Afghanistan Analysts Network – English

Economy, Development, Environment

The Khalid Payenda Interview (1): An insider’s view of politicking, graft and the fall of the Republic

Kate Clark Roxanna Shapour 33 min

What was it like to be a reformer at the heart of the Islamic Republic of Afghanistan? The Republic’s last finance minister, Khalid Payenda, has given AAN an insider’s perspective. It is a sobering account of the obstacles that prevented him and other reformers ending government corruption and holding wrongdoers to account. Payenda discussed with AAN’s Kate Clark and Roxanna Shapour his plans to get Afghanistan’s economic reforms on track, his efforts to tackle graft, and, ultimately, why he resigned. He provides a critical insight into the dissonance, nepotism, rampant corruption and failures of leadership that were a major cause of the collapse of the Republic – and the Taleban capturing power.

A Hawaladar counts banknotes at Sarai Shahzada exchange market in Kabul. Photo: Wakil Kohsar/AFP, 21 June 2021.

Khalid Payenda announced that he was stepping down as minister of finance after only seven months on the job in a series of tweets on 10 August 2021, in what turned out to be the dying days of the Republic. While he was criticised at the time for abandoning the government at such a critical time, he told AAN he had no idea that the government was about to fall.

Payenda had first worked at the Ministry of Finance in 2010 after spending the previous seven years at the Ministry of Rural Rehabilitation and Development and the World Bank in Kabul, and gaining a Masters from the University of Illinois Urbana-Champaign in the United States. Payenda spearheaded an ambitious portfolio of economic reforms and anti-corruption initiatives at the Ministry of Finance. [1]For an analysis of the 2018 budget reforms that he led on, how ambitious and hopeful they were, and what opposition they ran into, see AAN reporting here and here). Payenda contributed to AAN’s reporting on the Afghan economy, writing two reports in 2016 and 2017, (see here and here), on government revenues. In his interview for AAN, he explains why, in 2018, by which time he was a deputy minister, he resigned from government; it was an election year and he feared the ministry would be asked to make ‘compromises’ that he could not stomach. He also explains why he decided to accept an offer to come back as minister of finance in January 2021.

Payenda was not the only dedicated, brave, thoughtful individual trying to steer the Afghan government into being effective, efficient and accountable, but as minister of finance his insider’s view of politicking at the most senior level is significant. The experiences of reformers like him are a cornerstone in any effort to understand what went wrong with the Republic. His account is important not just for his compatriots but also Afghanistan’s international donors, who spent so much money helping to build and support a state which ultimately collapsed in a matter of weeks. Also, as the Taleban form a new administration, revive state institutions, create new ones, and face an economy now in free fall (see AAN’s recent report), there may also be lessons for Afghanistan’s newest leaders.

This is part one of Khalid Payenda’s extensive interview with AAN. Part two will be published in the coming days. [2]AAN interviewed Payenda on 19 August 2021 and 21 September 2021 on Zoom. Over the course of five weeks, follow up questions and clarifications were asked by email and WhatsApp. The published … Continue reading

AAN

Could you start by giving us the background to your return to Afghanistan and the Ministry of Finance?

Khalid Payenda

I’ll go back a little further to when the president’s friend [Mohammad Humayon Qayoumi] [3]In their 2005 paper, Conrad Schetter and Bernd Kuzmits refer to a group of men who emigrated to the US after finishing their studies at the American University of Beirut (AUB). According to the … Continue reading) was appointed minister of finance in 2018. I left my job as deputy minister a few months later, after concluding that I could not work with him. He was not listening to anyone. He had grand ideas, like bringing Oracle [a computer software programme] to the ministry. He lived in a different bubble and wasn’t interested in the job. I think he was travelling 260 days in a calendar year. [4]See Tolo News reporting here and here. The Ministry of Finance requires a lot of hands-on attention and knowing the president, I thought he wouldn’t listen, so, I made a graceful exit. Also, it was going to be an election year, the Ministry of Finance would have had to make some ‘compromises’ and I did not want to be part of it.

I was settling into a good family life here [in the US]. In November 2020, I went back at the president’s request, with [the economist] Andrew [Laing], to do an assessment. I think this was when the president wanted me to come back. I say I think because I’d been there for two days when my parents got sick with Covid and I was in hospital with them for another 13 days. We worked the rest of the month and then I left. I thought it was over and I was relieved that he did not ask me to come back. But then, a couple of months later, he contacted me. This time it was [National Security Advisor Hamdullah] Mohib who asked me to come back. He said the Ministry of Finance needs good deputies. I told him that a deputy minister could not fix the mess that had been created. There was silence for a couple of weeks and then, he called back and said [Head of the Administrative Office of the president, Fazel] Fazly would be in touch and asked me to please accept [the position]. When the text message finally came from Mohib, without even looking at it, I told my wife, this is the offer for the minister of finance: Should I accept it or do you want me to delete this message and block the number? She reluctantly said yes. I took the job with three hours’ notice, not because I wanted it, but because I wanted to help. The advice I got from friends, including the previous Minister of Finance Eklil Hakimi, not then but earlier, was not to accept the job as it would come at the risk of my reputation.

I also had a Skype call with the president, he told me that this was a call from the heart. So I responded from the heart, I took the job and went to serve [Afghanistan] at a critical time.

When I arrived, it was chaos at the finance ministry, internally as an institution and with the parliament concerning the [2021] budget. Many key positions were vacant. There were many vacancies at key positions. It took a couple of months to put the right people in place. I had a list of demands for the president, which I had not wanted to put [forward] before going; I thought it would be rude. But he pre-empted me with literally every single one. He told me: You will have complete authority; I want a professional finance ministry and not a political one. So it was a very good start. It enabled me to bring a lot of people back to the Ministry of Finance. it was a tough environment because of security reasons, the customs [reforms] and corruption [which] always increases when you have instability and insecurity.

