[3] In 2010, it was disclosed that its Chairman Sherkhan Farnood and other insiders were spending the bank's US$1 billion for their own personal lavish style living and lending money under the table to family, relatives and friends.

[8] DAB stated in February 2011, it would seek to sell Kabul Bank within three years once it was rehabilitated,[9] but both the International Monetary Fund and US officials subsequently pressed for a rapid wind down of the institution.

Despite Kabul Bank's near collapse in 2010 during the corruption allegations, Kabul Bank claims it is significant to Afghanistan's internal security and stability because it is the vehicle used to pay, largely with money supplied by the United States government, as many as 300,000 Afghan government employees, mostly military and police, who are key to plans to rebuild Afghanistan's capacity to deal with its ongoing Taliban-led insurgency.

[19] On 27 December 2010, a suicide car bomber killed at least three Afghans, including one policeman, as he targeted police officers who lined up to withdraw their salaries in front of Kabul Bank in central Kandahar; the midday explosion also wounded 16 policemen and five civilians, officials said.

[22] In early 2010, the Washington Post reported that the Kabul Bank played a part in "a crony capitalism that enriches politically connected insiders and dismays the Afghan populace.

"[23][24] At the beginning of September, Frozi, one of the two largest shareholders of Kabul Bank, said reports indicating that the institution had lost as much as $300 million were overstated.

Afghan leaders promised to guarantee deposits in an attempt to arrest the panic, which began at the end of August 2010 when the country's top banking officials demanded the resignations of both Frozi and Farnood.

"[25] In October, the Washington Post reported that Mahmood Karzai could soon be indicted for tax evasion in the U.S., though he denied the charges, telling the newspaper: "I'm very clean", and insisting his only interest was "rebuilding Afghanistan.

"[5][16] In mid-January 2011, acting chief financial officer and other Pakistani employees of Kabul Bank fled to Pakistan, apparently out of fear for their lives and possible arrest, though some said they were being made scapegoats for powerful shareholders.

[9] In early July 2011, Fitrat resigned as head of the central bank after fleeing to the United States, claiming his life had been threatened and that he was being made a scapegoat for politically connected individuals.

[8] After a mid-February 2011 visit by Neal Wolin, the U.S. deputy Treasury secretary, the Afghan finance ministry said that weak international support had exacerbated the crisis.

"Afghan and US officials agreed that (the crisis)... was compounded by the erroneous audit by PricewaterhouseCoopers, and ineffective international technical assistance and supervision", the ministry said.

However, Wolin pressed the government to rapidly place the lender into receivership, echoing calls made by a previous International Monetary Fund (IMF) delegation.

"The deputy secretary... stressed the need for the Afghan government to take swift and decisive action to ensure a credible, effective resolution of issues related to Kabul Bank," the U.S. embassy said in statement.

[26] At the end of June 2011, the Washington Post reported that Farnood and Frozi used fake names, forged documents, fictitious companies and secret records as part of an elaborate ruse to funnel hundreds of millions of dollars to shareholders and top Afghan officials, including President Karzai's brother Mahmood and Mohammed Fahim, the country's first vice president.

Authorities loosened the terms of their detention and provided them with a security detail to go to a bank office on workdays and on occasion to fancy restaurants and hotels for what Nazari described as work meetings.

[11] With regard to public sector corruption in Afghanistan and the loss of nearly U.S. $1 billion in U.S. taxpayers' funded foreign assistance to Afghanistan in the form of U.S.-supplied Afghan government and Afghan military and police salaries deposited into Kabul Bank, The New Yorker Magazine, The Wall Street Journal, The New York Times, National Public Radio (NPR) and others, have reported that widespread corruption, ponzi schemes, fraudulent loans, mass looting, insider loans to fake and bogus companies run by family and friends, and other corrupted practices, were undertaken by a small group of Afghan insiders (less than 12 people), apparently linked to Mahmoud Karzai, President Hamid Karzai and Ahmed Wali Karzai.

[29][30][31] On 28 November 2012, the Independent Joint Anti-Corruption Monitoring and Evaluation Committee published its report and declared in a news conference that US$5 billion, including $400 million the Kabul Bank's shareholders, were illegally transferred abroad.

[45] In April 2015, the Islamic State or an associated group claimed responsibility for a suicide bombing at the entrance of a New Kabul Bank branch in Jalalabad, where government workers waited in line to collect salaries.

[47] That month, a suicide bomber targeted the Kabul Bank branch entrance close to the US embassy, resulting in five reported deaths.