The Palestinian Authority Corruption

By public-integrity.org | by Dr. Rachel Ehrenfeld
Wednesday, November 19th, 2003 @ 5:04AM

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This report was originally published on – http://www.public-integrity.org/articles/publications42.htm, on November 19, 2003

“War is a dream; peace is a nightmare.” This statement was made by the chairman of the Palestinian Authority (PA), Yasser Arafat, on June 6, 2001, in an interview with Radio Palestine. It vividly explains both the Intifada that followed and the continuing bloodshed in the Middle East. It also illustrates Mr. Arafat’s vision for the future of the Palestinian people and the region. To facilitate this vision, the Palestinian Authority, under Arafat’s leadership, has consistently misused and abused international aid — aid entrusted them by the international donor community and intended for the Palestinian people. This, in turn, has allowed Arafat to expand his political control, and his grip on the Palestinian Authority’s pursestrings.

To understand — and ultimately, to stop — this dynamic, it is necessary to understand how and why the Palestinian Authority has become the dysfunctioning, corrupt, hate- mongering entity that it is today. Only this will enable us to lay out a pragmatic and viable plan for reform — a platform which, of course, will have to be closely supervised and controlled to ensure that funds are used properly on the projects they were allocated for. Just two weeks ago, both CBS and the BBC carried “exposes” of the Chairman’s misuse of PA monies. The activities listed in these broadcasts included the diversion of at least $1.3 billion to his bank account and that of his wife, as well as the ordering of payments of some $50,000 to members of the Al-Aqsa Martyrs Brigade terrorist organization, part of his Fatah party of the PLO. This information, however, is not new. It has, for quite some time, been known to anyone who followed Arafat and the corruption of, and in, the Palestinian Authority.

Most of the evidence comes from the PA’s own documents, captured by the Israeli Defense Forces (IDF), and now found online at the website of the Intelligence and Terrorism Information Center at the Center for Special Studies (www.intelligence.org.il). These expose — in which former Palestinian officials publicly admitted to a global audience Arafat’s corruption and that of the PA — can be interpreted as a signal to Mr. Arafat to relinquish power so that the reforms of the Palestinian Authority can be accomplished. But once again, Arafat has proven himself to be ahead of the curb and has now won yet another opportunity to consolidate his power and control over the PA treasury. Indeed, a day before the heavily advertised programs aired, Arafat’s latest appointee as the new puppet Palestinian Prime Minister, Ahmed Qorei, (Abu- Allah), conceded to Arafat’s demand not to appoint an interior minister who would be responsible for the security apparatuses, but to keep the control of all the Security Forces and their budget. Thus, Arafat managed to turn back some of the reforms in the security forces. One of their first actions was to announce a new hudna with Hamas-related organizations and the release of their frozen funds. Officially, the Security Forces will be under the authority of the National Security Council. But since Arafat heads the Council, he remains in control. According to Palestinian political analyst Ali Jerbawi, “This is once again Arafat’s cabinet dominated by his loyalists. He wants to prove that he is the only decision-maker here.”

The same statement was made by former Palestinian Prime Minister Mahmoud Abbas, who resigned on September 6th because Arafat refused to relinquish his power over the Security Forces. Abbas explained the payments to members of the al-Aqsa Martyrs Brigades by the PA Treasury as “an attempt to wean the terrorist from committing further homicide bombings.” But this money was not given to stop the activities of the al-Aqsa Martyrs Brigades; it merely constitutes the salaries of only one element of the terror apparatus controlled and paid for by Yasser Arafat within the Security Forces. On July 17, 2003, the European Union’s External Relations Commissioner, Christopher Patten, wrote in the Financial Times that “[t]he EU has worked throughout the bloodstained months of the intifada to keep a Palestinian administration alive and to drive a process of reform within it. At every step, the EU’s help was made conditional on reforms that would make a viable Palestinian state a reality one day and in the short term make the Palestinian territories a better, safer neighbor for Israel.” By the time the Commissioner had made this statement, he had received from the Israeli government volumes of captured Palestinian documents providing evidence that EU funds granted to the Palestinian Authority were being used to pay for the upkeep of terrorists, homicide bombings, weapons, bomb manufacturing plants, and vacations, travel, scholarships and medical treatments for members of the Palestinian leadership and their families, as well as to pad Chairman Arafat’s personal bank account.

By the time the Commissioner had made this statement, he had received from the Israeli government volumes of captured Palestinian documents providing evidence that EU funds granted to the Palestinian Authority were being used to pay for the upkeep of terrorists, homicide bombings, weapons, bomb manufacturing plants, and vacations, travel, scholarships and medical treatments for members of the Palestinian leadership and their families, as well as to pad Chairman Arafat’s personal bank account.