Also, MPs felt the president had insulted them [because] he said they don’t have any authority to change the budget and repairing that [relationship] meant a lot of bridge-building. Afterwards, I focused on customs. The more I dived in, the more it became a quagmire and I was drowning in it. Over a six to seven-month period, I had a completely different understanding of the ugliness and the underbelly of the political dealings that I had not been exposed to when I was the deputy minister of finance. It was extremely disappointing because the corruption level was mind-boggling; almost everyone was corrupt, absolutely. Even in the last few days when we were fighting for the survival of the state, a few people saw an opportunity to make money, especially in the security sector.

That’s how it started, with a few reforms. The people close to the president probably did not like it. There was a misinformation campaign to damage my reputation in the last few days and [I knew] that I would be scapegoated.

A week before I left [the ministry and Kabul], I came here [the US] for Eid to bring my family back and I heard my father crying on the phone to my wife. I’ve never seen my father cry except when my mom passed away last year. He was saying that he thinks the only reason he survived Covid and my mom didn’t, was because God wanted him to go through the torture of worrying for my security, day in and day out. He was telling my wife: If he’s decided to come back, give him his papers –  meaning divorce him, I took those risks; I took the risk of upsetting my wife and my dad.

But my first day back [in Afghanistan after Eid], we had a cabinet meeting and it was [broadcast] live. The president talked about what an eftezah [debacle] the budget is and everyone thought I was the issue. Actually, I had told him that the budget was disastrous – this was our analysis. He talked about the last seven [annual budgets] and it wasn’t good, bashing me on live TV. [5]See then president Ashraf Ghani addressing the first televised cabinet meeting on 1 August 2021 here. Then it got worse. In the last few days, he was not in the right frame of mind; frankly, it worried me. I was worried about my personal security. The more defeats he had on the military front, the deeper he dug at the Ministry of Finance and interfered in my job. I think being the minister of finance was his comfort zone. He never grew into being a president.

So that’s why I left — this is my side of the story. I honestly did not have any foresight into the tragic collapse that would happen a week later. Unfortunately, people see me as the first to abandon the Republic, which is not the true story. The true story is that I left because of president Ghani and his cronies.

AAN

Could you tell us about the state of the Ministry of Finance when you first arrived back in Kabul in December 2019?

Khalid Payenda

There was a lot of intervention [from the Palace] and the AoP [the Administrative Office of the President – its bland-sounding name belies the immense ‘gate-keeper’ power of its director, a cabinet-level post] had de facto taken over the ministry as they had issues with my predecessor. A lot of good people had left. [6]See William Byrd’s “Dismembering Afghanistan’s Ministry of Finance,” United States Institute of Peace (USIP) here. Many key positions were vacant – deputy ministers, DGs [director general] – and there was a lot of chaos. There was pressure from the president, but no support and no leadership to shield them [the staff] from political interference and give them a conducive environment to work. So the immediate issues were building the morale of the remaining people and filling key positions because otherwise, it was not going to be possible [to carry on].

I saw it as a precondition for the ministry to restore its position. First, I had to bring back good people. In the first two weeks, I think I hired a chief of staff, deputy minister for policy, DGs for fiscal policy, aid management and a few other key positions, but these were the key ones I appointed in the first week. Next came the second batch, starting with the spokesperson. We did not have a spokesperson at that critical time. I did not want [anyone from the] AoP to come [to the ministry] and do the traditional introduction [for me to the staff]; I forbad it. I did not want to be associated with anybody [from the AoP]. I told them I knew my own people. I met the staff immediately, starting with a 9 am all-staff meeting. I gave them confidence. I told them I’m back and I’m here to help you. You’re some of Afghanistan’s finest and it’s my honour to be back and work with you and provide you the environment to do your jobs. I said I don’t have any favourites and I’m not bringing people to replace any of you. I could see that they’d gone through a lot in the eight to nine months [Hadi] Arghandiwal was there. He had hired 1,300 people, many associated with Hezb-e Islami and [others] to appease the parliamentarians.

The [2021] budget was already rejected twice, so I did not have to go immediately to parliament in the first week. In the second week, I had a lot of consultations on the budget with parliamentarians to understand [what had happened], but also to understand the technicalities.

It was a horrible budget and it remained so until the mid-year review. I told the president as well [that it was] completely unrealistic. Most of the reforms we started in 2018 had been undone. [7]See AAN’s reporting of the reforms introduced by the Ministry of Finance in 2018 here and here. I remember one of the first few messages I got after accepting the job was from a guy introducing himself as Chief of Mission for Afghanistan for IMF [International Monetary Fund]. He said we need to talk and that he’s concerned about the unrealism in the budget.

It was too difficult and too late to change [the budget] to bring down the revenue targets and cut expenditures. It had been rejected by the parliament two times. I told the president as well that it was a really bad budget. So, in the first week, I focused on mostly internal things, and then had discussions with the parliament in the second week. Their main points were: We’re glad you’re back and we’re glad we can have technical discussions with the Ministry of Finance. Because the NDS [National Directorate of Security], National Security Council [NSC], and the AoP were assigned [by the president] to negotiate the budget with parliament and they had done a disastrous job because they did not understand budgeting and finance.

Even when we got the budget approved, it was the worst deal for the government. We literally lost everything against the parliament – we [had to give in] on every single point. But getting it out of the way was important. Most parliamentarians saw this as a status issue. The president in a Nangrahar rally had bashed parliamentarians and said they don’t have any authority on the budget. And they wanted to show the president that the budget cannot pass without them having a say in it. That was the first two weeks. It required a lot of work, a lot of teamwork. A lot of steep learning or re-learning, for me and my team. The people who worked [with me] and already knew me were relieved. Because they’d had a warlord as the minister of finance for almost a year and they had had enough. There’d been no discussion, no guidance from the leadership. I was told they would have two to three-hour meetings and then the minister would get up and say: OK, thank you and everybody would go off and scratch their heads – what happened? What did we decide?

