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Thursday, April 28, 2016
PMW: The PA's Billion Dollar Fraud

April 27, 2016
PMW Special Report
For full report
http://palwatch.org/STORAGE/special%20reports/PMW%20report,%20PA%20billion%20dollar%20fraud,%20270416.pdf

The PA's billion dollar fraud

The Palestinian Authority is deceiving Western donor countries,
falsely claiming to have stopped paying salaries to terrorist prisoners,
and reaping more than a billion dollars/year in return

by Itamar Marcus

This special report by Palestinian Media Watch reveals a major fraud by the
Palestinian Authority, through which it is reaping more than a billion
dollars in foreign aid yearly.

In 2014, the PA announced that in order to continue receiving more than a
billion dollars in financial support annually, it was acceding to US and
European donor countries' demands that the PA stop paying salaries to
terrorist prisoners. The PA claimed the money for prisoners salaries would
no longer be paid by the PA but instead by the PLO.

Even though PMW warned at the time that this was a "ploy," the US and EU
countries accepted the PA's assurance, and continue to give the PA over a
billion dollars in financial aid every year.

This PMW special report cites numerous official PA sources and statements by
officials, showing that the PA is violating the trust of the US and EU donor
countries. According to all these sources, the PA Ministry of Finance
continues to make the decisions and remains the source of the money for
paying salaries to terrorist prisoners.

In addition, PMW has studied records of the PA Ministry of Finance that show
money transfers the PA made to the PLO in the years 2012 - 2015. These
transfers show a noteworthy money trail used to transfer money that is
needed for terrorist salaries from the PA to the PLO. In 2015, after the PA
had assured Western donors it was no longer paying the salaries, and after
it had closed the Ministry of Prisoners' Affairs, it suddenly transferred
more than double what it had transferred to the PLO in previous years. The
additional amount transferred by the PA to the PLO in 2015 was almost
identical to the budget the PA Ministry of Prisoners' Affairs used to have.
This extra money the PLO received from the PA in 2015 matches the amount the
PLO now needed to pay the salaries of terrorist prisoners.

The payments may be made by the PLO, but the money is still PA money.

Since it continues to fund salaries to terrorists, thereby clearly violating
its promise to donors, the PA should be ineligible to receive Western donor
money. However, through this deception the PA is still reaping over a
billion dollars in foreign aid.

The PA's billion dollar fraud

The PA's claim that it no longer pays
salaries to terrorist prisoners is false

Claiming to have complied with demands of international donors, the PA
announced in August 2014 that it had stopped funding salaries to terrorist
prisoners, and that the PLO would fund those salaries instead

This PMW report documents that the PA's claim to have stopped funding
terrorist prisoners' salaries is false. The PA Ministry of Finance continues
to make the decisions and allocate the money for salaries.

The PA's pledge that it fulfilled donor countries' demands is false.
Therefore, the PA today is fraudulently receiving the $1 billion/year it
receives in foreign donor money

by Itamar Marcus and PMW staff

Overview:

2011: PMW exposes that the PA pays high salaries to terrorist prisoners
jailed in Israel, among them murderers serving many life sentences.

2012-2014: Western donor countries condemn these payments and threaten to
cut off funding unless the PA meets their demand and stop paying salaries to
imprisoned terrorists .

August 2014: PA claims to acquiesce to international pressure, announces
that it has closed the PA Ministry of Prisoners' Affairs, and that salaries
to prisoners will no longer be paid by the PA but by a newly formed PLO
Commission of Prisoners' Affairs.
&n bsp;
The new PLO Commission is identical to the old PA Ministry of Prisoners'
Affairs in everything but name. The Commission and the salary payments to
prisoners remain under the "supervision" of the "Palestinian presidency,"
i.e., Mahmoud Abbas. The PA Minister of Prisoners' Affairs became the
director of the PLO Commission of Prisoners' Affairs.

