings after it was set up by the Supreme Court last year to deal with the corruption revelations.

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.

--BBC