From a ministry of finance that was, despite its shortcomings, still the best institution in the country, it had gone down a lot in capacity, calibre and prestige. A lot of things had been taken over by the Palace. [There was] a lot of interference. I stopped some of it, but some remained until the collapse, unfortunately. But I wanted to focus on the Ministry of Finance’s tasks and not get carried away by other stuff. I was choosing [my] battles. I could not fight everybody at the same time.

AAN

You touched on how so much of the Ministry of Finance’s portfolio had been taken over by the Palace. From the outside, it looked like there was a plan to, more or less, gut the Ministry of Finance and shift all its functions to the Palace. What did you find? How did you stop it? Or did you?

Khalid Payenda

Yes, I stopped some of the key ones – much of the interference in the core functions – the budgeting, treasury management, [economic] policy to a very good extent, and revenue and customs – I stopped. I was not going to let anyone interfere. In the meetings on the budget, with Mohib, Fazly and others, my point was: I’m here. You don’t need to Intervene anymore. Thank you very much for all the help, leave us and let us do our work. They sort of listened. But then, I heard there was a lot of interference from the AoP on customs appointments. This was one of the previous minister’s issues; the deputy minister for customs and revenue was reporting to the AoP. [The deputy minister] was not listening to him [the minister]. He was giving lists of people to be fired and to be put on the no-fly list. [8]On 12 June 2020, in what was termed an “unprecedented move” by the Afghan media, Ghani banned 68 employees of the Ministry of Finance from leaving the country without prior permission from the … Continue reading I stopped that. I did not allow anybody from the AoP to interfere. But I also stopped my staff; I told them to focus on their technical work and leave the politics and the Palace to me. With some people, I was very frank. Some key people did report to the president and AoP. I heard that they had their own people appointed as customs directors and were getting monthly shares. I told them what I had heard and said if they continued, I’d tell the president. I told the president that I was looking into this and he was very clear and said: If anybody from my office interferes, let me know.

I also had a deal with the president that I would take my pishnehads [proposed appointments] directly to him and not process them through the AoP. So I wasn’t subject to the same meddling as other ministers. I would take it to him and he would sign it and sent it to the AoP and say: Process this decree.

But in other areas, like the PPP [public private partnerships] projects, something that was a sticking point for the World Bank and the IMF, [that] wasn’t completely resolved until I left. The IFU [Investment Facilitation Unit] [9]The Investment Facilitation Unit was established in December 2019 by presidential decree to identify and facilitate investment in Afghanistan (see the IFU website here). used to be a directorate general at the Ministry of Finance, but they took it to the Palace. They amended the law by presidential decree. The IMF and World Bank made the point that PPPs have a lot of fiscal risks: What if a project goes wrong? The Ministry of Finance should have the final say on which projects go ahead and which don’t. This was all taken out from the Ministry of Finance and it was a mess. It was a benchmark for the IMF and the ARTF IP [Afghanistan Reconstruction Trust Fund Incentive Programme]: they wanted the law reversed and the fiscal risk portions brought back to the Ministry of Finance.

There was interference from one of the president’s advisers, [who was] later [appointed] the director for policy and state-owned enterprises. He would directly intervene in these state-owned enterprises and hire people. Then I heard a lot of issues about corruption with his office. But then, I said: We’ll leave some fights for later; if SOEs [State-Owned Enterprises] have been mismanaged for fifty to sixty years, they can wait one more year. That was my plan for next year. It did not materialise.

AAN

What were the main obstacles and who interfered?

Khalid Payenda

The best advice I got on this was one sentence from the second VP [Sarwar Danish]. We were going to get political consensus on corruption and launch this accountability and transparency initiative. He said political consensus is impossible in this country. It all depends on your relationship with the president. As long as you have good relations with him, it’s going to work. Don’t worry about other people. I’m saying this because there was active resistance. They feared me because they saw I was close to the president. I was meeting [him] twice a week. I didn’t have anything to hide and I was blunt. But there were a lot of memos sent to the president [accusing] the Ministry of Finance – all lies. Unfortunately, with the president, [it was all about] whoever got to him first. He would write orders, asking why did this happen and order things to be investigated. He wouldn’t ask the other party what their side of the story was.

When I left for Eid, my first break in six months, to bring my family back [from Afghanistan] to the US, the rumours that I was not coming back started immediately. Actually, a week before, rumours started from the National Security Council, I don’t know who exactly, that he is being replaced, he is being sent as an ambassador to the UK and somebody else will come [as minister]. One of my advisors said that on the same evening my flight took off to Dubai, he got calls from his friends in the Presidential Palace telling him: Your minister is not coming back.

I saw the extent of the problem when I fired [one of] my deputy minister [name redacted]. [10]Payenda did name several individuals who were implicated in corruption. However, where no second sources were available the AAN editorial team has redacted the names. I fired him because the president asked me to check [into reports] that he’d demanded bribes from a prominent businessman. I talked to the businessman. It was funny he said I cannot talk in your office because everything is bugged there. We met at a place he chose. Even then, he said: Can we put your mobile there, even your Apple Watch. I asked him to cooperate. I said I’d talk with the Major Crimes Task Force: Let’s go catch this guy red-handed. He was reluctant. He said it was not good for his reputation. First, he said: I cannot do it in my house, then he reluctantly said: I’ll go to Dubai for Eid and I’ll send one of my guys over with the money. Then later, he called back and said: Never mind, I tried this before with the Attorney General’s chief of staff [on another case]. The moment we made the plan, [the person who was asking for a bribe] knew and was already in the US. He said: There is a corruption network and no matter who you tell and trust, they’re all linked. He told me: Just fire him or demand his resignation. That’s what I told the president and he said: Yes, fine, let’s do that.

