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Mr. Craig M. Steffensen,
Country Director,
Asian Development Bank,
Afghanistan Resident Mission (AFRM)
126, Street 2, Haji
Yaqoub Round About Shahar-e-Now,
P. O. Box 3070 Kabul,
Afghanistan.
Dear Mr. Steffensen,
During my service as Minister of Finance in Afghanistan from June 2002 to December 2004, a position in which I worked on a pro-bono basis and received no salary (except for a monthly honorarium paid to all cabinet members for office expenses), I developed a close partnership with all international financial institutions, including the Asian Development Bank. As part of the support provided for the government’s reform strategy, the Asian Development Bank agreed to provide funds through a structural adjustment loan to the government of Afghanistan, a bold initiative that proved remarkably successful.
When the first tranche was being transferred to the Government of Afghanistan, the Asian Development Bank and the government agreed to open a special account in the name of the government, with the ultimate signing authority vested in President Karzai, who was then Head of State of the Transitional Government. As per law, every use of the funds had to be authorized by the President in writing and the documents bear his signature.
Dr. Michael Carnahan, an Asian Development Bank consultant to the Ministry of Finance, handled the choice of the implementing organization and set up the management mechanisms with the Asian Development Bank team and the loan department of the Ministry of Finance. This department was at the time also being supported through technical assistance provided by the United States Department of the Treasury. I had no direct dealings with Crown Agents, the organization chosen to handle the account, or any subsequent dealing with them in this regard, and have not benefitted in any manner from the proceeds of the loan or any other activity carried out by Crown Agents. Nor have I had any direct or indirect financial dealings with Crown Agents, its officials or affiliates since that time.
Recently, the Deputy spokesman for President Karzai has alleged that I have deposited the proceeds of this Asian Development Bank loan in a personal bank account. In response to a New York Times story about his entrepreneurial initiatives, Mr. Mahmood Karzai the President’s elder brother, has also alleged that I had hidden the proceeds of the loan from the Government of Afghanistan in an effort to generate private gains. Mr. Arthur Kent, an independent journalist, has also been repeating these allegations on his website.
These allegations not only malign my reputation but also cast doubt on the reputation of the Asian Development Bank and its staff. To set the record straight I am requesting that you review your records and issue a public statement regarding the nature of the loan and the manner in which the Asian Development Bank agreed to procedures for the disbursement of the loan, the manner in which it monitored and the expenditure of funds. As per law, all of the relevant documents are filed in the loan department of the Afghan Ministry of Finance, but should there be need for me to provide any further records, I would be pleased to fully cooperate with you in any way possible.
Best regards,
Ashraf Ghani
Afghanistan’s Finance Minister, June 2002-December 2004.
Country Director’s Reply
Asian Development Bank
Afghanistan Resident Mission
29 April 2009
Dr. Ashraf Ghani
Dar-ul-Aman
Kabul
Afghanistan
Dear Dr. Ghani
Subject: Postconflict Multisector Program Loan
Thank you for your letter of 8 March 2009. The $150 million Postconflict Multisector Program Loan, or PMPL (LN 1954-AFG) was the first loan to Afghanistan by an international financial institution in more than 23 years, and was a key component of ADB’s renewed programming in Afghanistan. The loan was approved by ADB’s Board of Directors on 4 December 2002.
The program objective was to promote economic growth and poverty reduction through the introduction of fundamental policy and institutional reforms for improved efficiency in three key economic sectors- governance and finance, transport and energy. This was to be achieved through support for market-based policy reforms, public infrastructure investment, and institutional capacity building.
All first tranche conditions were fully met, allowing an initial disbursement of $100 million within a day of loan effectiveness, on 6 December 2002. The second and final $50 million tranche of the PMPL was released on 18 December 2003, in accordance with the appraisal schedule. We are able to confirm that the loan proceeds were properly disbursed by ADB to the Government of Afghanistan, in full accordance with ADB’s standard disbursement procedures.
Sincerely yours,
Craig Steffensen
Country Director
