Corruption Under Arafat - Something's Rotten in the Nonstate of Palestine

Something's Rotten in the Nonstate of Palestine

Corruption Under Arafat: the Legislators Speak

By Roni Ben Efrat
with Assaf Adiv & Stephen Langfur

Within the Palestinian Authority (PA) there is an office entitled General Control (GCO). In May it issued a report that included a startling claim: because of corruption $326 million, roughly one fourth of the PAs budget, disappeared in 1996. The Palestinian Legislative Council (PLC), which is elected by the people, commissioned nine of its members to check these findings. On July 29 they presented their report. In a stormy Council session, which Arafat did not bother to attend, the legislators called on the president to dissolve his government by September, form a new one based on experts, and bring those suspected of corruption to trial. Some of the gravest suspicions concern two of Arafats senior ministers, Nabil Shaat and Jamil Tarifi.

I asked Dr. Kamal Sharafi, who headed the committee of nine, why the Council found it necessary to check the report of the PAs comptroller. Sharafi: "The GCO report was an important contribution toward correct administrative procedures, but it had flaws. There were simple arithmetical errors. In many cases the GCO inspectors had written detailed accounts which did not make it into the final version. Many violations were ignored or left hanging. The main problem, though - which we have tried to correct - was the lack of conclusions. The GCO report failed to accuse persons by name, whether directors or ministers. You might have thought it was the Palestinian people that had stolen the money! The GCO did not ask the Attorney General to formulate indictments. The result was a series of wishy-washy, toothless recommendations, calling weakly for reform and delivering a few hazy warnings, whereas what was needed was a cry for legal action."

The PLC Committee's "report on the report" notes further flaws.

(1) The GCO failed to check important companies and public institutions that receive funding from the PA. These include the Petroleum General Commission, the al-Baher Company, the Tobacco Company, and the Palestinian Broadcasting Corporation. (Challenge has reported on the corruption in several of these; see Issues 39 and 43.)

(2) The GCO confined itself almost exclusively to Gaza. Its report covered less than a tenth of the ministries, institutions, municipalities, and non-governmental organizations receiving benefits from the PA.

(3) It stayed clear of the many security forces, although the Council turned up evidence that they are full of illegal practices, meddling where they have no business. The GCO also kept away from President Arafats office. (PLC Report, pages 3,4, and 30.)

The PLC Committees mandate restricted it to checking the GCO report. It could not undertake an independent investigation into areas which the latter had not touched. Despite this limitation, and despite lack of cooperation on the part of the PA comptroller as well as several ministries, the findings are chilling. The overall picture is one of a mafia-style government, where the main point of being in public office is to get rich quick. The Palestinian citizen, after thirty years of neglect under Israel, has fallen into the hands of a ruling class whose motto appears to be, "Eat, drink and be merry." The PA budget and the funds from the donor nations flow around and around within the closed circle of the few, who live a life of luxury while the people they are supposed to serve go hungry. In matters of health care and basic commodities, says the PLC Committee, the little person is a victim of dubious deals between the Palestinian and Israeli ruling elites. This conclusion may seem sweeping, but it arises from every page of the Committees report. Except for the Ministry of Education and that of Statistics, even the few untainted offices are described as inefficient and unprofessional. The report notes excessive duplication of tasks and overlapping of responsibilities, especially between the West Bank and Gaza.

The PLC Committee cites many kinds of corruption. There are ministers who violated their responsibilities to the point of endangering lives. There are unsupervised bank accounts containing what are supposed to be public funds. There are cronyism and nepotism, monopolies, releases from customs. Wherever greed can get its foot in, the space appears to have been filled. In this article we shall concentrate on three ministries where corruption is especially rife. We shall then briefly survey most of the others.