I demanded his resignation. He started resisting and there was a lot of push back from the AoP. I’m not sure what they were telling the president. He had links at the first VP’s office and, according to him, he had talked repeatedly to the first VP [Amrullah Saleh] who had told him he could stay [on the job]. It dragged on for a month or so and, by the end of it, I knew the networks at the AoP. Eventually, I removed him and when I did, a lot of people came forward, some of them in my Thursday meetings with people who had complaints. They told me he had demanded millions of dollars. He had asked this prominent businessman for one million [dollars] to clear his previous invoices for payment.

Some payments for work [already] done for the defence and interior ministries in the past few years were vetted by the first VP’s office and then the invoices would be sent to the Ministry of Finance for payment. So there was a network in the first VP’s office and his office was involved. It’s difficult to see how he did not know what was happening in his own office. One guy who said the government owed him 24 million dollars [told me] that [name redacted] had asked for 20 per cent of it. He said: I agreed. I was going to pay. But then there was a demand for an additional 10 percent from the first VP’s office and when I calculated all of it, I owed people more money than I was going to get paid. To pay my subcontractors, I [would have had to] add more money from my pocket. That’s why I did not pay [the bribe]. Five different people, reputable people, came [forward].

A week after I fired [name redacted], my chief of staff got a call from the president’s office asking him to hire this guy as the CEO of Ariana. I wanted to double-check with the president. I said: This is the guy we fired for corruption. He said: Can you please do it? There’s a lot of pressure on me. I said, OK. I came back and forgot about it for a day, then follow up calls started from the AoP about the president’s order. I sent another note to the president and said: This guy is corrupt. You told me he’s corrupt and I investigated. He’s corrupt. Why would we put him in Ariana? But he said: Send us this pishnehads [ie make the appointment] now. I didn’t do it; I asked a deputy minister to do it. It was my biggest disappointment.

I don’t know; honestly, maybe I’m a bit angry now and cannot analyse things unbiasedly. I don’t know whether it was the president’s ethnic bias, or whether he was really under pressure, or whether it was his cronies who had a lot of secrets with [name redacted] and they had to save him to save themselves. But if we could not remove one corrupt person, this whole thing about corruption was just a show. I lost belief in the president.

There was a lot of noise in the parliament, [they were] asking why I [removed him]. Actually, I didn’t just remove him, I abolished the DM [deputy minister] finance position. [11]See this Etilaatroz report. Because with having to sign on allotments and also on payments, this was an incredibly powerful position if somebody wanted to misuse it. To ring-fence budget management from the treasury, they should not have been reporting to the same person.

This was part of my learning who around the president [was corrupt]. Some of them were very passive. But I still don’t know whether Dr Fazly was truly a good guy. My interactions with him were extremely supportive and I found him very genuine. He did not interfere in anything. But was he doing his business through his cronies, his deputies and others? Was he involved [in corruption]? I still don’t know that, honestly. But there was a lot of it and if he wasn’t aware, it was sheer incompetence. [12]There have been persistent rumours of corruption levelled against Ghani’s top aid Fazel Mahmoud Fazly. For example, in a May 2019 interview with Khorsid TV, former presidential advisor General … Continue reading

AAN

You have spoken about corruption and your plans to fight it, particularly with customs and revenues. You were pretty active in reporting on what you were doing on social media. You talked extensively about your plans and what you had already found. I specifically remember you saying that you had no idea how deep the corruption ran. What did you find, what did you try to do and in the end, why did it fail?

Khalid Payenda

Actually, it did not fail. I’ll tell you why, if you look at the revenues we gathered before customs fell to the Taleban, there were gradual improvements, month on month, in revenue collections. Despite all the challenges, despite Covid, despite extreme poverty, despite the reduced donor grants. At first, I did not know much about customs. I spent ten years at the Ministry of Finance, first as an advisor, then DG and DM. I did not get into customs because of the stigma attached to it. But this time, as a minister, I could not avoid it. I was the minister for customs as well. I took a week to deep dive into understanding the technicalities. By the end of the week, my team and I prepared a 15-point plan on customs reforms. A very, what we call a watani [indigenous] plan. [There were] already strategies by ASI [Adam Smith International], Chemonics and others, but [the one we developed] came from our understanding and experience of the people who worked in customs. Creating political consensus was the first point, also improving tariffs and valuations and many other things. By the time it all fell apart, I think we had implemented most of it. I went on field visits [with my customs team], during these visits, we addressed institutional issues. First of all, customs, with its magnitude and with 2,000 people [staff], was just a directorate within a DG [directorate general]. MFPD [Macro-Fiscal Policy Department] with 26 people was [a DG] too. It [customs] needed to be expanded.

Some areas were kept intentionally weak, for example, the two backbones of customs – tariff rates and valuation. How much, for example, is this glass valued, and how would you calculate the tax [tariff]? They were sub-directorates, ameriyats, not even a riasat [directorate]. I made them into riasats. I brought technical people, good economists from other areas, to lead them. Then [there were] these institutional issues that needed restructuring. Some areas were overexpanded. Some areas needed a lot more people. For example, in Hairatan with, I think five ports, we had only six or seven people who would look at items, descriptions and declarations of value. I did a lot of work on that, but then I also needed to fire people.

