Palestinian Assets 'a Mess,' Official Says
The Palestinian Authority's top finance official said today that he had identified $600 million in Authority assets in 79 commercial ventures, including money that he said appeared to have given rise to Israeli accusations of slush funds controlled by Mr. Arafat and others.

"Of all the issues in public finance that cause us to have a bad name, this probably is the one that had the biggest neon sign on it," said the finance minister, Salam Fayyad, a former official of the International Monetary Fund who has been praised by American and Israeli officials as an energetic reformer.

In an interview here, Mr. Fayyad described a jumble of individually managed investments of public money in concerns ranging from Canadian biopharmaceuticals to Algerian cellphones.

While declining to discuss in detail the performance of officials who previously controlled the investments, Mr. Fayyad said the money would now be managed by a publicly accountable board of directors of the new Palestine Investment Fund.

Mr. Fayyad commissioned a study by Standard & Poor's and the Democracy Council, a nonprofit organization, as part of an effort to track down the Palestinian Authority's assets and put its finances on a sounder footing.

The groups have produced a 345-page report, which Mr. Fayyad released today, of the 10 largest investments, which amount to more than half of the total assets. They are continuing their work on the 69 other investments.

"It's a mess," Mr. Fayyad said of the scattered portfolio. "We are all over the place. I mean, what business do we have being in 79 commercial ventures? Really."

He said he planned to begin selling off the assets, depending on market conditions. "Commerce is an honorable profession, but it's not for the state," he said. He said the rate of return on the assets varied widely, as did their present value.

For example, the report pegs the present market value of the Palestinian Authority's 23 percent stake in the Oasis Hotel Casino Resort in Jericho, in the West Bank, at $28.5 million.

The casino was once a popular destination for Israelis, but it has been closed during the current conflict. The Authority's investment would presumably be worth far more if the casino were functioning.

The study covers only the finances of the Palestinian Authority, which by agreement with Israel has limited power to govern Palestinians in the West Bank and the Gaza Strip, and not of the Palestinians' umbrella organization, the Palestine Liberation Organization. The Authority identified what investments should be examined, according to a spokesman for Standard & Poor's.

Palestinians have long criticized some Authority officials as corruptly profiting from monopolies in goods like cement, but the report does not accuse any officials of corruption.

Under pressure from the United States, Israel has begun releasing customs duties and other taxes paid by Palestinians that by agreement it is supposed to pass to the Authority. Israel had sequestered the money, which amounts to more than $100 million dollars, saying the Authority would use it to finance terrorism.

Mr. Fayyad said the Authority had begun using the money to pay off unpaid bills — some dating to 1999 — for things like electricity, water and gasoline.
http://www.nytimes.com/2003/03/01/international/middleeast/01PALE.html