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 Ha'aretz, October 8, 1999

Israel deposited NIS 1.5b in Arafat's personal account

By Ronen Bergman, Ha'aretz Correspondent


BARI, Italy - Israel has transferred slightly over NIS 1.5 billion [about $350 million] in tax refunds to Palestinian Chair Yasser Arafat's personal bank account at a Tel Aviv branch of Bank Leumi, since the signing of the economic agreements with the Palestinian Authority in April 1994.

Senior sources among the donor states told Ha'aretz that this bank account is in their view one of the most disturbing issues with regard to the proper financial management of the Palestinian Authority.

The bank account at the Hashmonaim branch of Bank Leumi was first revealed by Ha'aretz in April 1997. It is referred to by knowledgeable sources as "a-sunduk a-thani," the "second budget," on which only Arafat and his senior economic adviser, Mohammed Rasheed, are authorized signatories.

The PA is required to give the donor states a detailed account of every penny it spends. Through the Bank Leumi account, Arafat is able to keep huge sums of money for himself without any supervision. At Rasheed's request, Israel transfers to this account all the refunds for tax on fuel which the PA imports for itself through the Ashdod and Haifa sea ports. The rest of the tax refunds are transferred directly to the PA's bank accounts in Gaza.

Since the signing of the economic accords in 1994, Israel has transferred a total of NIS 1.5 billion to the Tel Aviv account, and in the last two years the transfers have settled on more or less NIS 35 million a month. The Palestinian treasury has been complaining since the beginning that the funds deposited in the account do not reach its coffers.

Joseph Saba, director of the World Bank's Middle East division, told Ha'aretz that Israel, the PA and the donor states came to an agreement in 1996 (TAP) under which the Palestinian Authority was to subject any such private bank accounts to the supervision of the Palestinian treasury, but this was not done. According to Saba, the World Bank, like the other donors, is displeased with the situation. But he stressed that he has no idea what is going on in the account and refused to speculate on what might be happening with the money. "I have no proof," Saba said.


(c) copyright 1999 Ha'aretz. All Rights Reserved


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