DUBAI, UNITED ARAB EMIRATES - The brother of Afghanistan's president acknowledged Wednesday that he made at least $800,000 by buying and then quickly reselling a high-end Dubai villa using a loan provided by the chairman of the troubled Kabul Bank.
The comments by Mahmoud Karzai point to a pattern of insider wheeling and dealing that has helped plunge Afghanistan's largest bank into crisis.
Nervous customers rushed to teller windows to withdraw millions last week following reports of unorthodox lending practices and the resignation of the bank's top two executives. The bank has invested heavily in property in Dubai, where prices have since plummeted.
Revelations about the transaction come amid a renewed focus on allegations of corruption within his brother Hamid Karzai's administration and questions about Kabul Bank's ties to Afghanistan's political elite.
Speaking by phone from Dubai, Mahmoud Karzai acknowledged buying the house on the city-state's Palm Jumeirah island for just less than $2 million in July 2007. He said he bought the property as a way to help his family gain residency in the Gulf emirate, where his daughter is a high school student.
Karzai, who has not been accused of any wrongdoing, said the villa sale and the loan to cover it were organized by former Kabul Bank chairman Sherkhan Farnood, though it was listed in Karzai's name. He said he was uncertain about the terms of the loan -- or even if bank funds were involved.
"I don't know if it was Kabul Bank's money or his money," Karzai said. "He actually paid for it and said this was a loan to you. ... So I don't know."
Just months after he bought the property for $1.9 million, Karzai said he sold it for about $2.7 million. Again, he said, Farnood handled the deal.
"This was all his recommendation," Karzai said, adding that he benefited from the sale after repaying the initial loan. "I did make a profit. It went up in price."
Farnood, who has resigned from his job, couldn't be reached for comment.
The central bank has ordered Farnood to hand over $155 million in real estate holdings in Dubai. Included are 18 Palm Jumeirah villas and two business properties.
Mahmoud Karzai, Kabul Bank's third-largest shareholder, criticized Farnood's handling of the bank and vowed to remain involved in the bank as it works "to clean the house ... and start fresh."