The biggest issue with customs was that every customs house and every director had their own rates. They did not care about the official rates. They would lobby the traders. If you were importing, for example, from Pakistan and I were Nangrahar’s custom director, I would say: Don’t go through Kandahar, come to us. If he’s charging you 250,000 afghanis, I’ll charge you 210,000, then Kandahar would say: No, don’t go to them, I’ll charge you 200,000. This meant they still made their money, but the treasury was losing. My point to all customs directors was that I want 100 per cent implementation of the tariffs, whatever is on the books, whether it’s good or not, we’ll take care of it later. We will adjust them [the rates], but you have to implement this. I said: I’ll do raids and if I see that there are misdeclarations, I’ll fire people immediately.

I started with Nangrahar. I sent an advance team that arrived around 10 or 11 am, just about when the vehicles that were declared were coming out of the customs. They locked them in and stopped everything. I drove from Kabul to Nangrahar [to join the raid]. For example, almonds that should have been declared at 1.2 million Afs were declared at 120,000 [Afs], one-tenth [of their value]. I fired the two deputies. I demanded the director’s [Hashmatullah Alizai] resignation. [13]Alizai’s dismissal was reported by Pajhwok news on 5 April 2021 (see here, see also Reporterly here). He is [Brigadier General Haibatullah] Alizai’s brother, the commander who was appointed Army Chief of Staff in the last few days of the Republic.

Khalid Payenda at the Torkham customs office in Nangrahar province.
Photo: Ministry of Finance website, 5 April 2021.

Unfortunately, with our legal system, when you try to fire somebody, they will go to court and you cannot fire them. They are still innocent until proven guilty. They pay [people] off and come back with a stamp from the court that says you cannot remove this guy. Then you’re stuck with them forever. Actually, the minister could not hire or fire a director, only the president [could]. But I told him: You’re fired right now, nobody in this country has the authority to overrule it, don’t even try it. This is a good graceful exit. He went into his room. He was there for half an hour. I sent my chief of staff and he brought me his resignation. Then he came out and wanted to talk. He said: I’m not a bad person, but this environment is bad. He said: I have to pay the governor of Nangrahar, [name redacted] 40,000 dollars a month. [14]In June 2014, Amarkhel resigned from his position as the head of Afghanistan’s Independent Elections Commission (IEC) amidst allegations of election fraud in the controversial 2014 presidential … Continue reading I have to pay reporters from major Afghan news outlets, because they come and they have footage, they say: Give us money or we’ll report this. I have to pay the Major Crimes Task Force. And he was right.

I confronted the governor. I didn’t do it that day because I was staying in his guesthouse overnight. I did it at breakfast the next morning. I said: My director told me he paid you 40,000 dollars a month. The guy lost it. He was shattered. He forgot to eat and lost his train of thought. He had a trip to a district and I went back to Kabul. He was constantly calling me, asking me not to tell the president. He said it was a lie and shakhsiyat koshi [character assassination]. This was a part of my strategy and I did it until a few days before Herat fell. There were a lot of powerful people in Herat [customs]. The moment I removed them, the pressure would start, mostly from parliament. The deputy customs director for Nimruz was the nephew of a prominent member of the Mishrano Jirga [named redacted]. I fired him and his uncle was furious. I did not answer his calls, did not receive his chief of staff and when the midyear budget was sent [to parliament], he tried to create problems.

Almost all governors, actually all of them, I did not know of a clean governor, every custom director would tell me after I made these raids. I would say: Come clean now. When you’re caught red-handed, it’s no use telling me that this guy is getting this much money and that guy is getting that much money. Almost all of them are corrupt. They [the customs directors] had to pay the police, they had to pay the provincial councils and they had to pay the MPs. And then, they had to pay the Taleban as well, for protection. It was hopeless.

Then a few appointments made it worse. There is a state-owned company that provides protection, APPF [Afghan Public Protection Force]. They had a new chief [name redacted]. They also give security to customs. In his first week on the job, [the new chief/General Wali] removed the [overall] customs protection commander without consulting me. He also removed the commander in Islam Qala. He appointed two people, one from the Arg [Presidential Palace], [name redacted], who used to be in customs and everybody told me was extremely corrupt. He also brought an MP’s nephew as a commander for Herat – Islam Qala – the most lucrative one. I protested and I said it was not acceptable. The guy’s uncle [name redacted] came to see me. I told him: You know my policy – nobody from MPs’ families can work in customs. I’m sorry, this is a red line. I warned the National Security Council that I was not going to allow it. I said I would go to the president. Mohib assured me that he would take care of it and he did. He told the president and the president fired him [Ahmadzai]. He was fired from the protection force but was made the chief of army, until he was fired from that job too, a few days after I left. [15]See here and here.

[Name redacted] who used to be a DG at the Ministry of Finance a few years ago, replaced him at APPF. He was educated in Russia and at the time [he was that the finance ministry], people would say that he had 34 million dollars invested in Russia. Then he went to Logistics at the Ministry of Defence and other lucrative positions, and then the finance director for the Independent Election Commission. He one of those who were charged and later acquitted. [16]The abuse of power charges related to when Zamanzai was the head of the Independent Electoral commission’s (IEC) secretariat. He was found innocent of all charges on 3 September 2019 (see here and … Continue reading Then he came back and was hired at APPF.

The sort of corruption at this high level, or even if not corruption, just negligence in doing proper background checks was, at this critical moment for the Republic, just tragic, to say the least.

AAN

I’m always amazed at these people that they didn’t see the danger to themselves. They didn’t see that the wolf was at the door, there was an existential threat to the Republic and they were weakening it from inside. Had they known there was no sense of urgency that the Americans were leaving and the Republic had to do better to withstand the Taleban? It seems like a disconnect to me.

Khalid Payenda

An absolute disconnect. I sat on these security council meetings these last few days, I urged them. I had better intel than many of them. I said in Shirkhan Bandar [the port on the Tajik border in Kunduz province], there are literally only five Talebs. They are afraid. They don’t go into the premises, they hide under the trees because [they] fear air raids. There are 12 [Talebs] in Farah. Why are you not moving? Nothing happened. It was like business as usual. I don’t know why they did not get it.

