World Bank Is Withholding $70 Million as Afghans Try to Resolve a Scandal

The delay is part of a looming crisis surrounding Kabul Bank negotiations that could force the Afghan government to dip into badly needed cash reserves and imperil future development projects, according to Western diplomats. It also stands to deepen the crisis in confidence in the government at a key moment, as NATO forces begin handing over security responsibilities in seven areas of the country next month, Western diplomats say.

The World Bank-managed Afghanistan Reconstruction Trust Fund, which receives money from international donors, was scheduled to deliver $70 million on June 11 for incentive programs intended to reward the government for meeting certain benchmarks in areas like public administration reform. But the payment was contingent on the International Monetary Fund’s renewing its main credit program for the country, which was suspended in September as the banking crisis worsened.

“That money hasn’t gone to the government by the deadline of June 11, and the donors are undecided whether to say to the government, ‘You’ve lost it forever,’ or to just hold it back,” said one Western diplomat, who spoke on the condition of anonymity.

With no program in place, Western donors have suspended payments to the reconstruction trust fund. In addition to providing incentive money, the trust fund finances about half the non-security costs of government, including salaries for civil servants. No donor nation has given money to the fund in the last three months, the diplomat said.

At the current spending rate, the fund stands to run dry sometime next month, which could force the Afghan government to dip into its reserve funds to pay the salaries of some 250,000 civil servants on its own. The government reserves are deep enough to do that for now, the diplomat said, but such a move could hamper the government’s ability to become self-sustaining as foreign aid money draws down, which is expected to occur over the next few years.

The continuing discord between the Afghan government and the monetary fund over the banking crisis is a “litmus test” of the country’s governance, said a senior Western diplomat, who also spoke on the condition of anonymity. “And all of us have held to the view that the I.M.F. program is of paramount importance to show the Afghan government’s commitment to transparency, especially when it comes to Kabul Bank, which is critical to regain the confidence first and foremost of the Afghan people, but also to the international community.”

The banking crisis erupted in August when depositors made a run on Kabul Bank in a panic after government officials learned of $300 million in losses and demanded the resignation of the bank’s president and chairman. Banking specialists and others feared the crisis at Kabul Bank could prompt a run on solvent banks and threaten to destabilize the country’s financial system.

The bank was the nation’s largest private financial institution, and its politically connected shareholders included the brothers of President Hamid Karzai and First Vice President Muhammad Qasim Fahim. By January, the estimated losses had reached as much as $900 million.

In April, the Afghan government presented an overhaul plan intended to resolve the crisis by splitting the bank in two: one unit would take over the bank’s branches, deposits and good loans, and the other would be set up as a receivership to try to collect bad loans.

Afghan officials and diplomats at the time hoped the plan would persuade the monetary fund to resume its credit program. But Raphael Anspach, a spokesman for the monetary fund, said Friday that important issues still needed to be addressed, “including actions to ensure that problems that led to the collapse of the Kabul Bank do not recur.”

“The timing of how fast to move forward depends on how quickly the authorities act on the remaining issues,” he added, without providing specifics on the outstanding issues.

Among the steps the monetary fund had been pushing were that the Afghan government put the Kabul Bank in receivership to try to collect as much as possible from the bad loans and that it prosecute those who defrauded the bank. But so far, no one has been charged; in fact, a presidential commission last month cleared some of the most politically connected borrowers.

The commission, appointed by President Karzai to assess responsibility for the wide-ranging fraud scheme, said last month that 207 borrowers, including members of the president’s cabinet and Parliament, had taken out undocumented loans. But the commission absolved the brothers of the president and the first vice president of any wrongdoing. The commission concluded that, so far, only about $347 million was expected to be repaid.

The monetary fund has also been pushing the government to pass a supplemental budget to recapitalize the Central Bank for money it spent keeping Kabul Bank afloat, said Najibullah Manali, an adviser to the Afghan finance minister.

“We sent this proposal to the Parliament but the Parliament rejected it,” he said. The Karzai administration will try again when Parliament reconvenes in August, Mr. Manali said.

Sharifullah Sahak contributed reporting from Kabul.

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China probes adoption 'scandal'

 10 May 2011 Last updated at 10:28 ET  Chinese families are limited to one child under a controversial policy introduced in the 1980s China is investigating reports that about 20 babies were seized under the country's one-child-per-family policy and put up for international adoption.

Chinese media say family planning officials in Hunan province took the children from poor homes unable to pay fines for having more than one child.

The children were allegedly listed as orphans and adopted by foreigners for fees of about $3,000 (￡1,800) each.

Xinhua news agency said some were now in the US, the Netherlands and Poland.

The reports first appeared in Caixin magazine and caused such outrage that the Hunan provincial government has launched a formal investigation.

A government spokeswoman confirmed to AFP news agency that the investigation began on Monday.

Correspondents say the one-child policy is not always strictly enforced and the worst that violators normally expect is a fine.

However, Caixin reported that when some families in poorer parts of Hunan were unable to pay their fines, authorities would tear down their houses.

Then - about 10 years ago - officials started confiscating their children, it is claimed.

Missing daughter

Enforcers from the family planning bureau are said to have listed about 20 children as orphans - many of them from impoverished Longhui county. They then reportedly sent them to welfare centres from where they were put up for international adoption.

Officials in Longhui county allegedly received 1,000 yuan ($155; ￡94) for each child and the welfare agencies received up to $3,000 per child put up for adoption, it said.

One couple said their only child was taken away by mistake while they were working in another city. Migrant worker Yang Libing told Caixin he had since tracked down his daughter, now seven years old and living in the US.

