Why was €1m a month sent to Arafat's wife?

France launches inquiry into suspect bank transfers as Israelis say EU money went to help suicide bombers

Jon Henley in Paris
Thursday February 12, 2004
The Guardian

French public prosecutors said yesterday they had opened a money-laundering inquiry into suspect transfers totalling some €9m (£6m) into Paris bank accounts held by the wife of the Palestinian leader, Yasser Arafat.
The preliminary inquiry, which will determine whether a full investigation is warranted, was launched after the Bank of France and Tracfin, the French anti-laundering agency, noticed regular payments of about €1m a month entering Suha Arafat's accounts. An official said the money, from "a Swiss institution", was paid into two separate accounts at the Arab Bank and the Banque Nationale de Paris in the name of Mrs Arafat, who lives in Paris.

The inquiry, which began in October last year, is confined to payments between July 2002 and July 2003, he said, although the transfers started about a year earlier.

According to the satirical weekly Le Canard Enchaîné, €2m of the money subsequently left Mrs Arafat's accounts and was transferred to Alberto Pinto, an interior decorator much in demand among the international jet set. Mr Pinto's office denies he ever worked for the Palestinian leader or his family. Suha Arafat lives at an undisclosed Paris address with her daughter Zahwa and her mother, Raymonda Tawil.

The family has been reported as occupying an entire floor at the luxury Bristol Hotel, though this is denied by hotel management. She is also said to receive some $100,000 (£53,000) a month from the Palestinian Authority.

Word emerged in 1992 of Mr Arafat's secret marriage to the much younger Suha, whose uncovered hair and chic western clothes shocked many Palestinians. She rarely visits Palestine, has been criticised for leading an extravagant lifestyle, and has caused her husband many headaches by alleging corruption, cronyism and human rights abuses in his Palestinian Authority.

Investigators from the European Union's anti-fraud office are currently in Jerusalem examining the authority's accounts after allegations last year that part of the EU's annual aid package to Palestine - which totals about €350m a year - may have been misappropriated.

The EU's concerns arise mainly from an audit of the authority's finances carried out last year by the International Monetary Fund. In September 2003 the chief auditor, Karim Nashashibi, alleged at a press conference in Dubai that as much as $900m had been diverted between 1995 and 2000 into "a special account controlled by Yasser Arafat".

IMF and EU officials say that because of the way the Palestinian leadership has done business over many years, relying on a web of companies to generate money and move cash around when Palestinian political groups were fighting Israel from exile, it is difficult to estimate what proportion of the diverted funds has been misappropriated. The investigation by the EU's anti-fraud office has also taken in documents seized by the Israeli army during its reoccupation of Palestinian cities two years ago. The Israelis say the documents show that EU money went to the Al-Aqsa Martyrs Brigades, responsible for suicide bombings.

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The Palestinian Authority's representative in Paris, told Le Canard Enchaîné that Mrs Arafat was not aware of the inquiry and said she "does not answer journalists' questions". The authority's Paris office promised to pass a message to Mrs Arafat, but refused to say how she might be contacted. The Guardian received no response to its questions last night.

Mr Arafat has always rejected allegations of corruption in the authority. Yet in recent years it has suffered a fall in foreign donor money amid allegations that some of the cash has been siphoned off by corrupt officials or diverted to militants carrying out the suicide bombing campaign against Israel.

The Americans and Europeans forced a new finance minister, Salam Fayad, on Mr Arafat to establish more transparent management of Palestinian Authority finances. Mr Fayad made great strides and became the darling of foreign governments in the face of bitter resentment from Mr Arafat.

However, corruption is still rampant and there is widespread disillusionment among ordinary Palestinians at the relative luxury that many Fatah leaders live in. On Saturday, more than 300 members of Mr Arafat's ruling Fatah movement resigned collectively, demanding greater democracy and an end to all corruption.


http://www.guardian.co.uk/internatio...146032,00.html