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09-20-2003, 11:56 PM
An audit of the Palestinian Authority revealed that President Yasser Arafat had diverted US$900 million in public funds to a special bank account he controlled and most of the money was later invested in Palestinian assets, an International Monetary Fund official said Saturday.
Karim Nashashibi, IMF resident representative in the West Bank and Gaza, credited openness and transparency in the Palestinian Authority's accounting under Finance Minister Salam Fayad for disclosing the transfers between 1995 and 2000.
The large majority of the money was invested in Palestinian assets at home and abroad, Nashashibi said. A Palestinian Investment Fund was established to manage those assets and privatize them, he added.
But the IMF official did not rule out the possibility of the remaining funds being misused, saying he believes an audit of the remaining funds will be conducted later.
"In any system you can always have a possibility of misuse of funds," Nashashibi said. "But what we're trying to do is have a level of disclosure and transparency so that future or present misuse does not happen ... At least there is a followup, there is disclosure."
There have been charges of corruption and mismanagement in the Palestinian Authority. In a special annual issue of Forbes Magazine, Arafat was reported to control US$300 million, making him among one of the richest in its category of "Kings, Queens and Despots."
Nashashibi said the revenues were diverted from the budget to a special account controlled by Arafat and his chief economic adviser.
"We estimated that amount to be around US$900 million over a period of five years," the IMF official said.
He said that the Palestinian Authority was involved in 69 commercial activities, both at home and abroad, worth an estimated US$700 million in today's market prices, "which probably in '99 were US$900 million."
Nashashibi said Fayad, the Palestinian finance minister who was the resident representative of the IMF in the Palestinian territories in 2000, told Arafat that the account must be disclosed.
The disclosure came as Fayad won a promise of additional financial assistance at a meeting Saturday with the Group of Seven major industrialized nations in Dubai.
The Palestinian economy has contracted by 30 percent because of the Palestinian-Israeli violence over the last three years and IMF officials said it needs an injection of about US$1.2 billion in assistance.
Arafat, regarded by Palestinians and Arabs as the symbol of the Palestinian struggle for a homeland, has been the most famous Palestinian leader since waging a guerrilla war against Israel in the 1960s.
Israel on Sept. 11 announced that it will "remove" Arafat at an unspecified time, calling him an obstacle to peace.
Israeli officials have suggested he may be exiled, killed or simply isolated at his shattered compound in the West Bank town of Ramallah. The United States, while isolating Arafat politically, has criticized the Israeli decision, which sent Arafat's popularity soaring among his people and among many Arabs.
Karim Nashashibi, IMF resident representative in the West Bank and Gaza, credited openness and transparency in the Palestinian Authority's accounting under Finance Minister Salam Fayad for disclosing the transfers between 1995 and 2000.
The large majority of the money was invested in Palestinian assets at home and abroad, Nashashibi said. A Palestinian Investment Fund was established to manage those assets and privatize them, he added.
But the IMF official did not rule out the possibility of the remaining funds being misused, saying he believes an audit of the remaining funds will be conducted later.
"In any system you can always have a possibility of misuse of funds," Nashashibi said. "But what we're trying to do is have a level of disclosure and transparency so that future or present misuse does not happen ... At least there is a followup, there is disclosure."
There have been charges of corruption and mismanagement in the Palestinian Authority. In a special annual issue of Forbes Magazine, Arafat was reported to control US$300 million, making him among one of the richest in its category of "Kings, Queens and Despots."
Nashashibi said the revenues were diverted from the budget to a special account controlled by Arafat and his chief economic adviser.
"We estimated that amount to be around US$900 million over a period of five years," the IMF official said.
He said that the Palestinian Authority was involved in 69 commercial activities, both at home and abroad, worth an estimated US$700 million in today's market prices, "which probably in '99 were US$900 million."
Nashashibi said Fayad, the Palestinian finance minister who was the resident representative of the IMF in the Palestinian territories in 2000, told Arafat that the account must be disclosed.
The disclosure came as Fayad won a promise of additional financial assistance at a meeting Saturday with the Group of Seven major industrialized nations in Dubai.
The Palestinian economy has contracted by 30 percent because of the Palestinian-Israeli violence over the last three years and IMF officials said it needs an injection of about US$1.2 billion in assistance.
Arafat, regarded by Palestinians and Arabs as the symbol of the Palestinian struggle for a homeland, has been the most famous Palestinian leader since waging a guerrilla war against Israel in the 1960s.
Israel on Sept. 11 announced that it will "remove" Arafat at an unspecified time, calling him an obstacle to peace.
Israeli officials have suggested he may be exiled, killed or simply isolated at his shattered compound in the West Bank town of Ramallah. The United States, while isolating Arafat politically, has criticized the Israeli decision, which sent Arafat's popularity soaring among his people and among many Arabs.