Middle East: Is money at the root of the extraordinary events surrounding Yasser Arafat? Michael Jansen reports on the hundreds of millions, many of them "missing", connected to the Palestinian leader.
Palestinian commentators have expressed concern that as much as $1 billion in public funds could be salted away in numbered accounts known only to the Palestinian President, Mr Yasser Arafat, and his financial adviser, Mr Khaled Salam.
In an effort to refute allegations of financial intrigue, Mr Salam (an Iraqi Kurd who goes by the nom de guerre Muhammad Rashid) made a tearful statement on Arabic satellite television on Sunday night claiming that all funds at the disposal of Mr Arafat had been deposited in the Palestinian Investment Fund which Mr Salam formerly managed under the supervision of its board of directors and Mr Salam Fayyad, the Palestinian Minister of Finance.
Mr Salam resigned from the fund's board and his managerial post when Mr Arafat collapsed nearly two weeks ago.
Dr Samir Abdullah, who heads an economic think-tank in Ramallah, told The Irish Times that two years ago the US and EU donor countries insisted on an inventory of Palestinian Authority assets.
Two international accounting firms examined a portfolio of external and local investments valued at $900 million. One third had been placed in domestic concerns, including the main Palestinian telecommunications company, which was subsequently privatised, the rest in Egyptian, Algerian, Jordanian and European firms. Dr Abdullah said all the money in the fund came from Palestinian taxpayers.
In addition to this portfolio, there is nearly $1 billion which is said to have been exported by Mr Salam from the Palestinian territories between 1995 and 2000. The International Monetary Fund reported that a holding company supervised by Mr Salam, Palestinian Commercial Services, which controlled monopolies supplying cement, tobacco, and building materials, transferred $897.6 million out of the territories before the end of 1999. Of this, $119 million was returned to the authority's operational account in 2000, when finances were strained at the beginning of the Intifada.
Efforts to trace the $778 million have failed although in 2003 a French investigation into money laundering found that $11.5 million had been deposited in accounts in France and Switzerland in the name of Mr Arafat's wife, Suha.
There could also be funds belonging to the Palestine Liberation Organisation (PLO) and Mr Arafat's Fateh movement stashed abroad in undeclared investments and accounts. Until 1990 the PLO, dominated by Fateh, was considered a wealthy organisation. It received billions in regular contributions from oil-rich Arab states.
This money was controlled by Mr Arafat personally and to a lesser extent, by the current Prime Minister, Mr Ahmad Korei, who was head of the PLO's finance committee. Most was invested in enterprises in Africa and Europe.
In 1990, Gulf states ended their support after Mr Arafat refused to endorse the US-led war to free Kuwait from Iraqi occupation and instead attempted to mediate a peaceful Iraqi withdrawal from the emirate.
Dr Abdullah believes that once the flow of funds to PLO/Fateh coffers was cut, monies were soon spent, leaving the PLO/Fateh on the verge of bankruptcy.
Mr Arafat, who has never been accused of amassing a personal fortune, did not distinguish between PLO, Fateh, and Palestinian Authority money when dispersing large sums to buy loyalty of factions and influential individuals, assist poor countrymen, and invest in pet projects. His style of financial wheeling-and-dealing compounded with extreme secrecy has made it impossible to track expenditures. As a result, Dr Abdullah remarked: "No one knows if there is money in Arafat's name."
The Palestinian Authority is facing financial crisis if donors do not provide fresh funding. Dr Abdullah said that 60 per cent of the Palestinian Authority's budget came from taxes, duties and tariffs collected by Israel. In 1999 this amount was $650 million. Today it is around $300 million.
Furthermore, in 1999 income and value added taxes collected directly by the authority amounted to $350 million; this has been cut by more than half. Current expenditure amounts to more than $1.2 billion, creating a massive deficit of $888 million.
Six months ago, the authority appealed to the donor community to establish a trust fund but this remains to be done. Dr Abdullah warned that unless the authority receives funds there could be financial collapse, closure of schools and hospitals, and disruption of services.