The Treasury advisers won't return because working conditions at the bank have become too hostile, said the report from the top U.S. auditor for reconstruction in the war-ravaged nation.
Raising a new alarm over a national banking scandal that's left Afghanistan in financial crisis, the report cites Karzai's move as one of a number of ways in which his government fails to cooperate with costly international efforts to improve the country's financial sector.
"The United States has poured billions of aid dollars into a country plagued by corruption, insurgency and the narcotics trade," acting Special Inspector General for Afghanistan Reconstruction Herbert Richardson said in a statement accompanying his report. "It is essential that we use all tools available to ensure that U.S. dollars are protected from fraud and diversion to the insurgency."
Among his recommendations is that Afghan banks and the U.S. should record the serial numbers of the huge bundles of cash that have been flowing into the country as part of a $70 billion American effort since 2002 to improve security and development there.
But efforts to track and protect U.S. tax dollars and other international aid are entangled in a web of Afghan banking scandals that have been fast developing in recent weeks:
-The former head of the central bank, Abdul Qadir Fitrat, fled late last month to Northern Virginia amid allegations of failing to act on warnings about widespread corruption at the nation's largest private lender, Kabul Bank.
-Kabul Bank, formerly headed by a world-class poker player, nearly collapsed last year because of mismanagement and questionable lending practices, becoming a symbol for the country's cronyism and deep-rooted corruption. Top officers were not arrested until last month.
-Earlier in June, the International Monetary Fund stopped an expected $70 million reconstruction payment to Afghanistan to show displeasure of international donors, a move that threatens billions of aid to a country reliant on foreign assistance.
The United States has a number of programs to help develop Afghanistan's central bank, regulate the nation's 17 commercial banks and strengthen how U.S. and Afghan law-enforcement authorities monitor the flows of U.S. aid through the economy. As part of that, Treasury had two advisers in the central bank, Richardson's office said.
But "President Karzai banned all U.S. government advisers" at the bank in May, a U.S. Embassy comment in Richardson's report said. "Treasury currently has no plans to re-engage at the central bank as the working conditions there for advisers have become hostile."
