June 22, 2001
Fair Comment

Intifada Gives Cover to Arafat’s Graft and Fraud

By Rachel Ehrenfeld

Foreign leaders applauded President George W. Bush’s call for greater transparency in governance in written remarks to the Global Forum on Fighting Corruption held in The Hague on May 28. What remains to be seen is how the Bush administration addresses the appalling corruption of Yasser Arafat and the Palestinian Authority (PA).

It is evident that Arafat holds the key to the funds that keep the PA and himself in business. While CIA Director George Tenet negotiated with Arafat, American tax dollars continued to flow into Arafat’s private coffers to the tune of at least $75 million annually since 1994, according to the Congressional Research Service Report to Congress on April 17, 2001. Arafat, in sustained and well-documented instances of corruption, systematically has skimmed off portions of these funds, as he has with monies given to him on behalf of refugees in the camps. Amazingly, Arafat still elicits trust, recognition and sympathy from most world leaders.

The personal wealth of Arafat and his inner circle has not gone unnoticed by the Palestinian masses. Rapidly growing, highly visible social disparity in the territories under Arafat’s rule — rows of ostentatious villas and late-model Mercedes-Benz automobiles for Arafat’s cronies, while most Palestinians live in dismal conditions — began to threaten his leadership. It brought demonstrators against Arafat to the streets of Gaza and even prompted his wife, Suha, on Feb. 4, 1999, to try to shift the blame, saying: “I’ve told him over and again to get rid of these people who build private palaces next to refugee camps before it is too late,” according to the Jerusalem Post.

The PA has admitted that the current intifada, or uprising, was instigated and planned by Arafat last July, following the failed summit at Camp David. In light of current events, no one can dispute that Arafat holds the key to the violence in the West Bank and Gaza.
Igniting the latest intifada has enabled Arafat to portray the economic decline in the territories as “sacrifices” needed to mobilize against the “Zionist enemy.” Thus, he was able to divert attention from the corruption that he shares with his friends at the helm of the PA. To further hide this corruption, Arafat ordered the kidnapping of Jawar al-Rusien, the PLO’s former trusted accountant, who had had a falling out with Arafat. On April 20, al-Rusien was kidnapped by armed men from his home in Abu Dhabi in the United Arab Emirates and flown handcuffed on Arafat’s plane to Gaza. His whereabouts were unknown until recently, when Arafat’s aides admitted holding him “because he failed to return money he borrowed,” according to the Israeli newspaper Yedioth Aharonot.

Long before the Oslo accord, in 1990 the CIA estimated that the PLO had between $8 billion and $14 billion worth of assets generated from a 5 percent tax on every Palestinian working in Arab countries. However, according to a 1993 British National Criminal Intelligence Service (NCIS) report published on the eve of the famous “handshake” on the White House lawn, most of the PLO’s assets originated from “donations, extortion, payoffs, illegal arms dealing, drug trafficking, money laundering, fraud, etc.”

A little-noticed report by the London Daily Telegraph on Dec. 6, 1999, revealed that computer hackers had broken the security code of the PLO’s computer system. The hackers discovered records of about $8 billion the PLO held in numbered bank accounts in New York City, Geneva and Zurich. In addition, it held smaller secret accounts in North Africa, Europe and Asia.

The paper went on to report that the records obtained showed the PLO secretly owned shares in the Tokyo and Paris stock exchanges, and expensive real estate in London, Paris and other European capitals. They listed companies that fronted for the PLO, stocks the PLO held in Mercedes-Benz, shares in the national airlines of the Maldives and Guinea-Bissau, and other holdings of about $50 billion for the year 2000 (up from $32 billion in 1998). Yet, Arafat and the leadership of the PA continue to claim poverty.

But now we have legal tools to set the record straight. U.S. Treasury official R. Richard Newcomb told a Senate Appropriations subcommittee on May 10 that the Treasury Department’s Office of Foreign Assets Control can prohibit or regulate commercial or financial transactions involving specific foreign countries, entities and individuals engaged in terrorism, drug trafficking and money laundering.

There can be little doubt that Arafat’s corruption represents punishable crimes. Even without the force of the U.N. Convention Against Transnational Organized Crime (which has yet to be implemented), legal authority exists within the U.S. Criminal Code for indictment and prosecution of Arafat for participation in an organized criminal group, money laundering, corruption and obstruction of justice.

It is time for all to acknowledge that Arafat and his cadre in the PA are incapable of making the transformation from professional terrorists to a law-abiding government. Arafat was chosen by Israel and the United States to negotiate on behalf of the Palestinian people despite the fact he was elected to nothing and has a long record of opportunism.

Isn’t it time to recognize that the Palestinians deserve better? Why continue with Bill Clinton’s demonstrably flawed plans for peace in the Middle East? Until a real constituency for peace surfaces among the Palestinians, Israel, the United States and the civilized nations should just sit tight and wait it out.

Rachel Ehrenfeld is director of the New York-based Center for International Integrity.