Officials Puzzle Over Millions of Dollars Leaving Afghanistan by Plane for Dubai

February 26th, 2010

Via: Washington Post:

A blizzard of bank notes is flying out of Afghanistan — often in full view of customs officers at the Kabul airport — as part of a cash exodus that is confounding U.S. officials and raising concerns about the money’s origin.

The cash, estimated to total well over $1 billion a year, flows mostly to the Persian Gulf emirate of Dubai, where many wealthy Afghans now park their families and funds, according to U.S. and Afghan officials. So long as departing cash is declared at the airport here, its transfer is legal.

But at a time when the United States and its allies are spending billions of dollars to prop up the fragile government of President Hamid Karzai, the volume of the outflow has stirred concerns that funds have been diverted from aid. The U.S. Drug Enforcement Administration, for its part, is trying to figure out whether some of the money comes from Afghanistan’s thriving opium trade. And officials in neighboring Pakistan think that at least some of the cash leaving Kabul has been smuggled overland from Pakistan.

“All this money magically appears from nowhere,” said a U.S. official who monitors Afghanistan’s growing role as a hub for cash transfers to Dubai, which has six flights a day to and from Kabul.

Meanwhile, the United States is stepping up efforts to stop money flow in the other direction — into Afghanistan and Pakistan in support of al-Qaeda and the Taliban. Senior Treasury Department officials visited Kabul this month to discuss the cash flows and other issues relating to this country’s infant, often chaotic financial sector.

Tracking Afghan exchanges has long been made difficult by the widespread use of traditional money-moving outfits, known as “hawalas,” which keep few records. The Afghan central bank, supported by U.S. Treasury advisers, is trying to get a grip on them by licensing their operations.

In the meantime, the money continues to flow. Cash declaration forms filed at Kabul International Airport and reviewed by The Washington Post show that Afghan passengers took more than $180 million to Dubai during a two-month period starting in July. If that rate held for the entire year, the amount of cash that left Afghanistan in 2009 would have far exceeded the country’s annual tax and other domestic revenue of about $875 million.

The declaration forms highlight the prominent and often opaque role played by hawalas. Asked to identify the “source of funds” in forms issued by the Afghan central bank, cash couriers frequently put down the name of the same Kabul hawala, an outfit called New Ansari Exchange.

Early last month, Afghan police and intelligence officers raided New Ansari’s office in Kabul’s bazaar district, carting away documents and computers, said Afghan bankers familiar with the operation. U.S. officials declined to comment on what prompted the raid. New Ansari Exchange, which is affiliated with a licensed Afghan bank, closed for a day or so but was soon up and running again.

The total volume of departing cash is almost certainly much higher than the declared amount. A Chinese man, for instance, was arrested recently at the Kabul airport carrying 800,000 undeclared euros (about $1.1 million).

Cash also can be moved easily through a VIP section at the airport, from which Afghan officials generally leave without being searched. American officials said that they have repeatedly raised the issue of special treatment for VIPs at the Kabul airport with the Afghan government but that they have made no headway.

One U.S. official said he had been told by a senior Dubai police officer that an Afghan diplomat flew into the emirate’s airport last year with more than $2 million worth of euros in undeclared cash. The Afghan consul general in Dubai, Haji Rashoudin Mohammadi, said in a telephone interview that he was not aware of any such incident.

The high volume of cash passing through Kabul’s airport first came to light last summer when British company Global Strategies Group, which has an airport security contract, started filing reports on the money transfers at the request of Afghanistan’s National Directorate of Security, the domestic intelligence agency. The country’s notoriously corrupt police force, however, complained about this arrangement, and Global stopped its reporting in September, according to someone familiar with the matter.

Afghan bankers interviewed in Kabul said that much of the money that does get declared belongs to traders who want to buy goods in Dubai but want to avoid the fees, delays and paperwork that result from conventional wire transfers.

The cash flown out of Kabul includes a wide range of foreign currencies. Most is in U.S. dollars, euros and — to the bafflement of officials — Saudi Arabian riyals, a currency not widely used in Afghanistan.

Last month, a well-dressed Afghan man en route to Dubai was found carrying three briefcases stuffed with $3 million in U.S. currency and $2 million in Saudi currency, according to an American official who was present when the notes were counted. A few days later, the same man was back at the Kabul airport, en route to Dubai again, with about $5 million in U.S. and Saudi bank notes.

One theory is that some of the Arab nation’s cash might come from Saudi donations that were supposed to go to mosques and other projects in Afghanistan and Pakistan. But, the American official said, “we don’t really know what is going on.”

Efforts to figure out just how much money is leaving Afghanistan and why have been hampered by a lack of cooperation from Dubai, complained Afghan and U.S. officials, who spoke on the condition of anonymity. Dubai’s financial problems, said a U.S. official, had left the emirate eager for foreign cash, and “they don’t seem to care where it comes from.” Dubai authorities declined to comment.

4 Responses to “Officials Puzzle Over Millions of Dollars Leaving Afghanistan by Plane for Dubai”

  1. Eileen Says:

    This is NOT from the Onion, is it? It just seems so disingenous for the – wait- hold your NOSE- the Washington post to put such a story online, on paper, wherever.
    All of sudden, out of nowhere, this newspaper finally has a tale to spin about Afghanistan, the drug trade and money laundering.
    Well big flucking yawn.
    The Washington Post might as well be the New York Post.
    They’ve been bought, heart and soul, by somebody that doesn’t have either one of those assets.
    What a joke, I mean comon!!!!!!!!! How long has the US been in Afghanistan and why?????
    The reason for me is the drug money, pipeline money, all kinds of reasons why the US has been by them off.
    People must be getting their money out of there as fast as they can make it. And can you blame them???
    First the Russians, then the Taliban, then the US and now Dubai and who the fluck knows else has got their finger in this drugged up pie. Oh yes, let us not forget Israel and Iran and lord knows or cares who else.
    Whoever is playing this game is just heaping shit on themselves for a cut in the poppy trade.
    Good luck.
    I can’t figure how these people who are in on this game figure that they are going to get out of this game alive. And with money in their pocket.
    They won’t.
    No one makes it out of here alive. People tend to forget that untidy fact.
    And if you play games, there are going to be people or things after you.
    So buck up. Being an honest player is not a bad deal at all.
    You’ll feel so clean, not happy, but clean when see the rest of the yahoos bite the dust in a ginat flame down.
    These people who lie,cheat and steal are not going to escape. They will not. And I’ll be here to remind you of that.

  2. rototillerman Says:

    I guess I don’t see this as news in and of itself… I think most of us who are paying attention have a working theory that there is an immense drug trade centered on Afghanistan: money goes in, drugs come out. Money has to go somewhere eventually; so, some players move money out to other havens. I guess the real story, and probably the reason that you cited this article, is that it is rare that a mainstream outlet would acknowledge anything to support the drug smuggling angle, even if they don’t connect the dots for their readers.

  3. tochigi Says:

    i doubt that it is all money from poppies.
    i reckon a lot of bilateral and other aid money would also be involved. and look what happened in Iraq. the occupiers brought in planeloads of cash in new hundred bills to use for *all sorts* of reasons 😉
    as for why the WP is publishing this now, i would specualte the usual reasons: inter-elite feud of some kind.

  4. ronjondoe Says:

    yeah, big yawn here…must be some score-settling to posterize what anybody with half a brain had to know about the flow of $$$ into and out of Afg…not just USD, but euro’s, Saudi money, etc…just like the Columbians of yore, you gotta do something with all that drug profit and CIA payroll…otherwise, it’s just ass-wipe…

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