Yasser Arafat took many secrets to the grave, none more tantalizing than the real story of the Palestine Liberation Organization’s alleged hidden assets.
The Palestinian leader, who died last week, maintained tight control over a far-flung network of financial resources, and officials now fear that much of it is in danger of being lost or stolen.
Estimates of the amount vary wildly. One of his former PLO finance ministers recently put the figure at $3 billion to $5 billion. Israeli intelligence sources have claimed that about $700million has been hidden away in secret bank accounts.
Last year, Forbes magazine placed Arafat sixth on its list of the world’s wealthiest “kings, queens and despots.” The magazine calculated that he was worth about $300 million.
By all accounts, Arafat was a man of few material wants who lived a life of Spartan simplicity. But money is the lubricant of all political movements, and a virtual river of cash flowed through Arafat’s pockets during his four decades as chairman of the PLO and later as president of the Palestinian Authority.
Arafat obsessively controlled every penny, but he shunned conventional accounting methods, aides said. The PLO’s finances were highly compartmentalized, and only Arafat had the whole picture.
Soft touch for needy
Ordinary Palestinians saw Arafat as a father figure–and for good reason. He was a soft touch when they needed cash to pay hospital bills or to send a child to college. Often Palestinians would put a classified ad in the local newspaper explaining their plight and beseeching Arafat for help. He rarely said no.
More substantial sums were needed to open embassies around the world, buy military equipment, pay PLO fighters and compensate their families when they got killed.
The peace process also cost money. Edward Abington, a former U.S. counsel general in Jerusalem and currently an adviser to the Palestinian Authority, recalled that in the weeks before Arafat’s visit to the White House to sign the Oslo peace accords in 1993, the Palestinian advance team ran up a $250,000 hotel bill in Washington.
Aides frantically called Arafat and told him to bring cash. He brought only $30,000, Abington said, but gave $5,000 of it to a Palestinian-American from Chicago who needed an operation. A wealthy West Bank family paid the hotel bill.
Beginning in the 1960s, the main source of PLO funding was a 5 percent levy on the incomes of Palestinian exiles working mainly in the Arab gulf states. The money was collected by those states and transferred directly to Arafat. At its peak, it amounted to about $200million a year. But the flow of money dried up after Arafat sided with Saddam Hussein in the 1991 Persian Gulf war.
“The Arab governments stopped collecting those taxes and never started again,” Abington said. “After that, Arafat was constantly hard-pressed for money.”
Arafat received some help from Hussein, who gave him special export licenses to sell Iraqi oil. Those reportedly were worth $150 million.
Oslo reopened flow
It was not until Arafat signed the Oslo accords that the money began flowing again. About $6.5billion from international donors, most of it from the European Union, went to the newly created Palestinian Authority between 1994 and 2003.
The authority also received regular payments from the Israeli government, which acted as a tax-collecting agency for the Palestinians and charged a 3 percent fee for its services.
Under Arafat, accounting was lax, and corruption and mismanagement were rife.
An audit last year by the International Monetary Fund revealed that nearly $900 million of the $6.5 billion given to the authority was diverted into an account controlled by Arafat. Arafat immediately was accused of misappropriating the money, but a further audit has accounted for virtually all of it.
Most of the money was invested in energy and telecommunication ventures and in real estate. Even before the audit, under pressure from the U.S. and the European Union, Arafat was forced to appoint Salam Fayyad, a respected former official from the International Monetary Fund, as finance minister. Under Fayyad, authority investments are managed by the Palestine Investment Fund.
“The bottom line is that the $900 million is accounted for,” said Karim Nashashibi, the IMF official who conducted the 2003 audit. “There are no PA assets outside of the Palestine Investment Fund. Mr. Fayyad is running a very tight ship. Transparency and accountability have substantially improved during his tenure.”
But while Palestinian Authority accounting practices have improved, Palestinian officials acknowledge that this is not the whole picture. The PLO’s funds remain shrouded in mystery and mythology.
Israeli sources claim that Arafat stashed millions in bank accounts around the world. Abington, who was the No. 2 intelligence official in the State Department before he left the government, is skeptical.
“This allegation gets reported again and again. There’s an assumption that he squirreled away hundreds of millions in Swiss bank accounts, but there’s never any real information to back it up,” he said.
No one disputes that corruption remains rampant within the Palestinian Authority. Arafat used money to buy loyalty, but the usual way he did that was to grant monopoly concessions. Authority Prime Minister Ahmed Qureia, for example, controls the cement monopoly on the West Bank; Jibril Rajoub, Arafat’s national security adviser, ran the oil and gas monopoly in the West Bank.
Even Arafat’s wife, Suha, got a piece of the action. In 1994 she promoted the interests of a telecommunications company–and received a $2 million kickback for her services, according to a knowledgeable source.
Earlier this year, French prosecutors began investigating deposits of $15million into Suha Arafat’s bank accounts. Palestinian officials believe the money comes from her various questionable business dealings.
Deeply resented by ordinary Palestinians for her expensive lifestyle in Paris, Suha Arafat received monthly payments of $100,000 from Arafat’s office fund. The amount recently was cut in half at the insistence of senior Palestinian officials.
“We will not leave her and her daughter with financial problems, but she cannot make exaggerated demands,” Mohammed Rashid, one of Arafat’s key financial advisers over the last 10 years, told an Israeli newspaper.
Rashid, who was among the officials who gathered at Arafat’s deathbed last week, insisted his boss died a poor man. In any event, it appears Arafat did not leave a will.
