Israeli Says P.A. Used Swiss Accounts To Fund Terror

By Marc Perelman

Published March 26, 2004, issue of March 26, 2004.
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Money invested in Switzerland by the Palestinian Authority during the peace process is being used to finance attacks carried out by violent factions associated with Yasser Arafat’s Fatah party, according to an Israeli businessman who helped set up secret Swiss accounts worth several hundred million dollars for the P.A.

The businessman, a former Israeli senior intelligence official named Uzrad Lew (pronounced “Lev”), also told the Forward that the terrorist strikes were being funded in such a way that they should have drawn the attention of P.A. Finance Minister Salam Fayad, who has been widely praised for his efforts to stop corruption and make the budget process more transparent.

“I can prove that money from the Swiss accounts of the P.A. is financing terror and that Salam Fayad is not doing anything to prevent it,” Lew said.

Arafat appointed Fayad, a former official at the International Monetary Fund, in June 2002 in response to growing charges and investigations by Western nations regarding money that they had donated to the P.A.

Fayad did not respond to several requests for comment.

Edward Abington, a former U.S. diplomat who now advises the Palestinian Authority in Washington, stressed that Fayad had earned the respect of the donor community and of President Bush himself through his actions.

Lew first exposed the Swiss accounts in a lengthy article published in the Israeli daily Ma’ariv in December 2002, which described how a share of P.A. tax and customs revenues were transferred to a Swiss bank account at Lombard Odier Darier Hentsch. The account was opened by Lew in 1997 and controlled by Arafat and his close financial adviser, Mohammed Rashid. In the article, Lew claimed that Rashid had emptied the account in late 2001 and Lew asked what the Arafat adviser had done with the funds.

When interviewed last November by the CBS News program “60 Minutes,” Rashid said that the money went back to the Palestinian territories. Lew now claims he has a more precise answer to the question: The money he helped fructify is financing terror.

Lew claimed that he decided to speak out in order to clear his conscience. He also said that he was planning to file a lawsuit in Switzerland and possibly in Israel against his former associates, including Rashid, seeking unpaid fees as well as damages for what he describes as the harm to his reputation.

In addition to Rashid, Lew is promising to target the estate of Yossi Ginossar, a key Israeli go-between with the Palestinians who died of cancer earlier this year, and a Swiss businessman named Richard Smouha. Detailing what he described as the first step toward litigation, Lew said he had sent a letter demanding compensation from Lombard Odier, where the accounts were opened.

In an unusual departure from its traditional policy of not commenting on such allegations, the bank, which merged with Darier Hentsch in 2002, issued a blunt statement in response to a Forward query “Lombard Odier Darier Hentsch completely rejects the ungrounded, unwarranted and entirely fabricated allegations brought forth by Mr. Uzrad Lew,” the statement said. “It is regrettable that he is attempting to raise political issues, through the use of media and other venues, in what is a pure commercial dispute.”

Calls and e-mails to Rashid’s office in Cairo went unreturned, and his Israeli lawyer could not be reached.

Navot Tel Tzur, the Ginossar family lawyer, declined to comment. So did Smouha, who heads an asset management company called AtlanticOmnium S.A. in Geneva.

Lew flatly denies he is waging a personal vendetta and dismisses suspicions that he had decided to go public only after his former associates and the bank refused to settle with him financially.

“I felt I needed to make a choice and I did not want my kids to read bad things about me in the papers,” he said in explaining his decision.

Lew said he persuaded Lombard Odier to open the account for Arafat and Rashid in April 1997 under the name of an offshore holding company called “Ledbury Global Inc.” The bank also opened three other accounts controlled by offshore asset management companies working under the Ledbury umbrella.

Although the peace process was in full swing and Palestinian-Israeli business ties were growing, Lew says he drafted a letter of understanding between Ledbury and the bank that included many safeguards. One of the provisions was that the money would come exclusively from one P.A. account at the Arab Bank in Ramallah, according to a copy of the May 17, 1997 letter.

