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Arafat's billion-dollar stash

Rodney Dalton- Sunday 30th Nov 2003

WESTERN backers of the Palestinian Authority want to know Palestinian Authority chairman Yasser Arafat is clinging to a vast fortune, despite losing control of almost $US1 billion worth of state funds he had secretly shifted to an account in his name.
Arafat is thought to have salted away between $US300 million and $US1.3 billion in bank accounts worldwide by allegedly plundering aid money sent to prop up the battered West Bank and Gaza economy.

Hoping to deflect mounting concern over PA corruption, Arafat appointed Salam Fayyad, a chain-smoking US-educated economist, to the post of finance minister last year.

Fayyad is winning rave reviews for his swift assault on the culture of corruption, revealing that Arafat had diverted about $US900 million from the crippled PA budget between 1995 and 2000 to a secret Arafat-controlled account managed by his loyal financial adviser, Mohammed Rachid.

The once secret portfolio is now controlled by the Palestine Investment Fund. The investments include real estate, Middle East phone companies and a Coca-Cola bottling plant in Ramallah, where the PA chairman's shattered compound is based.

An International Monetary Fund report in September, detailing PA financial mismanagement, was followed by more allegations in a US 60 Minutes TV report earlier this month. In an interview on that show, Fayyad said: "There is corruption out there, there is abuse, there's impropriety. That's what had to be fixed."

However, Fayyad can only dig where he's allowed to, according to Matthew Levitt, a former FBI analyst who tracks terrorism financing.

"Fayyad is really trying very hard in some cases to shame people into action," Levitt told The Weekend Australian. "However, (his) best efforts can only be successful as they pertain to the PA's funds. He has no jurisdiction over PLO funds, Fatah (Arafat's political party) funds or any funds that have been diverted to Yasser Arafat's (or his associates') personal accounts."
Arafat still pays the salaries of more security officers than he needs, including Palestinian naval police based in landlocked Hebron.

"The fact is Salam Fayyad does not have access to the vast majority of those funds," Levitt said. The renewed interest in Arafat's finances comes at a sensitive time for the Palestinians, who will present their 2004 budget at an international donors conference in Rome on December 12.

Fayyad, the former head of the IMF mission in Palestine, will be among the PA delegation, which will attempt to convince donors to put up more money to help the West Bank and Gaza economy.

The World Bank estimates that $US1 billion a year is needed to drive the $US5 billion economy.

Arafat is under constant pressure from the West, with the US - which still holds out hopes the so-called road map can bring peace to the region -
regarding him as a failed leader. And Europe - the PA's main financial backer - wants to know what happened to the $US5.5 billion in international aid that has flowed in Arafat's direction since the PA was established in
The West Bank war horse's image is not helped when publications such as Forbes magazine feature the 74-year-old prominently on its list of most wealthy "King, Queens and Despots".

Forbes calculates that Arafat, who comes in sixth behind Queen Elizabeth II, has a net worth of $US300billion. Some Israelis believe Arafat's personal wealth may be as much as $US11 billion, although in testimony to the Knesset last year Israel's chief of military intelligence Aharon Zeevi listed his personal assets at more than $US1.3 billion.

Martin Indyk, a former US ambassador to Israel, explained to 60 Minutes that during the 1990s, when Arafat was free to travel, he was always asking for handouts, even though under the Oslo accords, the Israelis agreed to collect sales tax paid by Palestinians and return it to Ramallah. "That money is transferred to Yasser Arafat. To, among other places, bank accounts which he maintains off-line in Israel," said Indyk.

While Arafat has been effectively confined to his compound, his wife Suha has reportedly lived comfortably in a Paris apartment on a $US100,000-a-month allowance drawn from Palestinian coffers.

Reacting to those allegations, US State Department spokesman Richard Boucher said the "history of financial improprieties in the Palestinian Authority is well known and longstanding and, in fact, has been a major concern of ours".

He said all international donors had insisted on more transparency in the Palestinian budget process.

"They have expanded their control of donors funds to make sure that money that we or others might give are properly accounted for," Boucher said.

Washington's contribution to the PA this year is a relatively modest $US125 million, including $US20 million that, for the first time, was given directly to the PA instead of via contractors and non-government organisations. "I think we have made sure that US money is accounted for properly," Boucher said. According to Fayyad, Arafat was paying his security forces about $US20 million a month in cash.

One of Fayyad's early moves was to ensure that all revenues - about $US24 million a month - flowed to a central treasury account, effectively ending the ability of ministers to dispense largesse at their own discretion. He is also the chairman of the Palestine Investment Fund, which manages the diverse investments formerly controlled by Arafat.

Perhaps his greatest success has been in breaking up the oil monopoly under which the PA bought petrol from Israeli suppliers and mixed it with kerosene before selling it at inflated prices. Fayyad's stand made him "beloved on the street", according to Levitt, who recalls a research trip to the West Bank and Gaza during which he found a senior official billed the PA for $US8000 in heating for a Gazan summer.

"What has made it (the corruption) particularly egregious now is that it's not just lining pockets but financing terrorism as well, and we find that Arafat continues to pay the al-Aqsa Martyrs' Brigades in particular," Levitt said.

"Arabs and Westerners alike are incredibly frustrated with corruption within the PA. Many tax dollars from many states have gone to benefit the humanitarian situation in the Palestinian territories and to establish a Palestinian authority.

"We now find out that much of that money has been diverted to other causes, sometimes lining the pockets of Mr Arafat, Mohammed Rachid or others."

Levitt said Fayyad's willingness to point the finger at the Palestinian old guard reflects the support he has from the international community.

"If Arafat were to sack him that would be the end," he said. "He's really the only internationally recognised legitimate leader the Palestinians have."



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