Special Information
Bulletin

Intelligence and Terrorism Information Center
at the Center for Special Studies (C.S.S)
August 2004
   
 

The Arafat Papers: Documents captured during Operation Defensive Shield show corruption at the highest levels of the Palestinian Authority - Money allotted by Arafat and his cronies
(Updated August 2004)

 

One example of corruption
 
A demonstration in Gaza
against corruption
 
 
 
  $10,000 allotted by Arafat to pay for work done at the home of Amin Hadad, head of the Palestinian Monetary Authority. It was recently reported that Arafat refused to accede to the demands of the Legislative Council‘s reform committee to fire Hadad and to have him investigated for corruption by the attorney general.   A demonstration in Gaza organized by Fatah/Al- Aqsa Martyrs' Brigades to protest corruption in the Palestinian Authority. Some of the slogans on the banners read “Bring the corrupt officials to trial before the masses judge them – Al-Aqsa Martyrs' Brigades” and “Reform Yes – Corruption No.” (Abu Dhabi TV, July 22, 2004).
   
 
The System and How It Works
  Many documents were captured during Operation Defensive Shield (April 2002) and other Israeli army operations which exposed the far-reaching, consistent, systematic corruption tainting Yasser Arafat, high-ranking members of the Palestinian Authority (PA), members of the Palestinian Preventive Security Service, Arafat’s cronies and holders of various monopolies. That systematic corruption is the basis for the continuing demands for a genuine reform raised not only by the international community but Palestinian society at large and top politicians in particular.
  Some of the most striking examples of Arafat’s wide-spread corruption were found in the files captured from at his headquarters (the Muqata) in Ramallah. They contain hundreds of authorizations for payments which he personally signed, and date from 1999-2002. The extravagance with which the money was doled out, the benefits reaped by those close to Arafat (including high-ranking members of the PA) and the way the money is distributed clearly illustrate the extent of the corruption and the rampant waste and misuse of funds belonging to the Palestinian people.
  Arafat’s system is revealed through his largesse in distributing funds, which was supposed to disappear with the reforms demanded but which apparently continues unabated to this day. The system is based on the recklessly extravagant distribution of various amounts of money, from hundreds to tens of thousands of dollars, through a bureaucratic maze of approvals signed by Arafat and concentrated in his office.
  Until September 2003 the funds were listed in the Palestinian budget as transfers of expenditures for unspecified purposes1 with no actual examination of the use to which the funds were put. The transfers of expenditures were allotted on a monthly basis and peaked at $48 million in August 2003. According to reports prepared by the Palestinian treasury, at the end of 2003 an accounting correction was made but there was no change regarding the inspection of the funds.
1. Authorizations for receiving money from the Palestinian treasury which Arafat is authorized to sign.
  The money distributed by Arafat is used to aid to the needy, finance the personal expenses of his cronies, line the pockets of terrorist operatives and their families, and cover the (often odd) expenses of the Palestinian Preventive Security Service and the PA offices which exceed their formal budgets. The system continues uninterrupted during the four-year violent Palestinian-Israeli confrontation during which Palestinian unemployment has reached 40% and more than 60% of Palestinian families live below the poverty level 2.Arafat prefers to channel money to his cronies and the few who wallow in his financial support rather than to use the funds at his disposal to lighten the suffering of the general Palestinian population, pay unemployment insurance to those whose livelihoods were lost as a result of the ongoing violent confrontation or provide welfare payments for the poor.

2. The international poverty level is set at $2.10 per person per day.  
  How the system works: Requests for funds are sent to Arafat's office, usually written notes or through middlemen (such as Dr. Yussuf ‘Abdallah, in charge of Arafat's personal bodyguard, or Ghassan Fuad Nimr Kamal, [Abu Firas]a secretary in his office). However, Arafat does not automatically sign all requests. According to the documents captured, he reads the request, examines the sum asked for (sometimes lowering it),3 (sometimes) jots down instructions relevant to the request and (usually) order the officials working for the Ministry of Finance (or other PA institutions) to pay. In certain instances there are instructions from various functionaries as to how the money authorized by Arafat should be paid.

3. Among the hundreds of documents captured, those relating to requests for money show that while he sometimes allots half (or in extreme cases only a third), not one request is totally rejected. All of his decisions are arbitrary and not based on any objective criteria.
  It should be mentioned that Arafat has indiscriminately and arbitrarily doled out (and apparently continues to dole out) wantonly extravagant sums of money to his close associates. For example, one of the documents shows how he allots tiny amounts to needy students while the children of his cronies receive enormous stipends. Another shows the allotment of tens of thousands of dollars for the purchase of oil paintings as gifts. Often he instructs that payments be made through the Palestinian Ministry of Finance, bypassing the Palestinian Authority institutions which should be dealing with such cases, at least in some instances.
  Arafat’s profligate distribution of funds and their accounting details make it difficult to monitor them, since nothing can be learned from budget reports about the transfers of expenditures made through his office (expenses of running the office or “humanitarian aid”). Even the new accounting system (in which expenses are listed according to the relevant ministry) effectively neutralizes monitoring the accounts. That is because the funds are not distributed according to uniform criteria or to worthy causes, with the result that the pretense of providing widespread social aid is valueless, and in actual fact, enormous amounts of money flow directly into the pockets of Arafat’s cohorts.
  What is gained by using this system and why it is so hard for Arafat to give it up: In our assessment, he hopes that having absolute control of large amounts of money will ensure the loyalty of those around him and of the influential families and clans (using the time-proven system of divide and conquer). He also aspires to buy the personal loyalty of the rank and file and of relatively minor terrorist operatives, who receive payment through middlemen who are quick to assure the recipients that the money was authorized by Arafat himself. In addition, the system allows him to further his own personal political agenda, for instance supporting the ongoing violent confrontation with Israel and sabotaging attempts to promote agreements and political arrangements. It enables him to rule single-handedly with neither supervision nor limits imposed by the PA, and to thumb his nose at the demands made not only by the international community but by Palestinian society in general and political circles in particular for structural reforms within the PA.
  Arafat's system of financial distribution is but one of the symptoms of the corruption at the highest levels of the PA, and both makes it difficult for the PA to function properly and is in striking contrast with the grinding economic distress of the general Palestinian population. Not only is it also severely criticized by the international community, but it makes it difficult to alleviate the Palestinians' situation . Attempts made by Salam Fayad, Minister of Finance, to institute genuine structural reforms in the PA's economic and fiscal infrastructure – meant to reduce (if not put an end to) corruption – have, so far, borne only minimal fruit.
 
