THE DEPARTMENT for International Development has committed £7m to help Afghanistan sort out its floundering financial sector, after Kabul Bank was brought to its knees by an insider loans scandal last year.
It is not yet known which auditor will be handed the contract – the project was only approved yesterday – but it will be interesting to see if a domestic firm is engaged, or whether the Big Four will fill the role.
A DfID spokeswoman suggested an Afghan firm would be preferable due to its knowledge of the local environment and language, Dari. However, Big Four contenders could argue their superior size and international experience make them well placed to get Kabul Bank back on its feet.
Deloitte almost certainly won’t be in the offing as it recently got its fingers burnt, losing a USAID contract to advise the central bank, The Wall Street Journal reported. The contract was suspended after corruption fears caused a run on the bank, and Deloitte was criticised for failing to flag up the possible fraud.
USAID spokesman Lars Anderson said: “We don’t believe that Deloitte can be held responsible for the fraud at Kabul Bank but we do want our technical assistance to be as effective as possible.”
With DfID stumping up the cash, great emphasis will surely be placed on accountability and value for money. Undoubtedly there will be debates about strengthening local capacity via the contract; this could result in it being awarded in its entirety to an Afghan firm, or to a consortium of local firm(s) with international partners. The alternative would be engaging a firm with an existing presence in the country, with obvious contenders being PwC, KPMG and Grant Thornton.
With scant knowledge of Afghan firms’ capacity and experience, it is difficult to say whether they are up to the task of auditing a bank accused of granting off-the-record loans to shareholders and their friends, including the brother of president Hamid Karzai. Millions of pounds in aid have been suspended until donors are satisfied the banking sector has cleaned up its act, and the Kabul Bank audit promises to be interesting and emotive.
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