For some of them, it was like a feast. When there were emergencies, the rules would be relaxed and we would give them black ops money. The [people in] the provinces – the governors and these commanders, the ministers –  they loved it. Most of the money did not actually go to the people involved in the uprising [forces]. In the last week, I remember they gave just 6,000,000 Afs, around 100,000 USD, to Ismail Khan, who was fighting in Herat. I was amazed. Where did the rest of the money go?

They did not have an understanding of their inventory. An MP told me: I know a guy who works at Herat airport. He’s the inventory guy for the ammunition. He gave a huge list and said we have tons of ammunition here. The Taleban have intel and they have attacked the airport to get the ammunition. We have an uprising [force] of thousands of people. They don’t have ammunition. So why aren’t we giving it to them?

Many of us found out that we never had 120,000 soldiers. We did not have police and army that amounted to over 300,000. That was all a lie; we never reached those levels. My conclusion right now, [is that] at best, [there were] maybe 40 to 50 thousand. The rest were all ghosts. The commanders had a list of names, maybe some of them left, deserted or were killed, but he would get paid the money for all their salaries and meals. The budgeting at the ministries of defence and interior was done bottom-up. The commanders would say how many people they had [under their command]. In places where there should have been 1,000 [soldiers], there were 35. They colluded with the contractors on the payments for food and other stuff and divided the extra money [among themselves]. It ran all the way to the top. Unfortunately, they did not see the urgency.

I’ve been on a couple of provincial trips [with the president] to military bases. I’ll tell you now; they did not see the provinces or meet the people. The people they saw were vetted, so obviously, you had a selected audience. I went to Kandahar with the president. I stayed with him on this compound when he was engaging with people until lunch. After lunch, he went to the military compound and I drove with my deputy minister for customs to the outskirts of Kandahar where Tadin Khan [Kandahar’s former police chief, the less famous brother of the late General Abdul Razeq and a member of the High Council for National Reconciliation (HCNR)] had his ‘informal’ customs office.

There was this huge parking lot with literally hundreds of vehicles, maybe 1,000 or more that day. I asked these people: Why are you stopping here? They told me: It’s the customs. What customs, I asked. The Ministry of Finance’s customs, they said. We are not allowed to go to the city and at night, the customs people come here. They pointed to the office on the roadside. They give us these stickers and we pay from 3,000 to 60 or 70 thousand [afghanis] for fuel tankers. It all went into private pockets. I dragged these guys out and this police guy flatly refused, then his commander came; they almost opened fire. We had to run away.

He [the president] did not see the real issues. They did not, I don’t think, meet the people. They were in a bubble and they kept the president in a bubble. The president’s issue was his attitude; he humiliated people. All the good people left and those who were corrupt and those who flattered him stayed around and controlled everything.

As I said earlier, his version of Afghanistan was based on the briefs he got, most of them fabricated. The savvy ones knew how to play the president. They would literally do nothing and focus almost all their efforts on reporting to the president and formatting documents. The president was a John Hopkins professor; unfortunately, he would ‘grade papers’. People like me tried to do the work without reporting minor progress to the president. Now that I look back, maybe it wasn’t the right strategy. It was more important to portray a picture that did not exist than actually doing the job.

The corruption in the security sector was [another] tragedy. Poor soldiers from Nangrahar or Badakhshan or other deprived places would fight literally for two or two and half years on the frontline in Helmand with no change [rotation], and other people who had connections would be stationed in Kabul. [The poor soldiers] did not get paid; their salary went somewhere else. They were killed and their families did not get anything. There was a big mismatch between what was happening in the centre and the provinces. A major in our army, and even people with lower ranks, would have six or seven people looking after him, including an army vehicle and a driver. How would you expect them to fight? They had luxury lives financed by CSTC-A [Combined Security Transition Command – Afghanistan], without accountability.

The people in leadership positions were in a different mood. A one-time army chief [name redacted], was seen more in Dubai hookah bars than in Kabul or the provinces. They were completely detached. I heard that on [name redacted] last day [as minister], he asked his finance guy about his portion of the black ops money –  operatifida, operative money – which according to his calculations was 900 million Afs. They did not see it as money to fight. They saw it as their portions. The president’s leadership [was a problem] – how he would lose his temper and humiliate people and how he would make up his mind before people entered the meetings. Even if he was right, humiliating people in meetings meant that no one spoke.

Cabinet meetings were extremely silent. Only a couple of people spoke. First, Amrullah Saleh would speak, fanning the president’s ego and flattering him. Then, the president would give a 90-minute lecture. There were no Q&As, no discussions on the agenda and then [the meeting] closed. The only time I saw [any] discussions] was in the last week on a WhatsApp cabinet group I’m still part of. Once the president fled, there was discussion, open discussion, with people showing their frustration. It was ironic and tragic, but that was the only time I saw the cabinet speaking out without fear of getting somebody angry.

AAN

You’ve painted a picture of the president as someone who was out of touch with the realities on the ground. You said that his knowledge about what was going on was limited to the reports and briefings he received. I wonder if you could speak to this idea that he had no realistic picture of what was happening.

Khalid Payenda

It’s how he got the briefings. First of all, nobody wanted to anger him, even if it was with the truth, nobody. In his last days, he was very much aware of this. He was even sort of paranoid. He doubted everything he received, but unfortunately, it was too late. So first of all, people wouldn’t report problems to him. They hoped to fix things before they were reported to him.

