Karzai brother 'could be indicted for tax evasion'

WASHINGTON - Afghan President Hamid Karzai's eldest brother Mahmood could be soon indicted for tax evasion, the Washington Post said on Friday, citing a US official close to the federal investigation.

In a move that could further fray ties between Washington and President Karzai over charges of corruption in the Kabul government, the Internal Revenue Service is examining Mahmood Karzai's finances, said the Post.

Late last month the Wall Street Journal reported a criminal corruption probe had been launched, with prosecutors establishing whether to bring tax evasion, racketeering or extortion charges against him.

The move could risk a further setback in already toxic ties with the mercurial leader, who has challenged US efforts to overcome graft in Afghanistan that they say is undermining public support for the Afghan president and thus helping fuel the Taliban insurgency.

Mahmood Karzai, who used to live in the US state of Maryland where he ran a Baltimore restaurant, denied the charges to the Post from Kabul, telling the newspaper: "I know myself. I'm very clean."

He is, however, expected to be indicted in a New York federal court, according to sources cited by the Post, in relation to profits from the 2008 sale of a villa in the Gulf.

"Whatever was due, I paid it," Karzai told the Post. As a US citizen, despite living outside of the country -- mostly in Afghanistan and Dubai -- he remains subject to US tax laws.

The Journal said in September that US prosecutors are also looking at Afghan bank executives and alleged opium traffickers in the case.

Mahmood Karzai, who has indicated he may run for president himself in 2014 and who owns four properties in the United States, told the financial daily at the time that his sole interest was in "rebuilding Afghanistan."