Mysteries multiply over Yasser Arafat's missing monies

In the wake of Yasser Arafat's unstable condition, rumors have multiplied concerning funds that were previously under the Palestinian Authority chairman's control and which various elements in the PA are trying to locate. Reports have also abounded concerning a power struggle between Arafat's wife, Suha, and his financial adviser, Mohammed Rashid, who is in Paris.

A conservative estimate of the total sum held by Arafat in various places around the world is about $1 billion, and is largely based on monies that were clearly taken out of the territories and withdrawn from PA accounts between 1995 and 2000.

According to a report by the International Monetary Fund (IMF), which reviewed PA accounts and, in particular, the activity of the Palestinian Commercial Services Co. (PCSC) - Rashid's main agency, which oversaw cement, tobacco and building supplies' monopolies - an astronomical $897.6 million that was accrued by the PCSC and its offshoots during those years was spirited out of the Palestinian treasury and transfered to mysterious accounts in the course of 1999.

All attempts to trace that money came to naught, but several months after the report was written in mid-2003, a French prosecutor launched an inquiry into suspicions of money-laundering involving accounts belonging to Suha Arafat in France and Switzerland. She claimed the investigation stemmed from information given to the French authorities by "the Sharon government."

The bottom line is that the investigation continued, but its results are not known. The sum discovered in her accounts totaled $11.5 million.

According to the IMF report, entitled "West Bank and Gaza: Economic Performance and Reform under Conflict," when the PA was hit by a recession at the beginning of the intifada, particularly after Israel stopped transfering taxes it had collected, about $119 million was returned to the PA's current operational account - but the remaining $778 million or so disappeared.

International officials, especially those from PA donor countries, demanded that Arafat return the money to the PA's account, particularly following criticism within the donor countries over lax supervision of the PA's accounts during the Oslo years, and in view of Israel's charge that donations were being used to finance terrorist activity.

The money transfered to mystery accounts is apparently not the only sum that Arafat moved outside the territories. The IMF report explicitly states that the allegedly smuggled sums do not include the PA's income from taxes, about which no record has been found, nor investments that Mohammed Rashid made exclusively outside the territories. Additional monies that may have gone missing from PA accounts derive from various taxes levied on PA bureaucrats throughout the years.

In the case of the Karin A ship (seized in 2002 on its way to PA territories laden with weapons), at least, it is known that the ship's purchase was handled by the treasurer of the Palestinian security forces, Fuad Shubaki, who is in detention in Jericho, but it's unclear where the millions of dollars came from to buy the weapons in Iran.

Additionally, the money that disappeared does not include the income of the PA monopolies between the beginning of the intifada and the end of 2003, when they were placed under the auspices of the Palestine Investment Fund, which belongs to the PA and is headed by Finance Minister Salam Fayyad.

Mohammed Rashid served until two weeks ago as a member of the PIF's board of directors and was active on all its committees. Immediately after the news of Arafat's deteriorating health, Rashid resigned from this fund, which consolidates investments he made over the years. The fund was set up at the behest of the donor countries, which demanded sweeping reforms and brought in international accounting firms to audit Rashid's assets.

The fund reported holdings as of December 2003 that were worth $799 million. The sums in the fund are under the ongoing supervision of Fayyad and its board of directors, and cannot be withdrawn without the board's consent.

Other question marks concerning assets and monies held by Arafat remain with respect to accounts that the PLO and Fatah operate separate from other PA accounts. The extent and origins of the money in these accounts have never been fully ascertained.