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09.27.09

Karzai Family Secrets

One is branded a druglord; the other a corrupt tycoon—critics say President Karzai's brothers undermine Afghanistan. Both respond exclusively for the first time.

“My friend, I am ready to take a polygraph. I am innocent. If anyone can find any money from my family hidden in any bank in the world, I am telling you that they can keep it.” Ahmed Wali Karzai, the half-brother of Afghan President Hamid Karzai, is excited, his voice rising as he talks. He is tired of six years of news reports casting him as the Afghan Pablo Escobar.

“Our character is being assassinated before the entire world,” says Mahmoud Karzai, the president’s older brother, and the subject of widespread reports questioning a purported fortune through favoritism and tainted deals. “I am sick and tired of people thinking that I have accomplished what I have only because I am the president’s brother.”

“I am the most wanted person by al Qaeda and the Taliban. That is because I have brought the tribes together. I have done so much work for the Americans, so much of it secret, it is incredible how much I have helped the Americans. And I am repaid with these press reports?”

Ahmed and Mahmoud are cited by Afghanistan watchers as serious political liabilities to the country’s fragile democracy and to Hamid Karzai’s claim that his government is making progress against the systemic corruption that is part of the nation’s DNA.

Neither has ever been charged with any crime. The duo recently came out swinging, providing The Daily Beast exclusive and feisty interviews regarding what Ahmed calls “the slanders, lies, and vicious attacks” swirling around them.

First, some background. Afghan and American officials have privately accused Ahmed, who heads the powerful provincial council in Kandahar, of being a heroin kingpin in the nation that supplies 90 percent of the world’s opium supply. They cite a few examples. In 2004, Afghan security forces stumbled on a cache of heroin hidden in tractor-trailer outside Kandahar. The local commander, Habibullah Jan, said Ahmed called him and demanded the drugs be released. Jan was ambushed and shot to death in 2007, with government officials blaming the Taliban. In 2006, a DEA informant, Hajji Aman Kheri, gave a tip about a truck near Kandahar carrying 110 pounds of pure heroin, allegedly under the watchful eye of one of Ahmed’s bodyguards. And last month, the German magazine Stern reported that British troops seized several tons of raw opium on one of Ahmed’s farms.

Tina Brown: Let’s Not Abandon Afghan WomenAhmed spent a half hour debunking the details of the various charges. Jan was a well-known political opponent of his brother, he says, and went on to become an opposition member of parliament. So why would he have told a political foe to release seized drugs? “Anyone who understands our politics would know this is impossible it would be so stupid.”

As for the 2006 heroin seizure, “I am guilty by association. Can I be responsible for everyone who used to work for me?” And as for reports that British troops seized opium on his farm, he gets agitated. “Look, my friend, what land? What happened to the opium? The driver? What happened to those people who were taking the drugs somewhere? Every major foreign intelligence and drug agency is operating in Afghanistan. If I am a drug dealer why have they not produced a shred of real evidence, not just get somebody to print false rumors?”

Evidently Hamid Karzai heard the rumors often enough that he wanted to know if they were true. In 2006, he summoned to the presidential palace both the American ambassador, Ronald Neumann, and the embassy’s CIA station chief. Also present were the British ambassador and his MI6 spymaster.

“He asked us directly if his brother was involved in the drug trade,” Neumann, recently retired, disclosed to me for the first time. “There was no evidence in a judiciary or evidentiary sense. None of what we had could take him to court and get a conviction. I told President Karzai this would need to be addressed as a political matter because of the problems it created for him.”

“Neumann called me to the American Embassy,” Ahmed confirmed to me. “He said I was a political liability to my brother and said I should go away for a while. ‘This is not a legal issue. You can be an ambassador and serve your country elsewhere.’ I was very, very unhappy.”

Ahmed and his family had fled Afghanistan in 1981 with the Soviets and mujahideen fighting. After a year stopover in Pakistan, they moved to the U.S., where he spent the next 10 years. “We opened the first Afghan eatery in Chicago, and it was one of the 10 best restaurants in the city,” he boasts. “I got two speeding tickets during 10 years in the States. I have done nothing wrong in the last 10 or 15 years.”

“Hamid Karzai asked us directly if his brother was involved in the drug trade,” says the former American ambassador to Afghanistan.

Confronted with leaving Pakistan because the drug rumors were hurting his brother, Ahmed went directly to Hamid. “He asked me if I wanted to leave. No, I told him. ‘OK, stay then.’”

What about senior U.S. officials who, off the record, say he is part of the narcotics trade? “It’s all meant to destabilize my brother. Look, the Taliban has wasted nine suicide bombers on me. Once they killed a bodyguard. If I am a drug trafficker, then I am helping the Taliban since they are making money from it. So why would they try to kill me nine times if I am helping them?”

Ahmed claims that Afghan and American intelligence pass along daily death threats against him. He travels with a 30-person entourage, mostly bodyguards. One hundred and thirty guards are at his Kandahar compound. “I am the most wanted person by al Qaeda and the Taliban. That is because I have brought the tribes together. I have done so much work for the Americans, so much of it secret, it is incredible how much I have helped the Americans. And I am repaid with these press reports?”

“Ahmed has been tried and convicted in the press,” added Mahmoud, talking to me from his Kabul home, only a couple of days before flying off to Dubai to see one of his business partners. “It is different, but just as bad for me. This is all part of a campaign to undermine my brother, the president.”