Appendices
  The following captured documents illustrate how Arafat distributes the money and where it goes.4

4. These are only a few documents from the many captured during Operation Defensive Shield.
    Appendix A : Arafat’s authorization for the purchase of a gift: two pictures of Islam’s two most sacred cities, Mecca and Medina, for the sum of $66,000 (2001).
    Appendix B : Arafat’s authorization to allot $10,000 to Amin Hadad (head of the Palestinian Monetary Authority) for work done on his home (2002).
    Appendix C : A receipt on stationery from the “President’s Office” for $5,000 given to Umm Jihad (Intisar al-Wazir) (Minister of Social Affairs and a symbol of corruption in the PA) for a trip she took (2002).
    Appendix D : Receipts on stationery from the “President’s Office” for transfers of funds to top aide Nabil Abu Rudenieh (Arafat’s information advisor): $3,000 for rent, $2,000 to help two students (possibly his sons), $1,000 for travel expenses for a friend (Muhammad al-Amin) and $1,500 for an unclear purpose (1999-2002).
    Appendix E : Arafat’s authorization for 2,100 dinars (about $2,962) paid to Ahmad Muhammad Ayoub Abu Warda [a resident of the Jabaliya refugee camp and member of an influential family], who claimed he was poor and had four sons at university (1999).
    Appendix F : Financial aid to high-ranking Palestinian Authority functionaries: Arafat’s authorization for $6,000 paid to Jihad Hamdam (Director of the Office of Local Government) for debts he incurred to Al-Najah University (1999); and one for $3,000 for Ahmad Said al-Tamimmi (Minister of the Interior) to pay for his children’s university tuition (2002).
    Appendix G : Arafat’s authorization for 4,300 dinars (about $6,108) to pay annual dues for members of the Family of the Cultured Pen in Zarqa (in view of upcoming club elections). The check was drawn to Abbas Zaki (Sharif Mash’al) [a member of the Palestinian Legislative Council and of the Fatah Central Committee] (1999).
    Appendix H :Arafat’s authorization for $1,000 to cover the cost of a plane ticket for Darar ‘Ali Yussuf [employed by the Ministry of Tourism and Antiquities] to visit relatives (2001).
    Appendix I : Buying the loyalty of the Qawasmeh family – Arafat’s authorization to allot $3,500 to Daoud Qawasmi, a relative of Fayiz al-Qawasmi [a rich businessman and well-known public figure in Hebron, who died in 1999]; Daoud Qawasmi was studying in Cyprus. An authorization to allot $4,000 to another student from the Qawasmeh family, requested by Mahmoud al-Qawasmi [an engineer and director of the Palestinian Ministry of Transportation] (2001).
    Appendix J : Examples of funds transferred through the agencies of Dr. Yussuf ‘Abdallah, head of Arafat’s personal guard: authorization for expenses for a plane trip to Tunis for Lieutenant Mahfoudh ‘Abdallah ‘Aissa and his family for a plane trip to Beirut for Major Hassan ‘Abdallah and his family; authorization for $1,000 for Muhammad ‘Abdallah al-Aka [chauffeur of Tayyib ‘Abd al-Rahim, Presidential Director] in view of his difficult economic situation (2001).
    Appendix K : Refund of expenses to ‘Aqab ‘Abd al-Samed, former Director of the Ministry of Housing: $2,000 for rent, $2,000 to pay off debts, $3,000 for the tuition of his six children (2001).
    Appendix L : An allotment of $2,000 to Lieutenant Colonel Taysir Hassan Mansour Abu al-‘Izz, commander of the Intervention and Defense Guard Force in Ramallah, requested by ‘Ghazi al-Jibali, chief of police (2001).
    Appendix M : An allotment of$10,000 to pay for expenses and tuition at British schools for three daughters of ‘Ali Iskhaq, member of the PLO leadership; an allotment to pay for household expenses (2001).
    Appendix N : Arafat’s authorization for 15,000 Israeli shekels (about $3,675) to pay the bills incurred by Samih ‘Abd al-Fatah (Abu Hashem), the Palestinian representative in the Czech Republic (1999).
    Appendix O : Documents dealing with the transfer of large sums of money to cover expenses incurred in operating Arafat’s personal plane (2001).
    Appendix P : Buying influence with the Palestinian media: Palestinian Preventive Security Service reports about the transfer of $55,000 a month from Arafat’s office to Mahmoud Qassem Abu Zuluf for the support of his newspaper (Al-Quds) (1999).
    Appendix Q : Allotments of large amounts of money to Rabbi Moshe Hirsch, the “foreign minister” of the ultra-orthodox, virulently anti-Zionist Jewish sect known as Neturei Karta. Two extraordinary payments of $25,000 ( January 13, 2002) and $30,000 ( February 14, 2002), show that Arafat often gave payoffs to Hirsch.
   
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Appendix A