The Palestinian Authority and its money

A report on what happens to the funds that are collected through the Palestinian Authority Donor Machine.

David Bedein, | updated: 07:00

OpEds David Bedein
David Bedein
credit David Michael Cohen

When it comes to humanitarian aid to the Palestinian Authority, transparency does not exist. 

The result is a rich Palestinian elite which  builds exclusive neighborhoods around Ramallah,  leaving thousands of shoddily constructed apartments without services for the rest of Palestinian society.

Yasser Arafat set the tone for the PA when he arrived in Gaza in 1994. Arafat took control of every contract and investment, using donor money to build a secret $1 billion portfolio, including investments in Coca Cola, a Tunisian cellular phone company and venture capital funds in the US  and Cayman Islands. 

Arafat stole  $1 billion in tax revenue relayed by Israel for Palestinian workers. The money went to Arafat’s personal account in Israel’s Bank Leumi in Tel Aviv. 

$100,000 a month went to Arafat’s wife, Suha, living in Paris.   Arafat was estimated by U.S. investigators to be worth between $1 billion and $3 billion. [1] 

Within three years of the PA’s establishment, Palestinian auditors found that 40 percent of the PA budget, $326 million, was misappropriated, a figure that rose to $700 million a decade later. [2]

Not one Western government objected.  This set the tone for theft at all levels in the PA. PA officials paid themselves high salaries and  skimmed from others. [3]

Enter Abbas

Under Arafat’s successor, Mahmoud Abbas, nepotism reached every level of civil service. Officials, often related to Abbas, commanded salaries of $10,000 per month, more than 10 times that of ordinary civil servants, and opened secret accounts in Jordan with money  received in bribes. [4]

The difference between Abbas and Arafat: Instead of stealing from the PA, Abbas employed his two sons, Tareq and Yasser, to set up  businesses that dominate foreign investment, building a consortium called Falcon, which took over Palestinian commerce. [5]

Abbas  has pumped at  $890,000 into Falcon, with branches in Jordan and the United Arab Emirates, and  a monopoly on sale of U.S. cigarettes. 

Then there is Al Mashreq Insurance Co. operating  11 branches in the PA with a worth of $35 million, headed by Yasser Abbas. [6] 

In all, the wealth of Abbas’ sons is  estimated at $300 million. [7]

Mohammed Dahlan,  the challenger to Abbas, asserts that Abbas received $1.4 billion from Arafat’s personal finances after the latter’s death in 2004. Dahlan asserts that  Abbas concealed $600 million of this fund. Mohammed Rashid, economic adviser to Arafat reckons that Abbas’ embezzlement reaches $100 million. [8]

Abbas’ Elite

Abbas  fosters his own elite, builds palaces and approves construction of closed communities for his supporters around Ramallah. One such community is known as the “Diplomatic Compound,”, where Abbas approves construction of a shopping mall under his control. 

In 2011, Abbas’ adviser, Majdi Khaldi, asked $4 million from Bahrain for that community. The PA ensured the feasibility of the project by transferring public land at 60 percent of its market value.

Khaldi approves the entry of  PA officials, security commanders and  members of Fatah to the “Diplomatic Compound,” [9]

Abbas uses a multi-million-dollar palace under PA security control. Unauthorized visitors, particularly television crews, are threatened with arrest. [10]

Abbas involves loyalists in  business deals, such as Mohammed Mustafa, former deputy prime minister in the PA until 2015, appointed head of the Palestinian Investment Fund, the PIF, y linked to Abbas, which holds 18 percent of Arab Palestinian Investment Corporation, APIC. 

Abbas controls the PIF nad chooses all of its directors.

By 2009, Mustafa was appointed chief executive officer of one of the two cellular phone companies in the West Bank, Wataniya Mobile. PIF owns 34 percent of Wataniya’s shares. [11] 

Mustafa is allegedly involved in tax evasion and money laundering, as documented in the Panama Papers. Yet Abbas  grants Mustafa protection from prosecution. [12]

In February 2016, Palestinian Legislative Council member Najat Abu Bakr demanded investigation of Abbas's  Governance Minister Hussein Al Araj. Abbas threatened Ms. Abu Bakr with arrest , who fled to a PLC building for safe haven. The matter was hushed up. [13]

Target Dahlan

Abbas has fought against corruption of  his rivals- mainly Mohammed Dahlan, who often calls for Abbas’ resignation. A PA court sentenced Dahlan in absentia to three years in prison on charges of embezzling  public funds in 2007. 

