REPEATED ROBBERIES COULD PRODUCE BANKING CRISIS

C O N F I D E N T I A L SECTION 01 OF 02 KABUL 000246

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E.O. 12958: DECL: 01/23/2017
TAGS: EFIN ECON PGOV PINS KCRM AF
SUBJECT: REPEATED ROBBERIES COULD PRODUCE BANKING CRISIS


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Classified By: AMB Ronald Neumann for reasons 1.4(b) & (d).

1.(C) SUMMARY: Following its loss of $3 million in a January
11 robbery of an armored van, Standard Chartered Bank (SCB),
the only international bank operating in Afghanistan, has
pressed senior GOA officials for a serious investigation of
the case to restore bankers' confidence in the GOA's
management of the economy. This is the seventh such robbery
(of six separate banks) in as many months. The Standard
Chartered General Manager implied that senior GOA officials
may be behind the robberies. To leverage its argument,
Standard Chartered is threatening to withdraw its operations
and has already ceased its cash transfer operations (e.g.: to
U.S. contractors at Bagram Air Base). Central Bank Governor
Delawari is aware of the gravity of the situation. He has
changed his cash transfer operating methodology and is
offering armored van services protected by the Presidential
Guard. Afghanistan will remain a cash-based economy until
the draft negotiable instruments law (both in the early draft
and comment phase) is enacted, the banking system and culture
further develop, and consumers build confidence in the
system. A Standard Chartered departure from Afghanistan
would send a shockwave through the banking community and the
economy. It would be serious blow to the government's public
image and damage already shaky investor confidence in the
government's ability to manage the economy. We will need to
press the GOA to investigate these cases, apprehend those
responsible, and prosecute and convict them. We also need to
persuade Standard Chartered to stay the course in
Afghanistan. END SUMMARY.


2.(C) On January 18, local Standard Chartered Bank GM
Josephus Silvanus (PROTECT) briefed Deputy Econ Counselor on
the broad daylight robbery of a cash movement en route from
the Central Bank to the Standard Chartered Bank. The robbery
took place at one of the busiest intersections of Kabul, in
front of the UAE and Turkish Embassies, not far from the
Ministry of Foreign Affairs. Silvanus said that two "NDS"
(National Directorate of Security) vehicles blocked the road,
unloaded a large number of armed men, (including one or two
RPGs),who proceeded to remove $3 million from an armored
vehicle. He said that the accompanying private security
guards, outnumbered and outgunned, did not resist. Silvanus
charged that the robbery last week was a "set up" and
suggested that his cash movement had been "fingered" by
someone in the Central Bank.

3.(C) Silvanus implied that he had confirmed information
that a senior official or officials in the GOA are behind the
bank robberies. He commented that senior MOI officials are
peddling the units under their control as personal security
companies to banks, and asserted that the robberies could be
retribution for not hiring one of them. Within Kabul, there
have been seven major cash delivery robberies of which he is
aware in as many months. Silvanus stated that his company's
security rules forbid him from hiring local security
companies. He added that his security detail is being
interrogated by GOA investigators as if they are the primary
suspects in the case, which he does not believe. Silvanus
also noted that one of the vehicles used in the heist was
recovered by the police, and it contained an unused RPG.

4.(C) Silvanus advised that he has asked Central Bank
Governor Delawari and Commerce Minister Farhang to pressure
the government to investigate the case seriously and
apprehend the culprit(s). He advised both that Standard
Chartered, the only western bank in Afghanistan, is seriously
considering withdrawing from the country. Both Delawari and
Farhang called President Karzai to express their concerns,
and Silvanus indicated that he understands that the
investigation has been transferred from the police to the

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NDS. He said the Bankers Association is also pressing the
government for action and has been working up the government
chain, but has not yet seen President Karzai. Silvanus
welcomed the suggestion that he add the ministers of finance
and agriculture to his list of individuals to approach with
the case. Both are very keen about private sector access to
finance.

5.(C) There have been some immediate operational consequences
- Silvanus serves both Halliburton/KBR and Dyncorp at Bagram
Air Base. He has informed both that he can no longer provide
cash deliveries to them because he cannot guarantee the
security of cash shipments.

6.(C) Deputy ECON Counselor and Treasury Attache asked
Central Bank Governor Delawari about his efforts to address
the robbery situation. Delawari expressed dismay at the
robbery and deep concern about the impact on the economy and
the country's reputation, if Standard Chartered leaves. He
called Karzai immediately after the robbery to express his
grave concern about the situation and the need for a
conclusive investigation. Delawari admitted that he is not
conducting an internal investigation of the staff responsible
for organizing cash shipments.

7.(C) Deputy ECON Counselor and Treasury Attache stressed the
importance of restoring bankers' confidence in the cash
delivery system, suggesting that an investigation might be
one action that could help. Delawari responded that he
wanted to look ahead, so he has changed communication
procedures to make them "more secure." He also has offered
the Central Bank's own armored vehicles, protected by the
Presidential Guard, to make cash runs for banks for a nominal
fee. He also asked if USAID could quickly provide 4-5
additional armored vehicles so he could expand his fleet.

8.(C) COMMENT: Until the GOA can enact the draft Negotiable
Instruments law (both in the draft and comment phase),
Afghanistan's domestic economy remains entirely based on cash
transactions. Thus it is no surprise, that the robbery of a
Standard Chartered cash transfer and SCB's threat to leave
Afghanistan are sending shockwaves through Kabul's banking
community. A Standard Chartered withdrawal would be a major
vote of no confidence in the government's ability to provide
security and to manage the economy. The boldness of this
robbery, and the six that preceded it, suggest that the
person or persons behind them believe they can operate with
impunity. If the culprit is a major political figure, a
successful investigation and prosecution could bolster
confidence in the government and enhance its reputation.
Since the success of our mission depends on the GOA's
success, we need to persuade the GOA to show the courage to
apprehend, prosecute, convict the person(s) committing the
crimes and to persuade Standard Chartered to stay the course
in Afghanistan. END COMMENT.
NEUMANN