Mahmoud Karzai being investigated for racketeering, extortion and tax evasion

Prime Minister Hamid Karzai's older sibling may face charges in the U.S.

Band of brothers

Bogdan Cristel/Reuters

Mahmoud Karzai says he’s trying to build a better Afghanistan. But the U.S. begs to differ, and the older brother of Afghan President Hamid Karzai is under investigation by a grand jury over allegations that he built his business empire in Afghanistan on racketeering, extortion and tax evasion. Reports also claim that as a dual Afghan-American citizen, Mahmoud Karzai may face charges in the U.S. for allegedly violating federal laws prohibiting bribing officials in other countries.

Karzai is arguably Afghanistan’s most powerful businessman: he has major interests in the country’s only cement factory, its largest private bank, an ambitious real estate development, its only Toyota distributorship and several coal mines. But his success has significant U.S. roots. He was one of many extended Karzai family members who left war-torn Kandahar for the U.S. in the 1970s and 1980s. A waiter-turned-restaurateur, he ran a handful of restaurants in San Francisco, Boston and Baltimore up until the terrorist attacks of Sept. 11, 2001.

A new world of opportunity opened up for Karzai following the 2001 U.S.-led ouster of the Taliban, and he moved quickly to stake his claim in Afghanistan’s postwar economy. As George W. Bush’s administration began to dole out aid, Karzai cozied up to conservative Republicans and won $6 million from the United States Agency for International Development to set up a new Afghan Chamber of Commerce. From there, he capitalized on friendships with U.S. officials and international executives to build his empire.

The recent string of charges against Karzai only adds to the murky world of his business dealings. He’s the third-largest shareholder in Kabul Bank, which nearly collapsed in September when off-the-books loans to the Afghan elite came to light. He allegedly bribed the Afghan Ministry of Mines to secure his stake in the cement factory, and angered the Afghan army when he developed a residential real estate project on land the army claims to own. Karzai’s problems could prove to be a liability for his older brother. According to the New York Times, sources close to the president say he finds his brother’s business dealings politically embarrassing.

Mahmoud denies that he owes his success to his brother’s political influence. But he’s one of dozens of Karzai family members who have benefited from taking government jobs, pursuing business endeavours or working as contractors to the U.S. government since Hamid became a dominant political figure in 2001. But according to Mahmoud, Afghanistan needs the Karzai family: “It’s very difficult to get qualified people to work here,” he told the Times. “We can’t build this country unless there are people willing to take the risk.”

Karzai has denied any wrongdoing in the latest allegations against him, and says the U.S. is trying to undermine attempts to build the Afghan state. Karzai maintains his family is working hard to lead Afghanistan in the right economic direction. “The government of Afghanistan needs to provide its people with the means to help rebuild their country, because the government can’t do it alone,” he told Radio Free Europe in 2009. “And that is my struggle.”

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