The US media network CBS caused uproar in Ram Allah last week when it aired a story on its flagship news show, 60 Minutes, about financial corruption in the Palestinian Authority.
The investigative report, “Arafat’s Billions”, zeroed in on President Yasir Arafat, claiming that he had diverted nearly $1 billion in public funds to ensure his political survival.
The report also claimed that Arafat channelled $100,000 a month to his wife Suha, who resides in Paris with their seven-year-old daughter.
The BBC put out its own damning documentary shortly afterwards, making similar allegations of monetary malfeasance, just as the IMF released an audit revealing Arafat had diverted over $900 million from the PA budget into bank accounts under his control.
The exposés could not have come at a worse time.
The latest Palestinian cabinet headed by Ahmad Quraya and voted in by the Palestinian Legislative Council (PLC) by a narrow margin on 12 November, is still struggling for approval and legitimacy.
Many in the PLC simply do not see any difference between the Quraya cabinet and that of his predecessor, Mahmud Abbas.
Critics say both are staffed by the same familiar faces close to Arafat, and both are fundamentally unable or unprepared to take major steps towards reform.
Not everyone in the Palestinian government is convinced of the CBS report’s veracity.
The programme, they say, was nothing more than a cheap journalistic smear campaign against Yasir Arafat, twisted around to suit the producers' sensationalist script.
“I have my doubts about this piece of information... our money is verified, monitored, cleared out... I simply cannot accept these accusations,” said Basil Jabir, director of the Palestinian Ministerial Committee on Reform, or MCR, to Aljazeera.net.
Paper chase: finance minister has been tracking missing funds
The CBS team said Palestinian Authority (PA) Finance Minister Salam Fayyad assisted their investigation.
Fayyad, who has not yet seen the programme, told Aljazeera.net he was unable to comment at this time. Staffers close to the minister however say he feels his words were taken out of context and used in a manner unhelpful to his campaign against corruption.
Fayyad, who was appointed to the PA Cabinet with the approval of Yasir Arafat in 2002, has been relentless in his pursuit of transparency and accountability. He has received much praise locally and abroad for his attempt to trace all of the money allocated to the PA that never reached its intended destination.
Under his lead, all PA income has been consolidated into a single bank account and the first ever Palestinian budget has been issued and made public.
Fayyad also championed the efforts to cancel taxes on government employees’ paychecks, which has translated into a 20% increase in salary for tens of thousands of workers, and with replacing the patronage-yielding cash payments system of the Palestinian security forces with one of direct salary deposit.
In addition, most of the PA’s overseas assets and the individuals involved in their investment have been identified and are being audited by a private European firm, according to Muhannad al-Jauny, special assistant to Fayyad.
“[Fayyad] did not invent the wheel. It’s just a matter of relativity. He was simply doing the ABCs of his job, but given that no one else has been, it’s appeared as if what he’s done is pure genius”
member of Palestinian Legistlative Council
In this way, said al-Jauny, “the finance minister will always have a say in overlooking the PA’s investments.”
The CBS programme claimed that these assets were tucked away in companies like a Coca-Cola bottling plant in Ram Allah, a Tunisian cell phone company and venture capital funds in the US and the Cayman Islands.
“All these are important steps that were not easy to implement and he did it,” said al-Jauny.
“[Fayyad] did not invent the wheel,” said Azmi Shuabi, a member of the Palestinian Legislative Council and Secretary-General of AMAN-the Coalition for Accountability and Integrity. “It’s just a matter of relativity. He was simply doing the ABCs of his job, but given that no one else has been, it’s appeared as if what he’s done is pure genius.”
Fayyad also uncovered that the PA was running a system of monopolies on commodities such as flour and cement, and more seriously, on the General Petroleum Corporation.
“This organisation was responsible for buying fuel from Israel and distributing it to gas stations and was controlled by the PA. Now [Fayyad] has changed the president of the corporation and the ministry of finance is in charge of it,” said al-Jauny.
Palestinian drivers now pay 20% less for gas and 80% less for diesel fuel.
Fayyad’s job is not an easy one. He is responsible for forming an accountable finance department for the Palestinian government, while at the same time working closely with President Arafat, the very person accused of mismanaging the funds he has been tracking.
Shuabi feels Fayyad has struck the right balance in dealing with Arafat.
“On one hand, I think that Salam Fayyad understands the president and his importance in Palestinian society. He does not work behind the President’s back - he lets him know of all the steps he is taking,” said Shuabi.
“On the other hand, [Arafat] often complains about some of the measures taken by Fayyad because they show that the decisions he has made in the past were wrong.”
Fayyad’s achievements are notable amidst an otherwise lethargic bureaucracy.
It remains to be seen, however, if he is capable of tackling the sensitive financial issues that were the centre of last week’s media blitz. This would mean tracking the money controlled by Arafat himself.
“Anyone who engages in reform that threatens Arafat's authority - and that's the only reform that's real reform - will be out,” said Khalil Shikaki, director of the Palestinian Centre for Policy and Survey Research, earlier this week. “This was one of the lessons for Abu Ala [PM Quraya].”
Shuabi disagrees with this assessment, however. Arafat is in no position to argue with Fayyad, says Shuabi, even if he has been embarrassed by some of the findings that have surfaced about him.
“I think that given the political situation the President is in today, he is forced to find a way to cooperate with Salam Fayyad. Arafat cannot take action against Fayyad so long as [Fayyad] is proceeding with his work in a legitimate manner, and getting the approval of the President. ”
Palestine's new cabinet is stocked with Arafat loyalists
In May of 2002, under pressure from the Bush administration and Israel, President Arafat gave an address to the Legislative Council in which he announced his intention to lead a process of reform.
A nine-member Ministerial Committee on Reform was appointed shortly thereafter.
The committee, which is chaired by Yasir Abd Rabbu, was responsible for producing a “road map” for reform known as the 100-days plan. The plan included measures for reform in the financial, security, judicial and civil service sectors among others.
Many Palestinian legislators do not believe the plan has lived up to expectations though.
Legislators such as Hanan Ashrawi and Azmi Shuabi argue that it needs to be revised and that the pace of reform needs to speed up. They are also quick to point out that Palestinians have been pushing for reform and financial accountability long before it became fashionable in Washington to do so.
“The Legislative Council has been calling on the [Palestinian] Authority to carry out financial reforms for a long time now, but no one was listening. In fact, we passed the Public Budget Law in 1997, but it was never executed. The difference is that today, Salam Fayyad is implementing these laws,” Shuabi told Aljazeera.net.
Others, such as Ziad Abu Amr, member of the PLC and president of the Palestinian Council of Foreign Relations, do not accept excuses made by many in the PA that reform cannot occur in the current political climate. Nation building and the peace process, he argues, can and should occur simultaneously.
“Transparency and accountability cannot be compromised for any other reason and lack of it does contradict any other efforts or activity on part of the PA whether it is standing up to the Israeli challenge or threat or the president and his career,” said Abu Amr.
Shuabi agrees, and says that despite the politicisation of the issue of reform in the western media as of late, they will continue to do their jobs in their capacity as legislators.
“Our reform has Palestinian goals and is for a Palestinian agenda, not a Western one.”