The second [issue was] how the reporting was channelled [to the president]. Most people had to send [their reports] to the [Administrative] Office of the President. The reports would not be taken to the president [directly]. They [the AoP] would put them in their own format, omit some things and add other things. If you wanted to destroy a minister, it was very easy. You would add something or send someone to do a bogus investigation to show that this minister had done something [wrong] or mention it to the president when you briefed him. Most ministers did not have a direct line [of communication] to the president. So the way he got the reports was part of the problem, and [it was] how he was controlled. [17]The influence exerted by Ghani’s inner circle, particularly the national security advisor Hamdullah Mohib and AoP director Fazel Mahmood Fazly was the subject of much consternation and ridicule. … Continue reading

My DG for administration had worked in the media [department of] the Arg, and he told me that the president had asked for a daily media monitoring brief. For a few days, they sent a morning media brief and he would read and comment on them. But then they were told by the national security council to stop upsetting the president with the briefings. So it stopped. [After that] they [the NSC] would prepare them and send him selective feedback – out of thousands of comments, they would [choose] a comment [that was favourable to] the president and say this is what the public thinks. Unfortunately, most were [taken] from Facebook [and did not show] the realities on the ground. Facebook was the Kabul bubble. That’s how he was played. [18]An 18 August 2021 op-ed piece published by Etilaatroz mentioned a “triangle of illusions in the Palace,” and said: These days in Afghanistan, there is talk of a “three-person … Continue reading

He read most of his briefings in the morning before work. He would read [them] and get frustrated. He would write harsh comments without asking [any questions]. Some people misused it to say something [bad about a] minister – all lies. You could send [the report] and [the next thing] you would have a decree by the president, [ordering] the Attorney General to investigate, or firing the person [mentioned in the report]. Even if he did get the right information, it was also important for him to know what information he should deal with and what he should ignore.

His tendency to get involved in the weeds and micromanage also meant that many people did not do their job. Issues that should have been solved at the director-general level would be escalated to the president. It was easy for people not to take responsibility and shoot everything upward. For people like me who wanted to do things without interference and who just wanted to report results to the president, I assume he thought that not a lot was happening at the Ministry of Finance, [he thought:] That’s why I’m not getting reports. I never reported on my Thursday meetings with the public or the live sessions on Facebook, which the people really appreciated, to the president. I saw it as doing my job.

AAN

Could you give us a bit more detail about what you saw in terms of money going out? You talked about black ops money and funds for the uprising forces that you didn’t see actually going to them. Do you have any more detail on that?

Khalid Payenda

In the last few weeks, the discussion was that the army needs six months to recuperate and re-establish itself, so it cannot fight [now]. This actually meant that they found out there were no soldiers. There were no new recruits, and casualties – including those killed or seriously injured – were around 350 people a day – that’s 10,000 soldiers a month. So, there was no army. The police were taken out of this fight as they were focused on law enforcement. There was also a lot of interference from the National Security Council. The [defence] minister and the army [leadership] did not have the authority to hire or fire anyone. They would send everything to the NSA [national security advisor] and [he] would do it.

This deterioration of [state] institutions meant that they could not fight. The solution was to ask local militias or uprising [forces] to rise against the Taleban and fight. Obviously, they needed to be paid, and they needed ammunition. There were decrees by the president to give them almost 12 billion Afs, 150 million dollars, mostly for salaries and ammunition. And who was going to do this? It was the governors who would mobilise people, and the NDS would manage security.

This was all weird and convoluted. The governors did not have anything to do with the NDS. They reported to IDLG [Independent Directorate of Local Governance], which is a civilian [entity]. This money was mostly misused, from what I heard from a senior NDS official [name redacted], who was very concerned. He told me: This is not my job. Our job is intelligence. They’re asking us to fight. This money is channelled through us to the governors, but we don’t have oversight [authority], and we see a lot of misuse.

It was very easy, with no documentation [required]. You’d gather a few of your men, or thugs, with Kalashnikovs and send a photo to the governor and say: We are the resistance against Taleban in this area, we have 300 people and we need money. The governor would give you money, or he would divide the money – 100 million goes to you, but I’ll keep 50 [million].

I heard that the Taleban were spending a lot of money, maybe you have as well, through your reporting. They did not get everything militarily. They made deals with commanders. I heard of commanders [who were] offered evacuations to Islamabad for their families. They were told: This is the key to your new house in Islamabad. You just have to surrender. Once we re-capture [Afghanistan], we assure you that you will retain your job. So, these people would double dip, with the photos to get money from the government, and the Taleban. The deputy NSC told me that we re-captured a few districts, but he said: Nothing was done militarily. We just paid off the Taleban and others. [He said] it was going to be very dangerous – and costly if it had lasted a few more months or a year because it was not sustainable and meant that you needed to have more security issues to justify these payments. In some places that I mentioned earlier, like in Ismail Khan’s case, I heard that he was willing to fight, but he was only given 6 million Afs for all his people. For a key place like Herat, that was not the right thing [to do]. So, unfortunately, there was no accountability and there was misuse.

AAN

The big players, the bigger people than the governors, like Ismail Khan, Dostum, Atta, felt that they hadn’t got funding from the Palace. They blamed the Palace. But do you think there’s something else going on?

Khalid Payenda

They did not get the funding but they also exaggerated their influence and forces in their regions. They [the Palace] were also wary of involving them too much. They did not want these big players to be involved, maybe for good reasons, or maybe they did not want to share power. The president was appealing for national unity and [for] all these jihadis [to join the uprising], but in reality, I think first of all it was a bit too late. Second, his history with how he treated, for example Dostum and others, [meant] it was never going to be an easy make up. I know that they did not get the support on time. But they also exaggerated their forces and how much influence they had on these people to fight. Nobody fought and the promises that were made by the MPs, and others, did not materialise.

Part 2 of this interview will be published in the coming days.

