Watchdog: PA Money Laundry Run by EU & UK Foreign Ministries - Palestinians
in Poverty
DAVID FRANKFURTER
The Sprout | October 2004

Citizen's watchdog organisation, the Funding For Peace Coalition (FPC) has
just released a report (at www.euFunding.org ) substantiating a compelling
connection between European funding and ongoing Palestinian corruption and
terrorism.

The report uses meticulously documented evidence from the Palestinians
themselves. It lays bare the flimflam justifications over years of the
European Parliament and Commission, in turn supported by a shallow majority
report of a Parliamentary Working Party and the EU's docile fraud squad,
OLAF.

Many raw nerves are exposed: Nepotism and corruption amongst the Palestinian
Authority elite. Lists of names of PA employees engaged in terror -
contradicting EU denials. Terrorist organisatons admitting that they get
their salaries from PA budgets, which in turn are funded by European
largesse. Millions in a cash payroll to non-existent "employees" - years
after the EC had repeatedly declared that everyone was being paid through
direct bank deposits.

The report is well timed. The Working Party's majority report is due for
debate in the Autumn, and at least 2 MEPs have said they will be asking some
very direct questions. They want to know why the EU's money hasn't reached
the average Palestinian - who lives reportedly below the $2 a day poverty
marker. They want to know where 2 billion euros in EU taxpayers' aid over
10 years have gone.

Member states themselves have given a further 2 billion euros, in addition
to the EU contributions. Together with money from the US and Arab states,
the Palestinians have received what the World Bank calls '...the highest per
capita aid transfer in the history of foreign aid anywhere.'

Hidden in Appendix B of the report is a second and equally controversial
little gem. The UK government, often relying on EU assurances, has donated
an estimated £450 million to the Palestinians since 1993. £93 million has
been allocated for the three fiscal years to 2005/6. Most of this is
channelled through the Department For International Development (DfID).

The DfID official policy on fraud and corruption is one of zero tolerance.
The DfID notes that fraud diverts resources from the poor. It demands that:
"If anyone suspects fraud or corruption they must, immediately, report their
concerns to the Head of Internal Audit." And, the DfID lays out the strict
conditions for the handing out of Direct Budgetary Support.

The FPC's London spokesperson, David Winter says, "That's fine, in theory.
But the DfID must be aware of Britain's National Criminal Intelligence
Service report from 1993, which described the PLO, the main political
element of the PA, as 'the richest of all terrorist organizations'. Did the
PA suddenly reform itself overnight?"

A DfID document from July 2004 declares that the probability of fiduciary
risk for the £93 million is low to medium, because of reforms executed by
the Palestinian treasury. With the present evidence, that is unrealistic,
especially considering that most of the reforms have been stalled by the
executive.

Winter plans to challenge the DfID's Head of Audit on these issues. He
claims that handing money to the EU, which in turn passes money in Direct
Budgetary Support to the PA, deliberately bypasses its own regulations, and
is a breach of public trust. He says that the Head of Audit should have
acted on the public evidence from Arab and Palestinian sources, detailing PA
corruption, nepotism, the diversion of funds to terrorism and other abuses.

Further, he debunks DfID reliance on reforms in the PA protecting their
money. "Even the Palestinian street has erupted in riots because of the
paucity of these very reforms. It is time for a rethink - for the sakes of
both the Palestinian and the European taxpayer."