Clearly, there was no control, supervision, or accountability on these funds. How is it possible that the International Monitory Fund, CBS and the BBC were able to document the abuse and misuse of the Palestinian Authority’s funds by its own leadership, led by Mr. Arafat, while the Commissioner who had the same evidence all along, failed to acknowledge it? Moreover, the so -called requirement to prove that the actual Euros given by the EU were misused, negates accepted civil and criminal practices worldwide. The IMF report: “Economic Performance and Reforms under Conflict Conditions,” which was released last September in Abu Dhabi, concluded that 8% of PA budget is being spent by Arafat at his sole discretion. The report also concluded that $900 million in PA revenues “disappeared” during the period between 1995- 2000, and that the 2003 budget for Arafat’s office which totaled $74 million, had $34 million missing because they were transferred by the chairman to pay unidentified “organizations” and “individuals.” This report was based on some of the same PA documents that were earlier provided to the Commissioner by the Israeli government. Thus, the Commissioner’s persistent and constant denial that EU funds has been misused and abused and the refusal to acknowledge that the PA leadership is corrupt and that it used its aid money to fund terror and incitement resulted in granting more aid to the PA, much of which – as the recent IMF report documents – continued to be misappropriated even after the appointment of the reform oriented finance Minister Salem Fayyad.

Significantly, the conduct on the part of the Palestinian leadership follows an old pattern stretching back to the precursor of the Palestinian Authority – the PLO. Since the inception of the Palestinian Liberation Organization in the mid-1960s, both the organization and its leader, Yasser Arafat, served as a model and precedent for other terrorist organizations. It was mainly due to the West’s hypocrisy that, despite the PLO’s ongoing terrorist activities, the UN embraced the PLO in 1974 by granting it observer status. This legitimization, together with a territorial base in Lebanon, enabled the PLO, a terrorist organization, to open offices worldwide. (The PLO, and now its successor, the Palestinian Authority, maintained 89 embassies around the world. By way comparison, Jordan, a sovereign country, has only 45.) This legitimization enabled the PLO to obtain financial backing and to increase its assets and income by a multiple of 16 to 17 between 1974-1981. Over the years of the Cold War, the PLO also received financial and political support from the Soviet Union and its satellites around the world. Latin American and African countries, members of the Arab League and other Third World nations supported the PLO as well, and contributions continued to flow while the PLO continued its terrorist activities, not only to promote its stated agenda “to establish a Palestinian state,” but also in the service of other countries, such as Egypt, Libya, Sudan, Syria and others. The PLO has also been at the forefront of money laundering activities.

The mid-1960s saw the development of money laundering as a tool to hide illegal sources of money. These activities were facilitated for many years by corruption and hypocrisy worldwide, which have made illicit funds easy to launder and hide. Offshore banking centers, from Monaco, Nauru, and Cyprus to Hong Kong and the Bahamas, as well as international financial organizations, have been used not only to launder money, but also to invest it.

Historically, the PLO has had nine principal sources of income: * Official contributions from Arab states * The Palestinian Liberation Tax Fund, a 3.5 to 5 percent tax on the income of all Palestinians worldwide * Donations from wealthy Palestinians and international organizations such as the UN and the EU * Support from charitable organizations * Income from legitimate and illegitimate investments * “Protection” charges paid by companies and states in order not to have terrorist acts directed against them * Illegal arms deals * Fraud, money laundering, counterfeiting, and other criminal activities: *

Drug -Trafficking – In 1983, six months after the PLO was expelled from Lebanon, it made an official decision, under the chairmanship of Yasser Arafat, to exploit the drug trade for funding. The decision was made at a secret emergency session of the Finance Committee in Algiers. The PLO treasurer at the time, Sallah Dabbagh, stated, “The entire future of the PLO operation for liberation may hinge on our exporting more drugs throughout the world.” In 1983, a Reader’s Digest article reported that “The PLO purchased an estimated 40% of its light infantry weapons with either heroin, hashish, or morphine base produced by PLO and Syrian-controlled laboratories in Syria or Lebanon’s Beka’a Valley.” The U.S. Justice Department’s Special Report, which was published in 1984, confirmed this information. And James Adams observed in his 1987 book The Financing of Terror: An early lesson in the political impact of the drug economy on terrorist movements occurred in the Middle East with the Palestine Liberation Organization.