1. The Ministry of Health (Minister: Riad al-Zanoun)

Bad or expired drugs were used to treat cancer patients in ministry medical centers. With regard to other medicines as well, the Gaza branch of the ministry used drugs which the West Bank branch had rejected because they failed to meet specifications and had not been registered. Suspicion: Health ministry officials were (and are) in cahoots with a company called Al-Shifa, which imports medicines into Gaza. The report names Dr. Ziad Shath, general director of the ministrys pharmaceutical division, who allowed Al-Shifa to bring in the unregistered drugs on the pretext that registration was underway.

On another get-rich note, Al-Shifa imported several drugs as donations from Egypt: exempt, therefore, from customs and value-added tax (VAT). It then turned around and sold them to the Health Ministry including customs and VAT. Suspicion: Al-Shifa was aided in this exercise by one Khamis Najjar, a director of the ministry in Gaza, and by the Minister of Civil Affairs, Jamil Tarifi, a name we shall soon encounter again. The Committee recommended that Arafat direct the PA Attorney General to prosecute the three men named above.

In addition, a fifth of the Health Ministry's budget went to medical expenses abroad. ("Abroad" includes Israeli hospitals.) The Council found this figure rather high. In some cases it was Arafat who ordered the transfer of patients abroad; he had the Finance Ministry deduct the money from the Health Ministry's budget without notifying the latter. There is also the case, still pending, of Dr. Ibrahim Abu Hmeid, who was appointed to coordinate the distribution of patients among hospitals in Jordan. Several Jordanian hospitals have accused him of receiving bribes and embezzling funds. The Committee asserts that he had accomplices. Its report also raises the inevitable question: Where in all this was the Minister of Health? (PLC Report, pp. 7-8.)

2. The Ministry of Planning and International Cooperation (Minister: Nabil Sha'at)

Nabil Sha'at is known to millions as one of the chief Palestinian negotiators.

The council found many offenses. For example, any ministry is supposed to open a separate account with the Ministry of Finance for each of its projects. Thus Finance holds the money given by funders for the project, and it can supervise expenditures. Shaats ministry, however, opened separate accounts. Thus ministry officials could conspire with officials of a donor country, open an account together, and manipulate the funds without the knowledge of Finance. This practice has also opened the door for ministry officials to appoint themselves to jobs in the ministrys projects, giving themselves fat second salaries. The private account gives rise to another perk as well: You hire someone to a project for a large salary, but by prior agreement you pay the person less. The difference goes into what is called a "black box." Shaat and his director-general control the black box. They hid it from the GCO, but the Council Committee found it.

Other ills in the Ministry of Planning:

Tenders were granted under suspicious circumstances to companies with family connections to people in the ministry.

Within the ministrys projects, there was often no regard for budgets; purchase prices were high; there was a lack of competition and a lack of transparency.

The ministry used project funds to cash personal checks for the Minister.

These practices have damaged the PA's credibility with the donor nations.

The Committee has called for an investigation of Nabil Shaath together with three of his deputies. (PLC Report, pp. 15-16.)

3. The Ministry of Civil Affairs (Minister: Jamil Tarifi)

The Committee devotes four closely-written pages to this ministry, to which the GCO had given only scant attention.

The largest area of offense concerns the granting of exemptions on import duties, especially in the matter of automobiles. This can be a lot of money: the duty can amount to half the price of the (pre-duty) car. The right to grant customs exemptions is vested in the Finance Ministry, not in Civil Affairs. The latter was able to get a foot in, however, in the following manner: All imported goods must enter through Israel. Israel collects the customs on goods which are destined for the Palestinian areas and then transfers this money to the PA. Someone from the PA had to be present at the Israeli gateways, therefore, to tell the Israelis which goods to exempt. Logically, this should have been someone from Finance, but in fact it was Civil Affairs Minister Jamil Tarifi who got the task, perhaps because of his many Israeli connections, which date from before the Intifada. Infringing on the prerogatives of Finance, Tarifi personally exempted cars, furniture, and other goods, including the medicines mentioned above. The paperwork was slipshod or nonexistent. Many cars, after receiving Tarifi exemptions in the name of this or that governmental body, were converted to private ownership. This was the case, for example, with a certain Mercedes, which wound up belonging to none other than... the Coordinator of Customs Exemptions in the Ministry of Civil Affairs.

