Ginossar denies unlawful activity in dealings with PA funds
By Aluf Benn, Baruch Kra and Yossi Melman, Ha'aretz Correspondents
[Ha'aretz - 7 December 2002]
Israeli businessman Yossi Ginossar denied on Friday claims that he broke the law during his business dealings with the Palestinian Authority and its senior officials, including PA Chairman Yasser Arafat.
Speaking in an interview to Channel One, Ginossar said that all his dealings with the PA had been entirely within the framework of the law and that at no point did he or his associates have signatory power for any PA bank accounts.
The Ma'ariv daily reported Thursday that Ginossar, a former senior Shin Bet official, and his business partner Ozrad Lev were involved in the illegal transfer of some $300 million in Palestinian funds to Yasser Arafat through a secret Swiss bank account to unknown destinations during 2000 - the first year of the current Intifada.
Lev, a former assistant to Ginossar, alleged that the funds were transferred from an official Palestinian Authority account in the West Bank by Arafat and one of his top aides. Lev, an accountant, told Ma'ariv that he and Ginossar had helped open and manage the Swiss account.
Ginossar said that the Ma'ariv investigation into his business activity was tantamount to character assassination and abuse. He said that the $65 million was reportedly "missing" from the PA accounts, which the paper claimed had gone to fund terror activity, had been moved from one account to another and ultimately been used to finance communications enterprises. He said that the money belonged to the PA, which could do with it as it pleased.
Ginossar asserted that he had been the business partner of Yasser Arafat's financial adviser, Mohammed Rashid, but since the start of the Intifada in September 2000, he had ended all business dealings with him, although they had maintained their friendship.
A-G orders probe into Ginossar claims
Attorney General Elyakim Rubinstein met Friday morning with police chief Shlomo Aharonisky, to discuss claims that Ginossar and Lev managed Swiss bank accounts and shell companies for Palestinian Authority officials, and transferred hundreds of millions of dollars from Palestinian Authority Chairman Yasser Arafat's account to an unknown destination.
The two agreed that the police would investigate the claims, and that Rubinstein would subsequently decide whether any charges should be brought.
On Thursday, Prime Minister Ariel Sharon instructed the Mossad to investigate the allegations. Mossad head Meir Dagan met Lev and discussed the alleged illegal acts, such as bribes and money transfers to and from the PA. A government source said Dagan met Ozrad "due to personal interest" and that it is not at all clear whether the Mossad would be asked to probe the affair.
Palestinian Cabinet Minister Saeb Erekat denied the allegations, saying they were part of an Israeli "smear campaign" against the Palestinian Authority.
Lev's revelations - in interviews with Army Radio and Ma'ariv - came as international pressure builds on Arafat to reform the Palestinian Authority and crack down on corruption.
The United States and European donors to the PA - as well as the World Bank and new Palestinian finance minister Salem Fayad - have been searching for the funds since the Arafat aide, Mohammed Rashid, withdrew them last year, according to Ma'ariv.
Ginossar, who was in charge of top level negotiations with the Palestinians for almost a decade until last year, allegedly worked with Rashid to set up the account. Rashid oversees Arafat's secret funds and is seen as a key figure behind alleged corruption in the Palestinian Authority. Erekat denied Arafat's involvement in any such scheme.
Ginossar reportedly made $10 million from Rashid in commissions for his services and in return, funneled money to Rashid via fictitious companies that were set up, Lev said. Ginossar managed Rashid's funds, "using them as his own, establishing countless offshore companies (and) secretly paying Mohammed Rashid percentages and commissions from gas and cement deals in Israel," from which he also took a cut.
Ginossar, who served as personal envoy to the PA for Israeli prime ministers due to his close personal and business relations with Palestinians, denied any wrongdoing.
"All my activities as a businessman were carried out lawfully," he told Ma'ariv. "The state made use of me and my connections, not the other way around." He insisted he had filed all the necessary reports to the relevant authorities and kept his business affairs separate from his volunteer work as an envoy for Israeli prime ministers. He said, however, that he did make use of the business connections with the Palestinians to advance contacts between Israel and the PA.
Labor MK Benjamin Ben-Eliezer, who served as defense minister during the period in question, told Army Radio he knew nothing of the bank account being managed by Ginossar and was certain the former Shin Bet official was not involved in any illegal activities.
Lev, who gave Ma'ariv details of the arrangement, said he felt guilty over the affair. "I couldn't go on living with the feeling that I was partner, albeit a completely passive one, to illegal and unethical acts, including under-the-table bribe payments, conflicts of interest and problematic conduct," he reportedly said. "It became clear to me that the peace process is corrupt, no less than the occupation," he added.
Lev, a 42-year old businessman, opened the Swiss bank account on behalf of the Palestinians and was used as their financial strategist. He was also Mohammed Rashid's financial adviser. Lev told Ma'ariv how he personally persuaded the respected Swiss bank, Lombard Odier & Cie., to open an account for Arafat in April 1997. Funds from an official Palestinian Authority account at a branch of the Arab Bank in Ramallah were transferred to the Swiss account, he said.
It is not clear if the Ramallah account contained money donated by foreign countries or involved tax receipts or other income. The foreign account was opened with copies of Arafat's personal documents, for a front company named Ledbury, the paper said. The company's name was later changed to Crouper by the Israelis, who were concerned that too many people knew about it.
Lev said he did not know where the money ended up. "It could have been used for personal needs, to form a shelter for Arafat and senior Palestinian officials, to pay salaries or even, and I really hope not, for illegal activities," he said.
After the recent elections and following reports of Ginossar's contacts with PA officials, Rubinstein asked Sharon not to use Ginossar for this type of mission.
Ginossar himself is out of the country and was unavailable for comment. Legal and government sources said the reports of Ginossar's cooperation with Rashid and his mediation in business deals between Israeli companies and the PA were not new. However, the Ma'ariv report uncovers details that raise suspicion of conflict of interest and bribery, the sources said.
The PA's funds are deposited in Palestinian and Arab banks. From there they are transferred for investments, preserving their value and profit making, into accounts of banks and investment companies abroad.
Ginossar and Lev did not have signatory rights in these accounts and they could not withdraw funds from them. According to Lev, they paid "under the table" commissions and payments to Rashid from the company they set up, Ledbury. Lev hinted that at a certain stage he began to suspect that Rashid was transferring funds to causes which could be used to finance terrorist activities. The turning point came, Lev said, when Rashid transferred $65 million to an unknown account after the Intifada started.