2014-2016: Western donors accept PA assurances that the PA has stopped
paying salaries to terrorist prisoners and the PA continues to receive
foreign aid.

April 2016: This PMW report shows that the PA has misled donor countries and
in fact continues to fund salaries to terrorists. The PA today is
fraudulently receiving aid from Western donor countries of approximately $1
billion/year.

- The PA Ministry of Finance is identified by official PA sources as the
body responsible for paying salaries to terrorist prisoners.
- The PA Ministry of Finance continues to be responsible for policies
regarding salaries to terrorists.
- PA officials openly talk about the PA's continued payment of salaries to
prisoners based on current PA law that mandates that the PA pay them
salaries.
- When the PA was short on cash, it announced that it cut salaries to
terrorist prisoners (and civil servants) by 60%.
- In 2014, the last year the PA Ministry of Prisoners' Affairs operated, its
budget was 442 million shekels. The year after the "closure" of the PA
Ministry of Prisoners' Affairs, the PA raised the amount it transfers to the
PLO by 481 million shekels: from 294 million (2014), to 775 million (2015).
The additional 481 million shekels ($128 million) the PA gave to the PLO in
2015 is the amount the PLO Commission of Prisoners' Affairs needed to take
on the responsibilitie s of the PA Ministry of Prisoners' Affairs, which is
primarily paying terrorists salaries. The previous year's amount, 442
million shekels, plus approximately 10% yearly rise matches the additional
481 million shekels the PA gave the PLO in 2015.
- The source of the money for salaries to terrorist prisoners thus continues
to be the PA.

Conclusion
- Western donors are being intentionally misled by the PA, which continues
to fund the salaries to imprisoned terrorists.
- By creating the PLO Commission of Prisoners' Affairs in order to hide that
it continues to fund salaries to terrorists, the PA has succeeded to
fraudulently receive $1 billion/year in foreign aid from the donor
countries.

Executive Summary

The Palestinian Authority receives over a billion dollars in international
aid yearly. Several EU countries and the US threatened to stop funding the
PA after Palestinian Media Watch exposed in 2011 that the PA pays high
salaries to terrorist prisoners and released terrorists. Among the terrorist
prisoners on the PA payroll are murderers who are serving many life
sentences for killing Israeli civilians and orchestrating suicide bombing
attacks, such as Abdallah Barghouti who is serving 54 life sentences for
building bombs that murdered civilians in cafes, buses, and at the Hebrew
University.
To counter the international condemnation and to continue receiving donor
funding, the PA announced in August 2014 that it had closed the PA Ministry
of Prisoners' Affairs and established a new institution, the PLO Commission
of Prisoners' Affairs, which the PA claimed would instead fund the salaries
from non-PA sources.

However, the PLO Commission of Prisoners' Affairs was new only in name. The
PLO Commission has the same responsibilities and pays the exact same amount
of salaries to prisoners. The payments are based on PA decisions and PA law.
The former PA Minister of Prisoners' Affairs, Issa Karake, became the
director of the new PLO Commission and PA Chairman Mahmoud Abbas retained
overall supervision of the PLO Commission. (All sources appear below.)

In spite of these mere cosmetic changes, the international community
accepted the PA's assurances that the PA was no longer paying the salaries
to terrorist prisoners. One example is this statement issued by the Dutch
Government:

"The responsibility for payments to prisoners was transferred to the PLO and
will no longer be charged to the budget of the PA, and these [payments to
prisoners] are not funded by PA tax revenues or donor funds. The PLO pays
such costs from their own income, where the [Dutch] Cabinet has no access."
[Question and Answer session, Dutch Ministry of Foreign Affairs, April 22,
2015]

The United States apparently also accepted that this change was enough. When
challenged by a member of Congress to cut funding to the PA because of the
salaries the PA paid to terrorists, Assistant US Secretary of State
Patterson, three months before the announced closing of the PA ministry,
explained that the US was aware the PA would "phase that out" and therefore
it was not necessary to cut US funding to the PA:

"I frankly know that they're going to try and phase that out and we should
give them an opportunity to do so."
[House Committee on Foreign Affairs' websit e, April 29, 2014]

Palestinian Media Watch has uncovered extensive and definitive evidence from
official PA sources, proving that the PA assurances to the Netherlands, the
US and other donors are false (all sources in full below):

- In August 2014, the PA announced that salaries to prisoners would no
longer be paid by the PA but by the PLO. Yet, in October 2014, two months
later, the PA announced that there were more than 200,000 recipients of PA
salaries, which "includes the families of the Martyrs (Shahids) and wounded,
as well as the prisoners' and released [prisoners]."

- In January 2015, five months later, the PA Ministry of Finance announced
that the PA budget for the Gaza Strip includes salaries to prisoners from
there who are in Israeli jails.

- When Israel withheld PA tax money in early 2015, the PA announced that
prisoners receiving more than 2,000 shekels/month would only receive 60% of
their salary- the same reduction that was imposed the previous day on all PA
civil servants. Were the P LO paying prisoners' salaries from non-PA
sources, Israel's holding up tax money from the PA would have no impact
prisoners' salaries. Clearly, PA money is still the source paying terrorist
prisoners' salaries.

- In December 2015, an internal dispute started within the PA. The PA, not
the PLO, had decided to stop salary payments to a small number of prisoners
and released prisoners for various reasons. This is significant because the
PLO Commissioner of Prisoners' Affairs and PA officials all criticized the
PA Ministry of Finance for stopping the salaries. No one complained to the
PLO, as they should have, were it the PLO that paid the salaries. Nearly a
year an d half after the PA claimed not be involved in salaries, the PA was
still deciding and allocating the money for the terrorist prisoners'
salaries. Significantly, the head of the PLO Commission of Prisoners'
Affairs, Issa Karake, personally complained to the PA Ministry of Finance
over the new PA policy regarding salaries to prisoners. Why would he
complain to the PA if he himself and the PLO were in charge of the salaries?

- When released prisoners were protesting against new conditions to receive
salary payments that had recently been imposed, they protested in the
offices of the PA Ministry of Finance and not in the offices of the PLO
Commission of Prisoners' Affairs.

- Finally, PMW has uncovered PA Ministry of Finance documents that indicate
a money trail, showing the transfer of money from the PA to the Palestinian
National Fund (PNF), the body that funds the PLO, in the amount needed to
pay the salaries to terrorist prisoners:

A. In 2014, the budget of the PA Ministry of Prisoners' Affairs, which then
paid the salaries to terrorist prisoners, was 442 million shekels.

B. In 2015, after the Ministry of Prisoners' Affairs was closed, the PA
raised its annual transfer to the PLO via the Palestinian National Fund by
481 million shekels ($128 million):
2014 transfer - 294 million shekels
2015 transfer - 775 million shekels

C. The additional 481 million shekels the PLO received from the PA in 2015
was the amount it needed to fund the PLO Commission of Prisoners' Affairs,
undertaking the responsibilities of the Ministry of Prisoners' Affairs. The
transfer of 481 million is virtually identical to the budget of the Ministry
of Prisoners' Affairs in 2014 (442 million), plus 10% yearly growth due to
rising prisoners salaries. According to PA law, the salaries of terrorist
prisoners rise the longer they are in prison.)

D. This route - money transfers from the PA to the PNF and then to the PLO -
is the way the PA is transferring money to the PLO in order to continue
funding salaries to terrorist prisoners, and to keep their payments hidden
from donor countries.

All the above documentation shows that while the PA fraudulently claims to
donor countries that the PLO is paying salaries to terrorist prisoners from
non-PA sources, in fact the PA continues to be the source of the re wards to
the terrorists.
Unaware that the PA continues to fund salaries to terrorists, the donor
countries continue to contribute nearly one billion dollars a year to the
PA.

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