At Oslo Israel permitted a few thousand PLO members to return. The PA granted them exemptions from customs. This opened the door to abuse: many a car was exempted on the fictitious claim that it belonged to a returnee. Such a one is Ibrahim Awad Abdel Qader Salameh, 75 years old, supposedly the proud owner of a brand new Jaguar. He does not get to use it much. The family members of Minister Tarifi are always taking it out for a spin.

A country without industry or natural resources depends heavily on customs duties. The loss of money through false exemptions amounts to a serious blow.

Tarifis list goes on. Israel issues work permits, and the PAs ministries of Labor and Interior are supposed to distribute them. But here too Civil Affairs got a foot in -- again, it seems, thanks to Tarifis connections with Israel; his ministry gets work permits and hands them out without telling anyone.

Unknown to the Ministry of Finance, Tarifi illegally imposed fees on trucks bringing goods to and from Jordan. At one point, says the Committee, he got the Israelis to close the Jordanian border for two weeks to all trucks bringing cement except those of a company called al-Karmel, which belongs to his eldest son.

The Committee sums up Tarifis offenses by calling them "a blatant attack on public funds." It asks that the Attorney General bring the Minister to justice. (PLC Report, pp. 17-21.)

4. Examples from other Ministries.

Finance (Minister: Muhammad Nashashibi): The Council Committee criticizes this office for losing control in areas which it is supposed to regulate, like customs exemptions and project accounts. Several officials, it notes, took advantage of their positions to establish private companies. (PLC Report, pp. 5-6.)

Agriculture (Minister: Abdel Jawad Saleh): The Committee found evidence of many violations, but it did not go into detail. (Ibid.,p.9.)

Public Works (Minister: Azzam al-Ahmad): Most purchases were made by direct order, always from the same importers, rather than by tender. Mr. al-Ahmad states that the violations took place before there was a minister for Public Works. (Ibid.)

Social Affairs (Minister: Intisar Wazzir): This office failed to use proper procedures in the handling of large donations and in distributions to the needy. (Ibid., pp. 9-10.)

Post and Communication: Among various offenses, this stands out: Many telephones which are supposed to be in government offices have found their way to the private homes of officials and employees. The PA pays their phone bills. (Ibid., p. 10.)

Housing (Minister: Abdel Rahman Hamad): The earlier GCO report noted serious administrative, legal, and financial violations, most of which occurred during the term of the former minister, Dr. Zakarieh al- Agha. The violations include (1) a housing project which was carried out in defiance of regulations, using materials that did not match specifications; (2) questionable allotments of land; and (3) the plunder of sand, one of Gazas few and nonrenewable resources. The Committee made inquiries, but the ministry failed to cooperate in response. (Ibid., p. 12.)

Interior: The GCO report exposed the manipulation of state funds. The ministry gave the Council Committee a "positive and reliable response." (Ibid., p. 13.)

Culture (Minister: Yasser Abed Rabo): The minister charged the public $7,671 to install a central heating system in the house he is renting. Almost 90% of the ministry employees are in administrative positions, although many lack educational qualifications. (Ibid., p. 14.)

Information (same minister): Large sums are budgeted for purposes not connected to the ministrys work, including a $10,000 personal allowance for the minister. (Ibid.)

Supplies (also called Rations) (Minister: Ali Shaheen): This winter people in Nablus got sick because they ate flour whose date had expired. A PLC member, Khussam Khader, exposed the case, showing that old flour had been repackaged. The Council laid the responsibility on the Ministry of Supplies and passed a law redefining its role. Yet the ministry continues to interfere in the sale of flour. It worked in cahoots with a Finance Ministry official, Muhammad Jaradah, using public money to import flour through a company which Mr. Jaradah heads. The Supplies Ministry also blocked the border to other companies, so that Mr. Jaradahs would have the monopoly. (Ibid., p. 21.)