The PLO has been one of the most successful terrorist movements of modern times, both in its ability to survive and in its accumulation of wealth. Inevitably, drugs have played a part in the investment portfolio. The wealth accumulated by the PLO helped it to become an international conglomerate worth billions of dollars. It also allowed it to fund an international propaganda campaign, which contributed to its growing popularity and increased its influence.

Under the guise of “fighting for peace,” the PLO was allowed to continue its terrorist and illegal activities with impunity. In 1987 the US declared the PLO an international terrorist organization, but the PLO’s propaganda campaign was so successful that it took only a year for a presidential waiver to be issued permitting contact with the organization. And the concessions toward the PLO and its successor, the PA, have not stopped since. Let us be clear: this money was supposed to be distributed to the Palestinian people. Instead, Yasser Arafat used the contributions to enhance his power and expand the PLO’s terror activities, while the international community kept quiet. The total amount of wealth accumulated by the PLO from its inception until the Oslo Accords has been estimated by a variety of sources. In 1990, the CIA estimated that the PLO had a fortune of between eight and fourteen billion dollars. In 1993 and 1994, the British National Criminal Intelligence Services estimated that they had about ten billion dollars. The British report also noted that the PLO was, in fact, the wealthiest of the world’s terrorist organizations. And even though the Palestinian Authority was established under the Oslo Accords, there has never been a firm demand for the PLO leadership to account for the missing fortunes of the Palestinian people. Instead, the very same corrupt leadership headed by

Let us be clear: this money was supposed to be distributed to the Palestinian people. Instead, Yasser Arafat used the contributions to enhance his power and expand the PLO’s terror activities, while the international community kept quiet.

The total amount of wealth accumulated by the PLO from its inception until the Oslo Accords has been estimated by a variety of sources. In 1990, the CIA estimated that the PLO had a fortune of between eight and fourteen billion dollars. In 1993 and 1994, the British National Criminal Intelligence Services estimated that they had about ten billion dollars. The British report also noted that the PLO was, in fact, the wealthiest of the world’s terrorist organizations. And even though the Palestinian Authority was established under the Oslo Accords, there has never been a firm demand for the PLO leadership to account for the missing fortunes of the Palestinian people. Instead, the very same corrupt leadership headed by Mr. Arafat now receives billions of dollars from the international donor community for the stated purpose of aiding the Palestinian people and enhancing “peace in the region.”

The six billion dollars that the PA has received since 1993 has come from the EU, the UN, the US, Saudi Arabia and other Arab League countries. It has done little to advance the development of a viable Palestinian State, or of peace in the region. Rather, this has helped to fuel the Palestinian leadership’s terrorist agenda and kept the Palestinian people oppressed and disenfranchised. In the mid 90′ – shortly after the PA came to power – the Palestinian writer Fawaz Turki described the regime as “the dissolution of civilized society, of all civil norms, and all hope.” Despite all of this, most international organizations and the world community at large continue to ignore the ongoing human and civil rights violations perpetrated against the Palestinians by their leadership. Some of this abuse is carried out through the introduction of a culture that encourages martyrdom in children as young as kindergarten age. This indoctrination was and continues to be led by HAMAS, a terrorist organization that is largely responsible for the education system – with the blessing of Chairman Arafat and the religious leadership. Schools, universities, textbooks and teachers that are funded by the EU, the UN and other international organizations; Palestinian radio, television, and written media, as well as mosques, public officials and even sports clubs, are used to reinforce this indoctrination of hate and martyrdom – all in the name of “Peace.”

The Quartet’s’ agenda to bring democracy and freedom to the Middle East is commendable. It will not happen overnight, and it will not be easy. And it can happen ONLY when the Palestinian Authority stops sponsoring terror; when the campaign of incitement and hate against the Israeli population ceases and is replaced with real messages for peace, tolerance and co-existence ; when Israel is fully recognized on all the maps issued by the Palestinian Authority ; when the PA is fully transparent and accountable, and the billions of dollars embezzled from the Palestinian people are returned and the perpetrators are punished, and; when a real independent government representative of the Palestinian people and their real interests can be elected, and when not only aid but real economic incentives are offered to the Palestinian people. But this can happen only when the international donor community stops supporting the corrupt Palestinian regime and demands full accountability for its behavior and for every Euro that the European taxpayer donates to the Palestinian people. Only then can we expect the enhancement of democratic values, true economic development, welfare, and peace for ALL the people in the Middle East.

*Dr. Rachel Ehrenfeld, author of Funding Evil; How Terrorism is Financed – and How to Stop It (Bonus Books, 2003).


Categories: Abbas, Anti-Corruption, Oslo Accord, PA, Palestinian, terror financing, Terrorist Financing