Department for International Development (UK)

October, 2004

The FPC's September report on EU funding of the Palestinians has been warmly received. One of the more surprising issues for the authors has been the response to Appendix B, which details the operations of the UK government's Department for International Development.

The October 2004 issue of The Sprout focused on the unorthodox the approach of the DFID, and the need for greater transparency and supervision.

Citizen's watchdog organisation, the Funding For Peace Coalition (FPC) has just released a report substantiating a compelling connection between European funding and ongoing Palestinian corruption and terrorism.

The report uses meticulously documented evidence from the Palestinians themselves. It lays bare the flimflam justifications over years of the European Parliament and Commission, in turn supported by a shallow majority report of a Parliamentary Working Party and the EU's docile fraud squad, OLAF.

Many raw nerves are exposed: Nepotism and corruption amongst the Palestinian Authority elite. Lists of names of PA employees engaged in terror - contradicting EU denials. Terrorist organisations admitting that they get their salaries from PA budgets, which in turn are funded by European largesse. Millions in a cash payroll to non-existent "employees" -- years after the EC had repeatedly declared that everyone was being paid through direct bank deposits.

The report is well timed. The Working Party's majority report is due for debate in the Autumn, and at least 2 MEPs have said they will be asking some very direct questions. They want to know why the EU's money hasn't reached the average Palestinian -- who lives reportedly below the $2 a day poverty marker. They want to know where 2 billion euros in EU taxpayers' aid over 10 years have gone.

Member states themselves have given a further 2 billion euros, in addition to the EU contributions. Together with money from the US and Arab states, the Palestinians have received what the World Bank calls '...the highest per capita aid transfer in the history of foreign aid anywhere.'

Hidden in Appendix B of the report is a second and equally controversial little gem. The UK government, often relying on EU assurances, has donated an estimated 450 million to the Palestinians since 1993. 93 million has been allocated for the three fiscal years to 2005/6. Most of this is channelled through the Department For International Development (DfID).

The DfID official policy on fraud and corruption is one of zero tolerance. The DfID notes that fraud diverts resources from the poor. It demands that: "If anyone suspects fraud or corruption they must, immediately, report their concerns to the Head of Internal Audit." And, the DfID lays out the strict conditions for the handing out of Direct Budgetary Support.

The FPC's London spokesperson, David Winter says, "That's fine, in theory. But the DfID must be aware of Britain's National Criminal Intelligence Service report from 1993, which described the PLO, the main political element of the PA, as 'the richest of all terrorist organizations'. Did the PA suddenly reform itself overnight?"

A DfID document from July 2004 declares that the probability of fiduciary risk for the 93 million is low to medium, because of reforms executed by the Palestinian treasury. With the present evidence, that is unrealistic, especially considering that most of the reforms have been stalled by the executive.

Winter plans to challenge the DfID's Head of Audit on these issues. He claims that handing money to the EU, which in turn passes money in Direct Budgetary Support to the PA, deliberately bypasses its own regulations, and is a breach of public trust. He says that the Head of Audit should have acted on the public evidence from Arab and Palestinian sources, detailing PA corruption, nepotism, the diversion of funds to terrorism and other abuses.

Further, he debunks DfID reliance on reforms in the PA protecting their money. "Even the Palestinian street has erupted in riots because of the paucity of these very reforms. It is time for a rethink -- for the sakes of both the Palestinian and the European taxpayer."

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