The news comes as Israeli officials agreed on Sunday to make an overdue payment of about $45 million owed to the Palestinians, but say future transfers will be halted once Hamas forms the next Palestinian government.

Commenting on the PA squandering issue, Ahmed al-Moghani, Palestinian attorney-general, said: "There are 50 cases of financial and administrative corruption. The amount of money that was squandered and stolen is more than $700 million."
 
Moghani said 25 officials had been arrested so far and 10 had fled abroad. He said the Palestinian Authority was seeking their extradition.

Among the cases under investigation involved a fictitious pipe factory funded by $4 million of Palestinian Authority cash and $2 million of Italian aid money, he said.
 
"The factory existed only on paper and the investigation is under way to find out where the money went," Moghani said.

Mismanagement

Hamas won the 25 January Palestinian parliamentary election by a landslide on a platform of ending corruption and mismanagement in the Palestinian Authority.

Hamas leaders are expected to
form a new government

Israel froze the payment last week to protest at Hamas's election victory.

Officials said at the time they wanted assurances that the money would not be used for bombings.

Zeev Boim, Israeli cabinet minister, said on Sunday the money was being transferred because Hamas was not yet part of the government.

"If and when Hamas rises to power and supports policies according to its jihad principles of destroying Israel, not another dollar will be transferred," he said.

Hamas, which remains committed to Israel's destruction, is expected to form a new government in the coming weeks.

Deepening crisis

"If and when Hamas rises to power and supports policies according to its jihad principles of destroying Israel, not another dollar will be transferred"

Zeev Boim
Israeli cabinet minister

Under existing peace accords, Israel collects millions of dollars of taxes for the Palestinians each month, then transfers the money to the Palestinians.

The money is essential for the Palestinian Authority, which employs about 137,000 government workers.

Last week's decision to freeze the payment deepened a crisis for the Palestinians, who had to seek emergency aid from Arab allies to meet their payroll.