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American Morning

Arafat's $1.3 Billion Stash

Aired August 14, 2002 - 07:42   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PAULA ZAHN, CNN ANCHOR: Now on to the Middle East, where Israel has indicted a close aide to Yasser Arafat, Marwan Barghouti, accusing him of orchestrating terror attacks on the Israelis. Barghouti, in handcuffs, screamed that he is a fighter for peace.
And there is yet a new charge this morning that Yasser Arafat has been lining his own pockets with aid money intended for the Palestinians, and an Israeli general says he has proof that the Palestinian leader has been secretly stashing away plenty of cash in personal accounts around the world.

CNN's Walt Rodgers joins us from Jerusalem. He has more on the story, which was first reported by Israeli newspapers and echoed by one of the New York tabloids this morning.

Good morning -- Walt.

WALTER RODGERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, Paula.

It's a pretty nice piece of change, $1.3 billion. But we shouldn't be surprised, looking at the sources of Arafat's money over the years.

Now, the Saudis have bankrolled him for at least 20 years. More recently, the European Union and the United States, since the Palestinian Authority became somewhat legitimate in the mid-'90s, also helped bankroll Arafat. Additionally, and this has been a big source of income for Arafat, the Palestinian Authority has had a monopoly over such things as gasoline, cement and tobacco. That has been a huge source of money for Arafat.

Now, in fairness to him, he has never lived lavishly, but this money has been stashed away, and he used it to help run the Palestinian Authority. That is to literally buy people, to appease people, to give other people jobs, to sort of keep the lid on. The problem with Arafat, of course, is that he's a very sloppy bookkeeper. His chief money man is Mohammed Rashid. He's actually managed the accounts. And now, the European Union, the IMF, in recent months have said to Arafat, you've got to clean up the way you deal with these monies.

According to the EU and the IMF, Arafat has made considerable progress in reforming the finances of the Palestinian Authority, but it makes a good story. And remember that the Israelis did release this information in tandem with a long process of trying to discredit Arafat. Remember, this won't play well with the Palestinian people, who are really suffering. So if Arafat looks rich, the Palestinian people are very hungry at this point, living in poverty, this isn't going to help Arafat with his own people -- Paula.

ZAHN: Well, Walt, when you talk about the suggestion that some believe that he's trying to reform the Palestinian Authority, is there any suggestion that any of this money that is in this complex web of investments has, in fact, gone to the people it was intended for?

RODGERS: I'm not sure that what I suggested was that he was going to reform the Palestinian Authority. What he has done in recent years is use some of this money, which he has received, to keep the Palestinian Authority afloat, and that's a little bit different.

Now, he has used some of it for salaries. He has certainly paid off his lieutenants within the Palestinian Authority, possible rivals, those who are loyal to him are rewarded. It's a sort of appeasement policy, but it certainly hasn't been reformed. The reform has come under EU pressure and International Monetary Fund pressure to reform his finances. That's where the reform is coming -- Paula.

ZAHN: So in general, what are the Palestinians saying about this story?

RODGERS: Well, it just broke. It's a little early, but it isn't going to play well.

ZAHN: I'm sure it won't.

RODGERS: People are hungry up there.

ZAHN: All right, Walt Rodgers, thanks for the update -- appreciate it.

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