Transport (Minister: Ali Qawasmeh): Because of slipshod office procedures the PA has lost control over the use of government cars, though it pays all the costs. The Transport Ministry illegally converted some government cars to private ownership without notifying Finance, which is supposed to oversee public property. (Ibid., pp. 22-23.)

Youth and Sport: Ministry officials used donated money, intended for renovating playgrounds, to cover private expenses. (Ibid., p. 23.)

Local Governance (Minister: Saeb Erakat): This ministry supervises municipalities and village councils. The GCO report covered only thirty of the latter, but it exposed administrative, financial and legal violations. The Committee demanded a response to the GCO findings, but the ministry has refused to cooperate. (Ibid., pp. 25-26.)

Monetary Authority: The committee found excessive and unjustified expenses, as well as discrepancies between financial files and daily books. (Ibid., p. 26.)

TV and Radio Broadcasting Agency: Purchases and tenders are not subject to supervision. As in the case of all ministries and agencies, income is supposed to be transferred to the Finance Ministry for supervision and control, but this is not done. (Ibid., p. 27.)

All nations suffer from corruption, but who would have expected so much so soon? One reason, the Committee report makes clear, is the chaos that prevails in rules and regulations, in defining spheres of authority, and in norms of financial management. (Ibid., p. 28.) All beginnings are difficult, and this is no exception. But other beginnings have a grace which this one lacks. Such widespread corruption could not take hold if the leaders had any national feeling, or sense of community, or higher purpose. These things were surrendered at Oslo. The PA is the creature of Oslo, where a national hope was betrayed for the sake of personal power. That was the arch-corruption. The present examples are its offspring.

Amid the gloom there remains a spark of light: the fact that the PLC Committee report could appear at all. Once again the legislative council has proved, despite its limitations, that there are those who seek to establish a new Palestinian society on foundations of sound administration and public rectitude. We spoke, for example, with Ali Girbawi, a professor in Political Science at Bir Zeit University and head of the Palestinian Independent Commission for Citizens Rights. In response to the Committee report, he said, "I think that the Palestinian Legislative Council has found its own strength. I dont think they were aware that they could do what they have done. Now they have realized that they have an impact. If they will hold the executive to account, the people will support them."

The Committee report exposed the alienation, even hostility, between the PAs executive and legislative branches. The entire Council approved the report, including PLO supporters close to Arafat, whereas most cabinet ministers took it as a declaration of war. Soon after its publication, sixteen ministers gave letters to Arafat signaling their readiness to resign if he wished. (The sixteen did not include Nabil Shaath, Jamil Tarifi, and Yassir Abed Rabu.) Public opinion in the West Bank saw this collective performance merely as a ploy aimed at taking the sting from the report. Kamal Sharafi, head of the Committee, told Challenge: "We didnt ask anyone to resign. We only demanded that Arafat disperse the cabinet, bring in the Attorney General, and put the guilty on trial. As far as were concerned, any ministers who are cleared can become part of the new cabinet."

In the meantime an additional factor has emerged. Even as the PLC Committee was conducting its investigation, Arafat appointed Taib Abed al-Rahim, General Secretary of the Presidential Office, to make a detailed inquiry into acts of corruption. The result has been yet another report, 200 pages long, which Arafat is keeping to himself. There are, then, three studies of corruption: that of the GCO, that of the PLC, and now this. The bevy of reports may reduce the overall impact. If Arafat refuses to deal with that of the PLC and ignores its recommendations, the Council will be exposed in all its impotence. Kamal Sharafi, however, counsels against despair. "Let's wait till September," he says. Meanwhile, corruption is thriving.

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