In a nation with plenty of hidden wealth, no reporting requirements for bank cash deposits or accounts, and a tax system that is mostly voluntary, it’s impossible to figure out the net worth of top Afghanis. Still, many financial experts think Mahmoud Karzai could be the country’s wealthiest person. He is sometimes derisively called the “Minister of Deals,” the person to see to do business in the post-Taliban country.

“That is a real joke,” he laughs. “I am poorer today than I was seven years ago. All my money is tied up in projects around Afghanistan. But I believe that Kabul could one day be like Hong Kong or Singapore. The investments me and my partners are making now are great, great risks, but if the country blossoms, so will our ventures. Maybe in 10 years I’ll be as wealthy as my enemies say I am now.”

There are several deals often cited when questioning the propriety of Mahmoud’s budding empire. One involves the nation’s only cement factory. The ministry of mines put up the operating rights for the plant at auction, and to the suspicion of many, ordered a last-minute provision by which any bidder had to post $25 million in cash. Mahmoud and his partners were the only bidders, and managed to show up with the $25 million in cash—obtained through the Kabul Bank, on which Mahmoud sat on the board of directors.

“We are losing $150,000 a month in that ‘great’ deal,” he said sarcastically. He provided me documents purporting to show he owns only 8 percent of the cement factory. “Hamid urged every major company in this industry to bid on that 50-year-old factory, but no one would. They were all scared away by the risks. Not only is there Taliban, but we have a 20 percent capital gains tax and a 20 percent payroll income tax. Afghanistan is not business-friendly. Fifteen hundred people would have lost their jobs if I didn’t’ step in. And they were living in filth, an absolute slum. Come and visit and I will show you how things have improved for them.”

Another deal often cited as a special favor is a major housing project in Kandahar. It’s a bold plan for a residential community named Aynomina (“a place to live”), on 10,000 acres owned by the Afghan army in the city center. Kandahar officials gave the land to Mahmoud. The government would only be paid as Karzai finished the development and sold homes. No one consulted the Army. When they learned of the giveaway in 2005, a contingent of troops seized the property by force, before the Kandahar governor ordered them to leave. At the time, Brigadier General Shahtory Habibullah, who oversaw properties for the ministry of defense, told a reporter that “The land mafia has taken my land.”

The decree that made the land available called for the Army to abandon all its posts inside of cities in exchange for property given them in rural areas. Those spots were considered a less-likely terror target than crammed urban centers.

“If I was doing this anywhere else on earth,” says Mahmoud Karzai, “I would be the hero of the world.”

“When me and my four partners came to Kandahar, there was no running water and no sewers on this land,” says Mahmoud. “People used the fields as bathrooms and when the winds came, the smell of human waste swept went over the city.” Mahmoud got a $5 million loan from the Overseas Private Investment Corp., a U.S. government agency established to help American businesses invest overseas in emerging markets. He was introduced to them by his friend, the late former congressman Jack Kemp.

“That OPIC gave me a loan also worked against me. ‘You are Karzai’s brother, that’s why you got it.’ I filled in all my applications and applied just like anyone else, you can check with them, they don’t just hand out U.S. dollars to anyone asking for it.”

In Kandahar, Mahmoud built a sprawling residential complex. Although much of the early architecture was a depressing Soviet-gulag knockoff, there is little argument that the homes, with almost a million trees planted around them, are remarkably modern for a country that often looks like a set for a medieval movie. Most of the homes were priced at $20,000 each, while some 5,000-square-foot McMansions listed for $130,000. In a country where the average per capita income is just over $800 annually, and even his brother makes only $487 a month as president, one would have expected that such homes would be white elephants.

“But we couldn’t keep up with the demand,” he says. The buyers are part of an emerging professional class, a mix of attorneys, bankers, and construction executives.

“If we had not stepped into this land,” says Mahmoud, “it would have been taken over by corrupt army commanders, the dirty mujahideen, they would have simply divided the land and sold it. Once we got it, we had to employ our own security force to keep them away.”

“If I was this anywhere else on earth, he adds, “I would be the hero of the world.”

“Afghanistan is our home now,” says Ahmed. “We are not like the shah’s family, lining our pockets with money in case we have to leave the country. I will die here first.” He hesitates for a moment. “It is my curse to be Hamid’s brother. They will never stop trying to ruin me so they can crush him.”

Does Mahmoud have anything he wants to say to the West? “Yes, tell the G-20 to stop debating about the election results (his brother’s reelection has been challenged for widespread reported ballot fraud), and send some money to Afghanistan for infrastructure improvement. They must invest in this country to make it a member of the international community. We have one foot in democracy, now we need to move the other into free-market capitalism. But we can’t without help from them.”

What would Ahmed like to say? “I beg President Obama to clear my name. Show the Afghan people that America is sincere when it says you are innocent until proven guilty. I have done so much to fight terrorism and the Taliban and now I must answer these defamations. I have lost all faith in the media.”

There is little doubt that in one of the poorest countries on the planet, the growing success and power of two Karzai brothers has fueled a popular disillusionment and anger with the central government. And Hamid Karzai’s attempts to distance himself from his brothers are increasingly unpersuasive.

“This is a major political problem,” Ambassador Neumann tells me. A problem that the Taliban will happily exploit to stir up popular dissent against the Karzai-led Kabul government.

Gerald Posner is The Daily Beast's chief investigative reporter. He's the award-winning author of 10 investigative nonfiction bestsellers, ranging from political assassinations, to Nazi war criminals, to 9/11, to terrorism. His latest book, Miami Babylon: Crime, Wealth and Power—A Dispatch from the Beach, will be published in October. He lives in Miami Beach with his wife, the author Trisha Posner.