IMF: Arafat stole $750 million from government budget

Sunday, September 28, 2003

LONDON The International Monetary Fund said Yasser Arafat has seized $750 million from the Palestinian Authority budget, much of which is financed by Western donors.

"There was a diversion of revenue from the budget to a special bank account controlled by President Arafat," Karim Nashashibi, IMF representative for the West Bank and Gaza Strip, said.

IMF officials acknowledged the investigation and its findings regarding Arafat at the summit by the financial institute held in the United Arab Emirates city of Dubai. The IMF and World Bank summit stressed the need for transparency in government.

The IMF concluded that Arafat took the $750 million from the PA budget and placed the funds in a bank account under his sole control. Arafat was found to have embezzled the funds from 1995 until 2000.

The assertion came in wake of the first IMF investigation of PA finances and the role of Arafat. The IMF said Arafat, chairman of the PA, invested most of missing PA funds in 69 companies that he directly controls.

"In any system, you can always have a possibility of some misuse," Nashashibi said. "What we are trying to do is raise the level of disclosure and transparency so that future or present misuse does not happen."

The IMF report said the money seized by Arafat came from an Israeli tax imposed on the employers of Palestinian laborers who worked in Israel. The tax revenues, amounting to more than $150 million a year, were then relayed to the PA.

The report also cited Arafat's stake in companies in PA-controlled areas. The companies included virtually every major firm in the West Bank and Gaza Strip, including casinos, telecommunications, quarries, cement production and fuel.

In Washington, Israel and the United States discussed the prospect that Arafat would be expelled from the Palestinian areas. The Bush administration reiterated its opposition to the expulsion of the PA chairman and Israeli Foreign Minister Silvan Shalom pledged to consult with Washington before Israel decides on such a move.

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