Karzai has been under pressure to clean up his government following this year's fraud-tainted election. The Aug. 20 vote took months to resolve because of massive ballot-box stuffing that nearly derailed the vote, undermining support for the war against the Taliban in the U.S. and other troop-supplying nations.
"I know corruption exists in the government and elsewhere. Let's be realistic. Let's acknowledge the problem first," Karzai said at the opening of a three-day conference on corruption that he ordered in his first decree after retaking office last month.
About 200 officials - mostly ministers, parliamentarians and diplomats - assembled at a marbled hall in the Foreign Ministry to hear the president. In all, about 400 conference attendees were expected to hash out issues such as hiring practices and judicial system problems over the next few days.
The call to end corruption came as Afghanistan struggles to maintain security in the face of a resurgent Taliban. As dignitaries awaited the arrival of the president Tuesday morning,.
The explosion was heard in the hall about 2 miles from the blast site, shocking the room into silence for a moment before people grabbed for their cell phones. The interior minister rushed out of the hall.
But the event started after a short delay. Karzai bemoaned the amount of bribes an Afghan has to pay to get a car license or any sort of government document. He noted many civil servants take vacations abroad - trips too expensive if they were relying on their government salaries alone.
The president did not offer many concrete solutions, but tasked the conference attendees with cleaning up a system that does more to contribute to citizens' sense of insecurity than to help them.
His tone was a shift from previous speeches where he focused on corruption in international contracting. Karzai did mention problems with international corruption, but focused more on the Afghan side.
"Millions of our people are vulnerable to raids and attacks by government officials at any time," he said. He did not elaborate, but appeared to be referring to abuses by police and unwarranted raids.
Finance Minister Omar Zakhilwal said Karzai sent a clear message to officials to clean up their ministries.
"The government first needs to clean itself up, then it can go after all the corruption in agencies outside the government," Zakhilwal said.
But many are skeptical after seeing two anti-corruption bodies founder. The first was disbanded after it became known that its head had been imprisoned on drug charges in the United States. The second was launched last year but often does not have the authority to push prosecutions through.
Last week, the mayor of Kabul was convicted of misuse of authority in connection with corruption in city contracts and sentenced to four years in prison. He is free pending appeal and has continued his duties despite orders to give up his post.
Karzai said the mayor has become an unfortunate scapegoat, adding he didn't believe he had done anything wrong. "He is clean. I know him," Karzai said.
By Associated Press Writer Heidi Vogt; AP writer Amir Shah contributed to this report