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December 13, 2002/Tevet 8 5763, Vol. 55, No. 16
'Rampant corruption' mars joint venture
GIL SEDAN
Jewish Telegraphic Agency
JERUSALEM - Those inclined to look on the bright side might say that Israeli-Palestinian cooperation is alive and kicking: Israelis and Palestinians joined ranks to make big money, until one of them woke up with a bad conscience.
The joint venture in question began in February 1997, when Palestinian Authority President Yasser Arafat transferred official P.A. funds from the Arab Bank in Ramallah to private accounts in Swiss banks.
The money was Palestinian, mostly customs and levies on products imported into the Palestinian Authority via Israel.
But the intermediaries were Israelis, who in return received generous commissions - millions of dollars, according to reports.
The key person was Yossi Ginossar, a former senior official in the Shin Bet security service, and his partner Ezrad Lev. Ginossar and Lev succeeded in opening the doors of Switzerland's Lombard Odier Bank to the Palestinian money.
The cooperation continued until the summer of 2001, well into the Intifada.
Like some other former senior officers, Ginossar had been involved in business transactions between Israeli and Palestinian companies ever since the early days of Palestinian Authority rule under the Oslo peace accords. The Palestinians dubbed him "Mr. 5 Percent," a reference to the commissions he earned on business deals.
The hidden Swiss accounts eventually grew to more than $300 million, according to Israeli press reports. The Israeli partners managed the accounts, though they were not authorized to make withdrawals.
But then, in August 2001, something unexpected happened: Mohammed Rashid, Arafat's closest financial advisor, suddenly withdrew some $65 million from the account, which then couldn't be traced.
Lev told the Israeli daily Ma'ariv that he suspected the money was going to finance terrorist activities.
He decided that enough was enough, that there was no real control over the money and that it was politically unacceptable that Ginossar - whose extensive business ties had led Prime Ministers Yitzhak Rabin and Ehud Barak to use him as an unofficial emissary to the Palestinian Authority - should also be involved in controversial financial transactions with the Palestinians.
Lev, 42, went to the Ma'ariv newspaper and disclosed the secret deals Ginossar was involved in. He even charged that Ginossar had paid millions of dollars to Rashid to ensure his continued involvement in the accounts.
There was nothing new in the fact that the Palestinian Authority handles its money as if it was the private property of Arafat and his colleagues. At his own discretion, Arafat has allocated funds to various projects - including the financing of terrorist activities, as the Israel Defense Force learned from documents seized at Arafat's Ramallah headquarters last spring.
Rampant corruption has enriched the Palestinian political elite, but it also has alienated the leadership from the masses - and helped opposition elements, including Hamas, gain in popularity.
What is new is the depth of Israeli involvement in the accounts - and the ways in which it undermined international pressure on Arafat to implement fiscal reforms and full financial accountability.
The exposure of the Swiss funds and their alleged connection to Israel hasn't helped Arafat's already battered political stock - or that of the Israeli left that negotiated and, in some cases, benefited from the Oslo peace accords.
While the ultimate use of the funds in Arafat's bank account is still unclear, the Ginossar scandal sheds light on the dubious character of financial relations between Israel and the Palestinian Authority.
Over the years, Israeli authorities approved the transfer of official P.A. funds to private accounts, though they knew the money could have been used instead to help hundreds of thousands of Palestinians suffering in the Palestinian territories.
The Israelis believed that financial interactions with the Palestinian Authority - even if not strictly kosher - ultimately would strengthen ties and lead to a peace agreement.
Shortly after the story was published in Ma'ariv, Sharon instructed the Mossad to check whether the Swiss accounts were used to finance terrorism.
P.A. officials dismissed the allegations as a smear campaign against Arafat. But Israeli pundits predicted that the scandal would further weaken Arafat's status among the Palestinians.
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