However, in 2010 , Dahlan and his wife were granted citizenship in Montenegro. Two years later, Dahlan served as liaison between  Serbia and UAE Vice President Mohammed Bin Zayed Al Nahyan, crown prince of Abu Dhabi. Not long after, Dahlan was also granted citizenship by Serbia, allowing him safe passage throughout Europe. [14]

Abbas Seeks  Benign Successor

The fortunes of Abbas and Dahlan have played a role in the succession battle for the Palestinian leadership. At 84, Abbas seeks to protect the his sons' economic empire.  Abbas sought to groom PA chief negotiator Saeb Erekat as his successor, but was opposed by the PLO Executive Committee - a blow to Abbas, who rewarded loyalty in the Executive Committee, where members receive a stipend of $30,000 a month as well as a luxury car and VIP privileges. [15]

Abbas has instead offered the mantle turned to a trusted aide – intelligence chief Majid Freij, seputy of Abbas. Yet the opponent of both Erekat and Freij has been Jibril Rajoub, former PA security chief.. [16]

The sentiment of Palestinians is that the PA is corrupt. From 1,200 Palestinians polled,  95.5 percent – or virtually everybody – declared that there was rampant corruption in the Abbas regime. [17]

PA corruption  manifests itself  in the black market, money laundering, women trafficking and profits accrued from foreign bank accounts – activities deemed  secret until a new ruler emerges. [18]

An Understanding West

Western governments  confirm embezzlement of their aid to the PA. 

In 2013, the European Union determined that the PA mismanaged  2 billion Euro between 2008 and 2012. The European Court of Auditors found that PA civil servants receive monthly salaries without reporting to work while tens of thousands of others actually working were not even paid. Brussels acknowledges that it does not press the PA to reform the civil service. [19]

The US State Department has done little better, continuing to withhold release of its reports of PA embezzlement. 

U.S. Aid has blindly provided the PA with over $5 billion e over the last 25 years. Washington has consistently paid PA debts to private companies, bypassing concern over Abbas’ fiscal responsibility and priorities. [20] 

Instead, U.S. taxpayers have ended up paying companies controlled by Abbas’ sons. , Abbas’ Sky Advertising even won a contract from the US to improve the image of the United States in the PA. [21]

From 2005 through 2009, Tareq and Yasser Abbsd received at least more than $2 million in contracts and subcontracts, most of them from U.S. AID.  . 

US AID will not release  contracts to Abbas’ sons and has  redacted key pieces of information, including executives and employees involved in the contracts. [22]

Conclusion

Western donor humanitarian funds have one purpose: to act as a  political resource for Abbas and his supporters. 

The notion that humanitarian aid to the PA reaches the Palestinian Arab people has no basis in reality.

The first step for any effort to ameliorate this situation would be to ask for conditions for id to the PA, requiring  accountability and transparency and the right to protect Palestinian whistleblowers.  

At this point, no one in the world  advocates such a change in policy. 

Notes

1 U.S.  government investigation of Arafat. Reported on CBS News “60 Minutes Nov. 7, 2003

2 Transparency International. Jan. 19, 2012

3 “Corruption in Palestine: A Self-Enforcing System.” Tariq Dana, Al Shabaka. Aug. 18, 2015

4 Dunya Al Watan. Feb. 6, 2006

5 “The Business of Mahmoud Abbas and His Sons. Yoni Ben Menachem. Jerusalem Center for Public Affairs. Sept. 14, 2016

 6 Al Masri Al Yom. Sept. 11, 2016. An investigation of Abbas’ finances by Hussein Yusef.

7  Mohammed Dahlan interview with the Jordanian website Amon. June 8, 2016

8“The Business of Mahmoud Abbas and His Sons.” Yoni Ben Menachem. Jerusalem Center for Public Affairs. Sept. 14, 2016.

9 “In tough times, most Palestinians view government as corrupt.” Karen Laub, Mohammed Daraghmeh. Associated Press. May 24, 2016

10 Al Jazeera interview of Abbas aide and PA negotiator Saeb Erekat. April 2, 2014

11 “Panama Papers: Leaks Reveal Abbas’ sons $1 million holding in company with ties to the Palestinian Authority.” Uri Blau, Daniel Dolev. Haaretz. April 7, 2016

12  “Palestinians Pop Up in Panama Papers. Adnan Abu Amer. Al Monitor. April 15, 2016

13 Palestine’s Anti-Corruption Crusader. Jonathan Schanzer, Grant Rumley. The Daily Beast. March 14, 2016

14 “Mahmoud Abbas rival given Serbian citizenship, documents reveal.” Ivan Angelovski in Belgrade and Lawrence Marzouk. Balkan Investigative Reporting Network. Jan. 30, 2015

15 “Car, VIP and $30,000 a Month Await Executive Committee Member.” Safa News Agency. Dec. 3, 2016

16 “The Business of Mahmoud Abbas and His Sons.” Yoni Ben Menachem. Jerusalem Center for Public Affairs. Sept. 14, 2016.

17 Nader Said poll of Palestinians in the West Bank and Gaza Strip. Bir Zeit University. April 2016. The survey found that 82 percent thought the Hamas regime in the Gaza Strip was corrupt.

18 “Corruption in Palestine: A Self-Enforcing System.” Tariq Dana, Al Shabaka. Aug. 18, 2015

19 European Court of Auditors. European Union Direct Financial Support of the Palestinian Authority. 2013

20 “U.S. Foreign Aid to the Palestinians”, by Jim Zanotti, Specialist in Middle Eastern Affairs December 16, 2016

21 Firms run by President Abbas’s sons get U.S. contracts. Adam Entous. Reuters News Agency. April 22, 2009

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