References

References
1 For an analysis of the 2018 budget reforms that he led on, how ambitious and hopeful they were, and what opposition they ran into, see AAN reporting here and here).
2 AAN interviewed Payenda on 19 August 2021 and 21 September 2021 on Zoom. Over the course of five weeks, follow up questions and clarifications were asked by email and WhatsApp. The published interview has been edited for clarity and flow. It is, otherwise, a direct transcript of the interview.
3 In their 2005 paper, Conrad Schetter and Bernd Kuzmits refer to a group of men who emigrated to the US after finishing their studies at the American University of Beirut (AUB). According to the paper, these “so-called Beiruti Boys,” included Ashraf Ghani, Zalmay Khalilzad, Anwar-ul-Haq Ahady and Akbar Popal. According to Schetter and Kuzmits, these men, along with others “who had studied at American universities or worked for U.S. companies, notably Unocal,” were favoured by the US government for top jobs and senior advisory positions in the Afghanistan Transitional Administration. While Qayoumi is not mentioned by name, it is noteworthy that he was a student at the AUB during the same time period. This was confirmed to AAN by a source close to Ghani and Qayoumi. (See Schetter, Conrad, Bernd Kuzmits, Jürgen Rüland, and Theodor Hanf. “The Revival of Geopolitics: U.S. Politics in Afghanistan and Central Asia.” Chapter. In U.S. Foreign Policy Toward the Third World: A Post-Cold War Assessment, edited by Eva Manske, pp 171-2 and 188. Routledge, 2005.
4 See Tolo News reporting here and here.
5 See then president Ashraf Ghani addressing the first televised cabinet meeting on 1 August 2021 here.
6 See William Byrd’s “Dismembering Afghanistan’s Ministry of Finance,” United States Institute of Peace (USIP) here.
7 See AAN’s reporting of the reforms introduced by the Ministry of Finance in 2018 here and here.
8 On 12 June 2020, in what was termed an “unprecedented move” by the Afghan media, Ghani banned 68 employees of the Ministry of Finance from leaving the country without prior permission from the president (see here and here). The announcement drew strong reactions from the Wolesi Jirga which called the inclusion of the finance ministry’s staff of the exit control list (no-fly list) spurious and politically motivated (see Tolo News here and here). Speaking to Ariana news, Integrity Watch’s Naser Timory called it an “ill-considered and random” act designed to appease the donors in advance of the November 2020 Geneva Conference on Afghanistan (see Ariana New’s discussion programme Tahawol here).
9 The Investment Facilitation Unit was established in December 2019 by presidential decree to identify and facilitate investment in Afghanistan (see the IFU website here).
10 Payenda did name several individuals who were implicated in corruption. However, where no second sources were available the AAN editorial team has redacted the names.
11 See this Etilaatroz report.
12 There have been persistent rumours of corruption levelled against Ghani’s top aid Fazel Mahmoud Fazly. For example, in a May 2019 interview with Khorsid TV, former presidential advisor General Habibullah Ahmadzai accused Fazly of running a corruption ring inside the Palace. Ahmadzai accused Fazly of influence peddling, electoral fraud, financial wrongdoing, and sexual misconduct. (See the interview in Pashto here and Hasht-e Sobh report in Dari here.) Ahmadzai was later summoned by the Attorney General’s office to answer questions related to the “sexual abuse allegations which he recently leveled against certain people inside the Presidential Palace” (see Tolo News here). While he later apologised to the president and first lady, he maintained that “certain groups within the government have continued with “sexual favors from women” in return for key posts” (see Tolo News here).
13 Alizai’s dismissal was reported by Pajhwok news on 5 April 2021 (see here, see also Reporterly here).
14 In June 2014, Amarkhel resigned from his position as the head of Afghanistan’s Independent Elections Commission (IEC) amidst allegations of election fraud in the controversial 2014 presidential election (see AAN report here). In 2018, Ghani appointed Amarkhel senior advisor on public and political affairs. He was named state minister for parliamentary affairs in May 2020 and governor of Nangrahar in August 2020.
15 See here and here.
16 The abuse of power charges related to when Zamanzai was the head of the Independent Electoral commission’s (IEC) secretariat. He was found innocent of all charges on 3 September 2019 (see here and here).
17 The influence exerted by Ghani’s inner circle, particularly the national security advisor Hamdullah Mohib and AoP director Fazel Mahmood Fazly was the subject of much consternation and ridicule. For example, in this satirical piece published by Etilaatroz, Essa Qalandar, a fictional reporter, interviews Fazly:

Qalandar: Mr Fazli, you are the Senior Advisor to the president. What does a Senior Advisor do?

Fazly: Anything he likes. He can interfere in the elections, make losers of winners and winners of losers. He can lock up [independent] elections commissioners on street 39 of Wazir Akbar Khan. He can interfere in government recruitments. He can hire an illiterate person in a high-ranking position. He can conjure evidence of incompetence for an expert and fire him. A senior adviser can censor reports that must be submitted to the president. If he does not do these things, he will no longer be a senior advisor; he will be like Mr Abdullah and Mr Danesh.

18 An 18 August 2021 op-ed piece published by Etilaatroz mentioned a “triangle of illusions in the Palace,” and said:

These days in Afghanistan, there is talk of a “three-person Republic” – the president, the national security adviser, and the head of the administrative office of the president. It seems that due to his academic background, the President of Afghanistan Mohammad Ashraf Ghani has a very inflated idea of his scientific and managerial abilities and thinks that his single-person knowledge can replace the understandings of thirty-five million citizens. Therefore, he does not see the need to check the veracity of his findings and analyses against the [collective] knowledge and cognizance dispersed among the thirty-five million people in this country. It is enough for his two young confidants, Hamdullah Mohib and Fazel Mahmoud Fazly, to validate of his plans or – to put it better – give him the feeling that everything is going well under the radiant wisdom of this astute and capable leader.

Tags:

Taleban Corruption Economy Government reforms ministry of finance

Authors:

Roxanna Shapour

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