Tens of thousands of Chinese children have been adopted by foreign couples since the one-child policy came into force in the 1980s.

The policy was aimed at curbing China's surging population.

Latest census figures revealed last month showed China's population grew to 1.34 billion people by 2010, with a sharp rise in those over 60.

The figures showed China's population was growing more slowly than in the past.

British Law Used to Shush Scandal Has Become One

They were not listening for the announcers, or even the score. Instead, as one of the journalists recounted, they were listening to the chanting crowd, hoping it would sing en masse about the extramarital affair of one of the players on the field.

The reporters knew that the player, married and among Britain’s most famous, had had an affair with a television personality. But the player has taken out a so-called super injunction — a stringent British legal measure that prevents newspapers from publishing a story on the topic, or even from making any mention that a court order has been granted.

The injunctions, intended to protect privacy, have become a scandal here in Britain. The BBC political editor Andrew Marr, who often grills Britain’s most prominent politicians on the Sunday show that bears his name, publicly admitted Tuesday that he, too, had used one to hide an affair.

And in recent weeks, the issue of the soccer player’s identity has become a matter of national debate, splashed across front pages and featured on television shows. Super injunctions have also been raised in the Houses of Parliament as an example of a curb on the freedom of the press by activist judges.

But in a world where millions converse on Facebook, Twitter and the like, the law cannot feasibly be enforced online. So the reporters listening to the soccer game were hoping that the boisterous fans of the rival team would have read about the affair on the Internet and then shout or sing the details to ridicule their opponents, providing a circuitous way of covering the story. But they were disappointed.

Britain’s press laws are widely seen as particularly restrictive, so much so that international celebrities and public figures often choose to pursue their libel suits here, in what is frequently referred to as “libel tourism.”

But the super injunctions offer a way of stopping stories before they come out and are frequently served on multiple newspapers to pre-empt any possible publication, said Charlotte Harris, a media lawyer who has represented public figures seeking injunctions and others arguing against them.

The injunctions are so protective of their subjects that only a few cases have been made public: another soccer player, John Terry, the captain of the English team, who was reported to have had an affair with the ex-girlfriend of a teammate; Fred Goodwin, the former chairman of the $40 billion banking group Royal Bank of Scotland, who faced criticism for his lavish payouts; and Trafigura, a multinational commodities company accused of dumping toxic waste in Africa.

Details of other cases may become well known within the media community, and rumors from other sources may even spread online, but once a super injunction is served news organizations must keep their readers in the dark. The injunctions take “a matter of hours” in private meetings between judges and lawyers, said Ms. Harris, the media lawyer. And though their secretive nature makes it hard to verify a precise number, reports in the British press suggest that as many as 30 super injunctions may have been granted to other prominent figures.

“The rich and powerful,” said Ian Hislop, the editor of the magazine Private Eye, a satirical weekly that often reports on the hypocrisies of Britain’s elite, “are increasingly turning to these orders.”

“They used at least to have to argue that something you’d printed was not true,” Mr. Hislop said referring to Britain’s strong libel laws, widely held to favor those bringing claims. “Now it doesn’t matter whether it’s true or not. They can suppress it with a super injunction and call it privacy.”

Private Eye had mounted a legal challenge to Mr. Marr’s super injunction last week, days before he admitted to the court order. Through a BBC spokesman, Mr. Marr declined to comment.

But speaking of his injunction, granted in 2008, he told the Daily Mail that he “did not come into journalism to go around gagging journalists. Am I embarrassed by it? Yes. Am I uneasy about it? Yes. But at the time there was a crisis in my marriage,” he said, adding that he was also concerned about protecting the young child of the woman with whom he had had the affair.

“I know these injunctions are controversial,” he said, “and the situation seems to be running out of control.”

The controversy first surfaced in 2009, when Trafigura obtained a super injunction against journalists who had obtained internal documents discussing the dumping of toxic waste in Ivory Coast. The documents, the company’s lawyers Carter-Ruck argued and the judge agreed, were private material.

The order was eventually overturned when a British member of Parliament tabled a question on the issue, using a centuries-old precedent known as privilege, which holds reporting on Parliament above the law. Later, WikiLeaks also published the document.

And last month another member of Parliament, John Hemming, also used Parliamentary privilege to reveal that Mr. Goodwin, the former chairman of the Royal Bank of Scotland, “has obtained a super injunction preventing him being identified as a banker.”

“Will the government,” Mr. Hemming asked, “have a debate or a statement on the issue of freedom of speech and whether there is one law for the rich, such as Fred Goodwin, and another law for the poor?”

Ms. Harris, the media lawyer, argued that “this is so much wider and more important than the rich and powerful protecting themselves.” Tabloid newspapers, she said, were using freedom of speech as a pretext to publish stories that were sometimes spurious.

Behind many of the injunctions she has worked on, she said, lies a seamy world of betrayals and tabloid bidding wars for kiss-and-tell tales, “not to mention blackmail and harassment of some of these people.”

“If you’re a public figure and a fan you’ve exchanged a few e-mails with suddenly tells you that she is going to ruin your career, that she’ll turn up at your kids’ school, or go to the press and make accusations, what can you do?” Ms. Harris continued.

“Instead of hysteria we need a proper debate on this,” she said. “What exactly is private and what exactly is not private?”

Mr. Hislop agrees that a debate is essential, and added that to ban publication in the age of the Internet, when many of the recipients of super injunctions can be revealed with a little careful searching online, is “bizarre; it’s ludicrous.”

“I suppose those of us in print should be flattered,” Mr. Hislop said, “that only dead-wood publications count for these judges.”