Lew claims the terms were later changed behind his back and that a company called Crouper S.A. succeeded Ledbury in 2000. A new letter of understanding dated June 19, 2000, a copy of which was obtained by the Forward, does not include the provision restricting the flow of money from the Ramallah bank.

The bank “basically told the Palestinians to do whatever they want with the money,” Lew said.

He said the Ledbury accounts at some point had a total worth of $340 million and that he made “a lot of money” by managing them. He refused to specify how much.

Lew told the Forward, as he reported to Ma’ariv, that he decided to lower his profile in the operation in 2000 after discovering kickback schemes involving Rashid and Ginossar. He said that he had received his last payment from Rashid in April 2001.

Asked why he then waited over a year and a half before going public, Lew countered that he first had to document his suspicions and make a tough personal decision.

Lew contends he has evidence that part of the money withdrawn by Rashid in late 2001 was placed in accounts at other European banks and then funneled to an account held by the Palestinian Finance Ministry and finally ended up in the hands of violent Fatah factions, including the Tanzim and the Al-Aksa Martyrs Brigades.

Documents Lew provided to the Forward show that $65 million was withdrawn from the account at Lombard Odier in late August 2001 and transferred “to a bank in London.” Lew also showed copies of other documents that seem to indicate that money coming from an account — with an identical number to the Lombard Odier account, but with an added prefix — was then transferred to a third account used by the Palestinian Finance Ministry to pay the salaries of militant groups.

According to documents uncovered by the Israeli military during its “Operation Defensive Shield” in the spring of 2002, the Finance Ministry’s account was used by Fatah leader Marwan Barghouti to pay Tanzim and Al-Aksa Martyrs militants. The IDF said the payments continued after Barghouti was arrested by Israel in April 2002 and Lew claims they continued after Fayad was appointed two months later.

“So we closed the cycle,” Lew said. “We now know where the missing funds went, but Fayad is not really trying to trace them. If he really wants to, he just needs to do one simple thing — petition the Swiss government, the Swiss federal banking commission and ask for the help of the U.S. administration to bring about the full disclosure of any documents regarding the account. But he never did.”

Lew said that during the past few weeks he has shared his information with Israeli officials, members of the Bush Administration and Congress, and Washington-based think tanks.

While he claims to have received positive feedback from the Pentagon and the office of Vice President Dick Cheney, Lew said that he felt outright antagonism from the State Department.

“Fayad is the American channel to the P.A.,” Lew said. “They believe he has some power, but this is total bull. He is a complete Arafat puppet. So this means they don’t have anyone to talk to.”

Lew, who describes himself as left-of-center in political terms, believes the State Department and Fayad are behind the postponement by the House Committee on Financial Services of a hearing dealing with P.A. corruption, at which he was supposed to testify in late February.

A State Department official said the allegations about protecting Fayad were “not worth commenting” on.

An aide to Rep. Spencer Bachus, the Alabama Republican who heads the House committee, said the postponement was due to a logistical problem and denied any pressure from the administration. Molly Millerwise, a Treasury Department spokeswoman, confirmed that an official in her department who was slated to testify could not appear because of a “logistical problem.”

But a Palestinian banker and Arafat foe, Issam Abu Issa, also charged that “some U.S. officials” tried to derail the hearing. Issa said he was scheduled to brief Congress staffers when he was refused entry to the U.S. at JFK airport on February 13. The incident was first reported in the New York Sun.

Issa told the Forward in an interview from Jerusalem that immigration officials informed him that he was barred from entering the United States because of suspicions that $6 million missing from his bank were funneled to the Palestinian Islamic Jihad. Issa said that the P.A doctored the accusations to block his congressional testimony.

Janette Rapaport, a spokesperson for the U.S. customs and border protection office in New York, confirmed that Abu Issa had been sent back to London but declined to say why.

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