EU millions: Was aid handed to terror gangs?

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IT BEGAN with a suspicion in the mind of two MEPs, Ilka Schröder and François Zimeray, that European Union funding for the Palestinian Authority was being diverted into the pockets of terrorists.

By the time the EU working group had finished its investigation, it had uncovered evidence to show that Yasser Arafat, the Palestinian president, had personally signed cheques to people linked with terrorist activity. This week, fresh allegations have surfaced that money intended for use by the Palestinian Authority for legitimate purposes has been siphoned off by corrupt officials, ostensibly to pay the wages of 7,000 non-existent staff. But rather than prosecutions and the recovery of misappropriated funds, the investigation has concluded with a whimper, petering out in two conflicting reports and an inconclusive debate.

What it is has provided, however, is a salutary lesson in the labyrinthine workings of the EU and the possibility that future donations may be subject to rather more scrutiny than that which applied to the $246 million (134 million) handed over without question to the Palestinian Authority.

Ms Schrder and Mr Zimeray’s determination uncovered a murky world where money from the EU’s constituent states was channelled into the pockets of dubious figures in the Palestinian Authority, and from there into the pockets of Palestinian terrorist groups.

They were unlikely champions of such a cause: Mr Zimeray was a French socialist MEP; Ms Schrder, a German Green MEP and later an associated member of the Group of the European United Left/Nordic Green Left. What they shared was a frustration with what they regarded as the EU’s implicit support for the Palestinian Authority, regardless of whether it was right or wrong.

Ms Schrder was in no doubt about what had happened to the money. In an open letter, she wrote: "It is a well known fact that the EU-funding for the Palestinian Authority was channelled to a black budget. It is also well known that the Palestinian Authority has financed a murderous anti-Semitic terrorist war against Israel. Israel provided the European Commission with proof of this use of EU-funding in May 2002. Since then, the commission denies having any knowledge of this specific use of the money and the Conference of Presidents successfully stalled an inquiry committee on this issue."

But from the start, it was an uphill battle. Chris Patten, the EU foreign affairs commissioner, was against any investigation, arguing it amounted to ignoring Palestinian suffering. Ms Schroeder could not stomach that argument: she accused Mr Patten of "winking approval of terrorist attacks funded by the EU".

Mr Zimeray and Ms Schrder pressed ahead and, after four months, had the 157 signatures they needed for a vote on the matter.

Mr Patten’s attempts to persuade Euro MPs to drop the matter were rejected, and the parliament set up a working group to look into the claims. Already, officials in Brussels were admitting they could not account for every penny spent by the Palestinian Authority. When Mr Patten protested that there was no need for further investigation because the International Monetary Fund supervised the EU’s funding arrangements, Thomas Dawson, the director of the IMF’s external relations department, made it clear it could not monitor or control every item in the budget. Even Salam Fayyad, the Palestinian finance minister, admitted the system was open to corruption.

Meanwhile, the working group ploughed on with its investigations, uncovering plenty of evidence to suggest money had ended up in the wrong pockets. The evidence suggested that money paid to the Palestinian Authority may have found its way to the al-Aqsa Martyrs Brigades, a group responsible for hundreds of attacks on Israeli targets. There was even evidence to show Mr Arafat had signed payment orders for thousands of pounds for people directly involved in terrorist activity. But when it came to their conclusions, they were divided on how much credence to give to the evidence they had uncovered, with seven members believing it was not of sufficient quality to stand up in court and six prepared to accept it.

Ms Schrder was unimpressed with their efforts: "The working group was established in order to downplay the importance of the issue," she wrote in a letter to the group.

Charles Tannock, the Tory foreign affairs spokesman in the European Parliament and one of the authors of the minority group’s report, called it a whitewash. He said the majority report had chosen to ignore signed payment orders by Mr Arafat to the tune of $39,000 (22,000) "to people linked to terrorist activities or their families" on the basis that they amounted to circumstantial evidence only and did not prove that payments had been made.

"I am very suspicious about giving money in cash to a theatre of war where corruption is endemic," he said.

Mr Tannock said that he believed about 270 million (178 million) had been paid to the Palestinian Authority over a two-year period, with the money going into a single account. "It was all paid into a pot to finance a variety of things, some of them legitimate and some dubious," he said. He demanded a committee of inquiry into the payments, but the request was vetoed and it is unlikely further investigation will take place.

But even as the working group was winding up, new evidence was emerging about the fate of the EU’s cash. Mr Zimeray and Ms Schrder had also persuaded OLAF, the anti-fraud office of the EU, to begin its own investigation into what had happened to the money. Its report is not yet out, but already evidence is emerging that some of the money was used to cover the salaries of thousands of security force employees who existed only on paper.

An examination of the payroll of the Palestinian Authority’s national security force, under the command of General Haj Ismail Jabber, revealed that about $2 million (1.1 million) a month was paid to General Jabber to cover the salaries of 37,000 security force members. The payroll showed there were only 30,000 people on the staff.

The EU working group may have concluded its investigation, but others are still searching for the truth. Ms Schrder and Mr Zimeray spotted the flaws in the argument this time, but there will have been other occasions, many more, when money has flowed out of the EU coffers without check or balance.

What appears to have prompted these two MEPs to place the greater good of the EU above political convenience - and there is no doubt that both would have found life easier over the last year had they ignored the voice of their consciences - is a sense of outrage at the knee-jerk response of the European Parliament to automatically back the Palestinian cause without pausing to consider what would happen to the money they so readily handed over.

Too often in Europe decisions are taken without fear of being held to account: on this occasion, the guilty parties have merely had a warning shot fired across their bows.

Fraud, corruption and mismanagement are woven into the fabric of the European Parliament, say its critics. It can only be hoped that this time, however hard senior EU powerbrokers attempt to place political convenience ahead of financial probity, it is not the end of the story.