Karzai's brother says he will amend US tax returns; says his businesses are open book

KABUL, Afghanistan – KABUL, Afghanistan (AP) — The eldest brother of Afghan President Hamid Karzai is preparing to amend his earnings on his U.S. tax returns and says he will freely disclose financial details of his life to American federal prosecutors.

"My whole life is open," Mahmood Karzai told The Associated Press in a recent interview that touched on allegations of corruption in the country that are straining U.S-Afghan relations in the 9-year-old war.

The Wall Street Journal, quoting unnamed U.S. officials, reported Monday that Mahmood Karzai is the focus of a criminal probe by federal prosecutors in the Southern District of New York who are investigating allegations of tax evasion, racketeering or extortion. The newspaper said that a spokesman for the federal prosecutor's office in New York declined to comment.

Karzai told the AP in the telephone interview last week that he had not met with U.S. investigators or prosecutors and had no knowledge of any pending investigation.

He said he was preparing to amend his tax returns to reflect rental income from his home in Maryland and to show a capital gains on the sale of property in Dubai in the United Arab Emirates, which he held for eight months before making a profit.

"There's nothing else in my life that will make me part of an investigation," said Karzai, who spends time in Afghanistan, Dubai and the United States. "If somebody else reported something on me and they want to investigate, I'm open to that. It is no problem. There are so many enemies of our family."

Earlier this month, Karzai said he made at least $800,000 by buying and then quickly reselling a high-end Dubai villa using a loan provided by the chairman of troubled Kabul Bank. Karzai is a 7 percent shareholder of the bank, which is now being overseen by Afghanistan's central bank.

Karzai, who has not been accused of any wrongdoing, said the villa sale and the loan to cover for it were organized by Sherkhan Farnood — who has since resigned as Kabul Bank chairman — though it was listed in Karzai's name. He said he was uncertain about the terms of the loan — or even if bank funds were involved.

Just months after he bought the property for $1.9 million, Karzai said he sold it for about $2.7 million. Again, he said, Farnood handled the deal.

Karzai said investigators in Afghanistan provided a letter to his lawyer several months ago, saying that he was not the subject of any investigation. Karzai said he's been unfairly targeted by U.S. officials because of disagreements the Afghan president has with the U.S. government over policy issues.

"What I don't like about international politics is that our family is treated like some kind of monarchy," lamented Karzai, who is a U.S. citizen. "In other words, if there's some dispute on policy matters with my brother, they will attack me or Ahmad Wali (another of the president's brothers and power broker in southern Afghanistan) to make him weak.

"This is to me so un-American. In the United States, we learn that individuals are very important and their rights are very precious and the country is based on individualism and individuals' rights. But to crucify my rights for the sake of getting to my brother — this is an outrageous way of doing things."

Karzai said that he has focused on development in Afghanistan, including a $4 million residential project in Kandahar where 11,000 lots have been sold. He and five investors pumped personal money and proceeds from the sale of the lots to pay for roads, sidewalks, electricity service, a sewage system and water. He said the project, which could take a decade to complete, is generating revenue for the Afghanistan government — $2 million in fees and taxes already and the expectation of a total of $30 million in payments by the time the project is completed.

Karzai said he was living on income he earned in the United States, including that from a restaurant in Cambridge, Massachusetts. He said he recently sold some of his businesses, including another restaurant in Baltimore, Maryland, to employees. He said he also has sold a car business that he opened several years ago in Afghanistan, but remains part owner of a cement producer, which employees 1,500. Thirty-four investors, including Karzai, took a risk by investing in the cement business, which he said has lost between $900,000 and $1 million in each of the past three years.

"I would be rewarded in any other country for something like that — taking risk, or making people put money into a business which is very risky in a country that is a high-risk environment," he said.

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Blackledge reported from Washington.