Lifestyles of the Rich and Palestinian

Palestinian Authority president stealing millions in aid, Middle East experts say

July 11, 2012

Palestinian Authority President Mahmoud Abbas has allegedly deposited nearly $13 million in U.S. taxpayer aid into a secret bank account, and routinely uses his political connections to profit from the stagnant peace process, according to testimony presented to Congress Tuesday by several Middle East experts.

Abbas has enriched himself during his seven years in office through secret land deals, and helped his two sons earn millions of dollars through their stakes in companies that profit from U.S. assistance, the experts said during a House Foreign Affairs Committee hearing entitled "Corruption within the Palestinian Political Establishment.

Abbas’ sons—Yasser and Tareq—have used their government ties to secure plum contracts and special treatment for business partners, according to Jonathan Schanzer, vice president for research at the Foundation for Defense of Democracies.

The corruption just scratches the surface of the Palestinian first family’s shady dealings, experts warned.

Abbas has "used his position of power to line his pockets," declared Rep. Steve Chabot (R., Ohio), chair of the House Foreign Affairs Subcommittee on the Middle East and South Asia. "Our policy must aim to empower those who seek to serve the Palestinian people instead of themselves."

Though Abbas and the PA are considered to be a safer, more moderate alternative to the terror group Hamas, which controls the Gaza Strip, the corrupt Abbas regime has poisoned peace talks as it seeks to secure power, experts and lawmakers said

"The consistent choice of Palestinian President Abbas is a path that has kept him in office," said Rep. Gary Ackerman (D., N.Y.), the subcommittee’s ranking member. "As a major political donor to the Palestinians, we need to be extremely concerned that our aid will be construed as support for a corrupt regime."

"It is the failure of the Palestinians to say ‘Yes’ that has prevented them from having a state of their own—not the [security] fence, not the settlements … not the [Israeli Defense Forces], not [Israeli] Prime Minister [Benjamin] Netanyahu or anyone else," Ackerman said.

The Obama administration is not providing proper oversight for the $600 million in U.S. foreign aid to the P.A., Schanzer noted.

"Washington should simply acknowledge that there is a problem," he said. "The staff at the U.S. Consulate General in East Jerusalem reportedly knows that Palestinians believe their ruling elites are corrupt. But for reasons that are not entirely clear, the State Department has yet to issue a clear statement to address the issue, or what it intends to do about it."

Elliott Abrams, a former national security adviser for George W. Bush, recounted the behind-the-scenes talks he had with Arab leaders who refused to support the P.A.’s corrupt institutions.

"I can tell you from my own experience, as an American official seeking financial assistance for the P.A. from Gulf Arab governments, that I was often told, ‘Why should we give them money when their officials will just steal it?" said Abrams, who noted that 82 percent of Palestinians believe their government is unethical. "Corruption is an insidious destroyer not only of Palestinian public finances but of faith in the entire political system."

The extent of Abbas’ shady dealings has come to light in recent months, Schanzer revealed in his testimony.

The Palestinian president is alleged by a former official to have stashed away $39 million in a secret bank account in Jordan, according to reports in the Arab press and elsewhere. Only Abbas and two of his closest confidants have access to the account, which is said to contain $13 million in U.S. funds.

Opposition websites in the West Bank have further alleged that Abbas earned $160 million from the sale of Palestine Liberation Organization-owned property in Lebanon, and that he owns "lavish properties worth more than $20 million in Gaza, Jordan, Qatar, Ramallah, Tunisia and the [United Arab Emirates]," according to Schanzer’s research.

Abbas’ sons have also sought to profit from their father’s political position, Schanzer said.

Yasser Abbas "served in an official capacity for the P.A., including as a special envoy to Canada in 2007," and "regularly accompanies his father on official travel," Schanzer said.

Yasser manages a construction company that routinely "does public works projects … on behalf of the Palestinian Authority." He also reportedly owns a corporation that received $1.89 million from USAID "to build a sewage system in the West Bank town of Hebron," Schanzer’s report states.

Additionally, the P.A. "granted diplomatic passports in 2009 to two business partners of the Abbas brothers," Schanzer revealed, based on conversations with current and former intelligence officials in the U.S. and elsewhere.

"The passports, according to these officials, ‘entitle [the business associates] to travel internationally with immunity’ normally afforded to Palestinian diplomats," Schanzer said.

Yasser Abbas has also attempted to engage in oil-related business in Sudan via the Caratube International Oil Company, a transaction that was facilitated by "Palestinian Authority ambassador to Sudan" Sayed al-Masri, the report states.

Since Schanzer and various news outlets first revealed some of these business ties, some of the websites and online sources affiliated with the Abbas brothers have been removed in an apparent attempt to hide their involvement.

"Washington’s foreign policy elites are largely unaware of the problem, or have chosen to ignore it," Schanzer told the committee. "If the problem goes unsolved and Palestinian frustration [with the corruption] festers, it could threaten regional stability."

Abrams noted in his testimony that President Abbas has insulated himself against legal inquiries into his business practices.

"He has been particularly allergic to such inquiries, and his reaction to allegations has often been swift—and illegal," Abrams said.

Both Abrams and Schanzer also outlined their concerns with the Palestine Investment Fund, an independent investment company established to bolster Palestinian institutions. The organization has faced scrutiny for being a tool of Abbas and his cronies.

"My most serious lingering concerns stem from indications that the fund is not as transparent or independent as it was first intended to be," Schanzer said. "Abbas has reportedly installed his own allies as board members."

Abrams urged the government and U.S. aid organizations such as the Middle East Partnership Initiative and USAID to pay closer attention to issues of corruption in the P.A.

"We have not one program dedicated to fighting corruption and to assisting those Palestinians who are doing so," Abrams said. "Why do we not make it a stated and central goal of our aid?"