Palestinian finance minister denies secret Arafat accounts, no terrorism payments

<br>JERUSALEM (AP) _ In a bid to dispel charges of widespread corruption, the top Palestinian financial official on Friday said the Palestinian Authority had no secret accounts and had not funneled money

Friday, February 28th 2003, 12:00 am

By: News On 6

JERUSALEM (AP) _ In a bid to dispel charges of widespread corruption, the top Palestinian financial official on Friday said the Palestinian Authority had no secret accounts and had not funneled money to groups Israel and the United States accuse of terrorism.

Finance Minister Salam Fayad also disclosed that the Palestinian Authority had about $600 million in liquid assets. The public accounting was the first since the creation of the Palestinian governing body since it was founded about a decade ago.

``The object is to have a system judged to be good and right by our own people,'' Fayad said in an interview with The Associated Press. ``If we succeed on that front, it should be good for the rest of the world.''

Fayad has won praise in recent months from Palestinians as well as Israeli and American officials for making serious efforts to clean up the Palestinian Authority's murky finances. He said his efforts were a first step in carrying out U.S.-backed reforms.

International donors, led by the United States and the European Union, have for years demanded the Palestinian government divulge its financial dealings, including the alleged diversion of millions of dollars in tax revenues to secret bank accounts to which only Palestinian leader Yasser Arafat and a few close advisers had access.

In a special annual issue of Forbes Magazine, Arafat was reported to have $300 million, making him among the richest in its category of ``Kings, Queens and Despots.''

``This is not his money,'' Fayad said. ``This is the Palestinian Authority money and it is being managed as such.'' Fayad's report was partially prepared by analysts from Standard & Poors and did not mention accounts held by Arafat.

An internationally respected former World Bank official, Fayad was appointed finance minister by Arafat in a Cabinet reshuffle forced on the Palestinian leader last June. Arafat made the changes after widespread complaints about corruption in his administration and Israeli charges that government funds were being funneled to terror groups. Fayad said no money had gone to fund terrorist activity.

``It is really not too hard to do the accounting and to show that what ever limited resources we had ... we were funding basic government functions,'' he said, dodging questions about past reports that Arafat himself had signed off on payments to suspected terrorists.

An aide to Israeli Prime Minister Ariel Sharon, Rannan Gissin, refused to comment on the financial disclosure, saying it would be counterproductive.

Last year, the Israelis issued a report linking Arafat to terror attacks against Israel and released documents that it said outlined payments to Palestinian militants, allegedly signed by Arafat. The Palestinians have questioned the authenticity of the documents.

Fayad said Friday's financial disclosure was meant to restore credibility, not only to the Palestinian Authority but also to Arafat.

``Reform is not very easy in the best of circumstances,'' Fayad said.

Fayad gave a detailed accounting of the Palestinian Authorities' financial assets, held locally and internationally. Among the most valuable were Orascom Telecom Algeria, valued at $90 million, and the Jordan Mobile Telecommunications Company, valued at more than $66 million.

Other assets included the Palestinian Cement Company, valued at $54 million. He said the Palestinian Authority's overall debt is about $1.2 billion.

Other holdings were still being evaluated by Standard & Poors, he said.

U.S. and European governments have complained for years that the Palestinian financial structure is not transparent and does not allow donors to trace funds through to end projects.

Also, there have been consistent charges that Palestinian officials rake off large sums of money for themselves. Fayad has promised to end the use of cash in government transactions, particularly in the payment of wages to Palestinian security forces, and to integrate for the first time the separate and shadowy defense budget into the overall public accounts.

Fayad, 50, refused to comment on speculation that he is a candidate for a new position of prime minister, which Arafat, under international pressure, has said he would fill in the coming weeks.

The appointment of a prime minister to share day-to-day control of the Palestinian Authority is another key reform demanded by the United States and Israel, who argue that Arafat has failed as Palestinian leader.

After meeting Arafat at his shell-battered headquarters in Ramallah, U.N. envoy Terje Roed-Larsen told reporters Friday that the Palestinian leader would call on the legislature and another key leadership body, the PLO Central Council, to discuss the appointment of a prime minister next week.