Corruption: How Central a Role has it Played in the Middle East Conflict?

Brad Nielsen

August 2, 2007

New evidence just published by Palestinian sources throws light on claims made here and elsewhere during the last five years that corruption is, and has long been, endemic to the Palestinian ruling elite. The scale and significance of the corruption continue to be the subject of controversy. But the fact of the looted funds no longer is.

Oddly, it is the Chinese news agency Xinhua that takes the most uncompromising position on this week's revelations. By contrast, the mainstream Associated Press continues to downplay the disclosures while implicitly admitting to their accuracy.

Start with AP since it often serves as the source for hundreds of syndicated newspaper reports throughout the world. Its editors, in a story curiously headlined "Hamas provides limited proof for sweeping allegations against Palestinian government", claim that Fatah documents "seized following Hamas' violent take over of the Gaza Strip in mid-June indicated no more than minor financial improprieties".

There is clearly room to think differently about the free spending of millions of donor dollars and euros by the allegedly bankrupt, impoverished Palestinian Authority regime. As Palestinian journalist Khaled Abu Toameh, himself formerly a staffer in Arafat's bureau, points out in a lead story in the Jerusalem Post, Arafat directed huge amounts of his treasury's money to corrupt purposes and via improper and compromised channels. These included:

  • School and university fees for the Europe-based children of his inner-circles cronies;
  • The purchase of houses and luxury vehicles for Lebanon-based insiders;
  • Tens of thousands of dollars for a clique-member's son's wedding;
  • An unimaginable $130,000 to compensate another Fatah insider for damage to his daughter's super-luxury motor vehicle;
  • Tens of thousands of dollars on paintings which were presented as gifts to an unidentified woman in Paris. That happens to be where Arafat's absentee wife Suha resided in gilded, fully-funded splendor for many years;
  • Millions of dollars to cover the personal expenses of Fatah officials and their families. The list goes on, and Hamas has promised there is more to come. In the context of its deadly rivalry with Fatah, this is likely to be true.

For much of the period of this massive looting of national resources, the finances of the Palestine National Authority were presided over by Dr. Salam Fayyad. On 15th June 2007, Fayyad, often regarded as a straight-shooting technocrat, was appointed prime minister of the PNA. That appointment was made by Palestinian President Mahmoud Abbas as a matter of "national emergency" arising from the Hamas take-over in Gaza.

Abbas himself was prime minister under Arafat while much of the newly-disclosed financial mismanagement and embezzlement was in full force. The Funding for Peace Coalition has been sounding out warnings about this for years.

Disturbingly, Associated Press, in an article startlingly light on facts or analysis and yet definitive in its conclusion of "no more than minor financial improprieties" is made to look somewhat foolish by Xinhua. The Chinese report refers to the papers gleefully presented to a press conference by a Hamas functionary as "a treasure of information". Clearly one man's treasure is another's rumour and innuendo.

It's left to the Jerusalem Post's Khaled Abu Toameh to point out what readers need to hear: Palestinian journalists examined the documents and pronounced them (as far as a person can) to be authentic. "There was no reason to doubt their credibility", Abu Toameh points out. Why is he the only reporter to make this significant observation?

While Palestine's insiders divvied up the loot among themselves and their offspring, most of it generously sourced from European tax payers, their brothers and cousins languished and died from lack of food and medicine for a decade. Neither AP nor Xinhua point to this, though the suffering of ordinary Palestinians has been a matter of public knowledge since Arafat's arrival in Gaza in the early nineties.

But beyond this, the latest reports raise a troubling background question. If the power-brokers on the Palestinian Arab side were doing so well for so long under the stewardship of Arafat and afterwards, is this not the evidence to show that European and other taxpayers have wasted huge sums of money which were supposed to go to promoting a new peace in the Middle East? The voices of furious denial from Brussels are now fading away as Palestinians themselves confirm what has been obvious to concerned observers like the Funding for Peace Coalition for a decade. In brief, Arafat and his successors were making out like Mafiosi to the detriment of their own people.

What follows is the full report from Khaled Abu Toameh.

Hamas shows proof of PA corruption

Khaled Abu Toameh, THE JERUSALEM POST, Aug. 1, 2007

Two paintings worth $66,000 were presented as a gift to a woman in Paris by the PA, which also paid millions of dollars to cover the personal expenses of senior Fatah officials and their families, according to documents released by Hamas on Tuesday.

The documents, which were seized by Hamas at various PA institutions in the Gaza Strip in mid-June, were presented to the Palestinian public by top Hamas leader Mahmoud Zahar during a press conference in Gaza City.

The 30 documents that were released Tuesday are related to the period when Yasser Arafat was chairman of the PA, between 1994 and 2004.

Fatah officials in Ramallah reacted with fury to the revelations, accusing Hamas of seeking to mislead the Palestinians through lies and forgery. But Palestinian journalist who examined the documents said they all appeared to be authentic and that there was no reason to doubt their credibility.

One of the documents showed that Arafat had approved the payment of some $30,000 to cover university tuition fees in London for the daughters of his media adviser. Another one revealed that Arafat had approved an annual payment of $9,000 to cover the university tuition of the son of another senior official who was studying in Germany.

The documents also showed that the PA had invested international funds in various economic projects, especially in Lebanon. In one case, a senior Fatah official living in Lebanon was given hundreds of thousands of dollars to purchase houses and luxurious vehicles. He also received $40,000 to pay for his son's wedding and another $130,000 as compensation for damages caused to his daughter's car.

Zahar also presented documents that showed that the Fatah-controlled PA security forces had been involved in commercial activities and in tax-collection, in violation of PA laws.

He said some of the activities were carried out when current PA Prime Minister Salaam Fayad served as finance minister under Arafat.

Fahmi Za'areer, a Fatah spokesman in the West Bank, called on Hamas to inform the Palestinians about the fate of millions of dollars that the Islamist movement received from Iran and Qatar over the past two years.

Meanwhile, Ihab al-Ghissin, a top official at the Hamas-run Interior Ministry in the Gaza Strip, announced that his movement was planning to establish a new intelligence service in the coming weeks.

"The new force will be called the Internal Security Apparatus and it will replace the Preventive Security Force that has been dismantled in the Gaza Strip," he said.

He said members of the former Fatah-controlled security forces in the Gaza Strip would be permitted to join the new service.

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