Secrecy News

Report on Kabul Bank Corruption Is Classified, Taken Offline

An eye-opening report on corruption in the Afghan Central Bank that was issued last March by the Inspector General of the U.S. Agency for International Development was recently removed from the USAID web site after the Agency decided to classify some of its published contents.

The now-classified IG report focused on the failure to discover a widespread pattern of fraudulent loans at the Kabul Bank which led to the diversion of $850 million, the near collapse in 2009 of the bank, and an ensuing national crisis. Employees of the Deloitte accounting firm, who were serving as advisers to the bank under contract to USAID, could and should have alerted the U.S. government to early signs of fraud, the Inspector General found, but they did not.  (Instead, the U.S. government learned of the bank corruption thanks to a February 22, 2010 story in the Washington Post.)

But in the past week or so, the March 16, 2011 USAID Inspector General report (pdf) was abruptly withdrawn from the Agency’s website.

Why?  Because USAID retroactively classified certain information in the report.

“At the time our report was issued, it was written utilizing information from non-classified sources,” said James C. Charlifue, the chief of staff of the USAID Office of Inspector General.  “After our report had been issued, USAID subsequently classified two documents that were cited in our report.  This action resulted in the report becoming classified and we removed it from the web site,” he told Secrecy News.

Depending on the precise circumstances, the classification of information that has already been officially released into the public domain is either discouraged or prohibited, not to mention futile.  According to executive order 13526 (section 1.7c), declassified information that has already been released can only be reclassified with the written approval of the agency head.  Unclassified information that has been formally released and is no longer under U.S. government control is supposed to be beyond the reach of the classification system altogether.

A spokesman for USAID did not respond to requests for comment on the decision to classify the information.

In the present case, the suppressed IG report remains independently available in its original form.  A copy was obtained by Secrecy News.  See “Review of USAID/Afghanistan’s Bank Supervision Assistance Activities and the Kabul Bank Crisis,” USAID Office of Inspector General report, March 16, 2011.

Much of the substance of the report was previously reported in “U.S. Advisers Saw Early Signs of Trouble at Afghan Bank” by Ernesto Londono and Rajiv Chandrasekaran, Washington Post, March 15, 2011; and “U.S. Agency Ends Accounting Firm’s Afghan Contract” by Alissa J. Rubin and James Risen, New York Times, March 17, 2011.

Now that the original report has been formally classified and withdrawn, “We plan on publishing a non-classified version of the report,” said Mr. Charlifue of the USAID Office of Inspector General, “which we will place on our web site.”

6 thoughts on “Report on Kabul Bank Corruption Is Classified, Taken Offline

  1. could they not, you know, decide to prosecute someone under the Computer Espionage law? 18 USC 1030(a)(1)?

  2. Why would this type of information come as a shock? Our bankers are raping their constituents, why wouldn’t an afghan bank? The larger question is how much money did the U.S. infuse into the afghan bank to sustain them? How much of american tax money has been sent to afghanistan?

  3. Deloitte is involved in a bank crisis and there is $850 million involved? Why is that NOT surprising?

  4. Why non of the reporters check the current state of the management of Kabul bank. I got to know that the current CEO and the CFO are brothers. How come this could happen in a financial institution. Where all management staff of the bank is at the moment?

  5. i agree with Mr.Ahmadi.Current CEO Mr Musa Khan Ghazi and CFO Mr Nasir Khan Gazi are real brothers and are enjoying salaries from Afghan central bank or commonly know as DAB and Kabul bank.

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