Palestinians probe the depth of graft

In the wake of Hamas's parliamentary landslide, government embezzlement and graft have moved to the top of the Palestinian domestic agenda. This week, the Palestinian Authority's attorney general announced 50 investigations that account for about $700 million stolen from the government treasury.

While the inquiries are being credited to President Mahmoud Abbas, observers say it was the ruling Fatah Party's loss in last month's Palestinian parliamentary vote that sparked a push for investigations into the corruption long thought to be endemic within the PA.

"The veto power that [Fatah politicians] had before the election to stop this type of investigation is no longer around," says Daoud Kuttab, a Palestinian political commentator. "They're not out of power yet legally, but they're out of power morally."

Observers say the cases only scratch the surface of wrongdoing that could implicate top politicians, business people, and civil service organizations.

The inquiries are critical not only for restoring public trust in the government, but to reassuring foreign investors and donor countries that have provided more than $5 billion in assistance to the PA over the last five years.

"[Fatah] lost a vote of confidence and now there are legal actions that will confirm what the public has already confirmed," says Sam Bahour, who owns a Palestinian technology consulting firm. "We don't know what it's going to reveal. Dealing with corruption on such a large scale is difficult for Palestinians to acknowledge. But you have a very pro-active attitude on the part of Palestinian people at large wanting to see this being dealt with."

On Sunday, Attorney General Ahmed al-Moghani said 25 officials have been arrested so far and the PA would seek the extradition of 10 others who have fled abroad, the Associated Press reported.

The cases being investigated include an imaginary pipe factory funded with $2 million of Italian aid money and $4 million of PA cash. Experts expect the finance ministry officials and the head of public monopolies to be implicated for embezzling public funds.

The publication of the investigation has triggered a rash of speculation that beneficiaries of the graft would seek to slip out of the Palestinian territories along with the stolen money.

Hamas won nearly three-fifths of the 132-seat Palestinian Legislative Council in a Jan. 25 vote, largely because of public frustration with government mismanagement.

Running under the banner of "reform and change," Hamas candidates hammered away at Fatah for the party's reputation for corruption. Hamas leader Ismail Haniyeh recently estimated that more than 1 in every 5 jobs funded by the government budget is fictitious - implying about $200 million in wasted money a year, said one economist.

"The Palestinian people are expecting the new representatives to handle these files diligently and seriously. Once the files are open, there will be pressure to pursue them to the end," says Abed Fokah, who was elected to the Parliament last month on the Hamas list. "If we don't deliver, the Palestinian people will be upset."

But even with the sweeping mandate to root out public vice, observers say that the crisis is so pervasive it will require considerable political will as well as a bipartisan coalition of Mr. Abbas and the newly installed Hamas government.

Abbas will need Hamas legislators and ministers to push for the public prosecution of many former allies from Fatah. At the same time, the president's endorsement of the investigations will be critical for Hamas to calm fears of a partisan witch hunt that could paralyze a bureaucracy that's still dominated by Fatah-appointees.

"This is a difficult issue for a new government," says Samir Barghouthi, an economist at the Arab Center for Agricultural Development who advises the World Bank and the European Union. "The corruption is huge. It is everywhere in all ministries."

Mr. Bahour predicted that the inquiry would also uncover ties to Israeli officials who control the movement of goods and people in Palestinian cities.

Prosecuting the cases also poses a daunting challenge for a legal system that is understaffed and has enjoyed little independence from the executive branch.

Mr. Barghouthi says that mismanagement was already well-entrenched among functionaries of Yasser Arafat's Palestinian Liberation Organization (PLO) when they were based in Beirut and Tunis in the 1980s. When they returned to the West Bank and Gaza after the Oslo peace accords of the mid-1990s to set up the Palestinian autonomy government, they brought the culture of corruption with them.

In a political system dominated by Mr. Arafat and those loyal to him, public criticism of graft meant risking intimidation by Palestinian police or summary imprisonment. And yet occasional warnings surfaced, including a 1997 state comptroller's report pointing to $300 million in missing funds, and a 1999 letter implicating Arafat, signed by legislators and public figures.

"It became an institution in itself. Everyone covers for everyone,'' says Omar Assaf, who spent two months in jail for accusing Palestinian gas and cigarette monopolies of embezzling public money. "There was an undeclared coalition between civil society and public institutions. That is what made corruption become a prominent phenomenon in Palestinian society."

The death of Arafat in November 2004 raised new questions about the murky management of billions of dollars in PLO funds by his financial deputies. A year ago, Abbas was voted into office promising to reform government and stamp out corruption, but has been too weak to go on the offensive.

The January election changed that, providing an opportunity for the attorney general to make the announcement.

"It's one huge step forward, but it's not enough. We need to see the circle close," says Bahour.

"We shouldn't only be looking backward, we should be looking forward to ensure this doesn't happen again," he says.