Arafat's Stolen Riches
By: Sam F. Ghattas
StarNewsOnline.com | Tuesday, September 23, 2003
An audit of the Palestinian Authority revealed that President Yasser Arafat diverted $900 million in public funds to a special bank account he controlled, an International Monetary Fund official said Saturday.
Most of the cash, which came from revenues in the budget, went into some 69 commercial activities located in Palestinian areas and abroad, said Karim Nashashibi, IMF resident representative in the West Bank and Gaza.
Hanan Ashwari, a Palestinian lawmaker and onetime Arafat spokeswoman, acknowledged there had been incidents of misuse of funds in the past but that the release of the information was an attempt to discredit the Palestinian leader.
"There is nothing innocent about the timing," she said. "This is a campaign against the president and the (Palestinian) Authority."
Nashashibi did not elaborate on the types of businesses the Palestinian Authority was involved in, but Palestinian Finance Minister Salam Fayad has said its interests range from cement to telecommunications holdings in Algeria and Jordan.
Nashashibi disclosed the Arafat account and figures to reporters at a news conference on the economic situation in the West Bank and Gaza. He said the information provided by the Palestinians were an example of the openness and transparency in Palestinian finances under Fayad.
However, Nashashibi did not rule out the possibility that a portion of the funds were misused. He said he believes an accounting of the rest of the money will be conducted "at some point, but we're taking it all a step at a time."
"What we're trying to do is have a level of disclosure and transparency so that future or present misuse does not happen ... At least there is a followup, there is disclosure," Nashashibi said
Nashashibi did not say which public monies were involved.
There have been charges of corruption and mismanagement and money-skimming in the Palestinian Authority, including some complaints from ordinary Palestinians, which officials have denied.
In a special annual issue of Forbes Magazine earlier this year, Arafat was reported to control $300 million.
U.S. and European governments have complained for years that the Palestinian financial structure is not transparent and does not allow donors to follow their money to projects for the benefit of the people.
Official Palestinian figures show that investment in the Palestinian private sector amounts to about $300 million. The money was funneled in the past through a fund operated by Arafat's financial adviser, Khaled Salam.
Nashashibi said that authority was involved in commercial activities, both at home and abroad, worth an estimated $700 million in today's market prices, "which probably in '99 were $900 million."
Nashashibi said Fayad, the Palestinian finance minister who was the resident representative of the IMF in the Palestinian territories in 2000, told Arafat at that time that the account must be disclosed.
Finance ministers from the wealthy industrialized nations who met here Saturday and spoke with Fayad also praised his efforts "to improve transparency in the budget and the operations of the Palestinian Authority," according to a statement issued afterwards.
As part of restructuring the way the Palestinian Authority deals with money, Fayad last year announced the creation of the Palestinian Investment Fund and said that all Palestinian Authority funds would pass through the new holding company.
Nashashibi said he thinks the authority wants to "get out of all these commercial activities."
The Palestinian economy has contracted by 30 percent because of the Palestinian-Israeli violence over the last three years and IMF officials said it needs an injection of about $1.2 billion in assistance.
Meanwhile, the Palestinian finance minister won a promise of additional assistance Saturday with the finance ministers of major industrialized nations as a World Bank official urged donors to help the troubled Palestinian economy, according to a statement issued by the group.
No figure of assistance was given, but an IMF official said Saturday the Palestinians would need "in the neighborhood" of $1.2 billion.
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