WRITTEN QUESTION E-3443/03 by José Ribeiro e Castro (UEN) to the Commission. Palestinian authority — diversion of funds.
Date: 2003-11-20
Institutions: European Parliament, Provisional data
Subjects: Palestine, corruption, financial aid, financial control, financial management, international aid, political figure, political morality

8.4.2004

EN

Official Journal of the European Union

C 88 E/145

Is such provocative conduct by Bulgaria consistent with that befitting a country applying for accession to
the EU? Will the Commission take action, and in what way, to prevent the circulation of the stamp
concerned and make the Bulgarians realise that progress towards EU accession is not compatible with such
conduct?

Answer given by Mr Verheugen on behalf of the Commission

(12 January 2004)

According to information available to the Commission, the postage stamps referred to by the Honourable
Member show the Zografos Monastery, a monastery in Greece with a Bulgarian speaking order.

However, the Union has no competence in matters relating to postage stamps. The Commission is,
therefore, not in a position to take measures to prevent the circulation of the stamp concerned.

(2004/C 88 E/0154)

WRITTEN QUESTION E-3443/03

by José Ribeiro e Castro (UEN) to the Commission

(20 November 2003)

Subject: Palestinian authority (cid:1) diversion of funds

The media report that the ‘Sixty minutes’ programme broadcast by the US television channel CBS has
stated that Yasser Arafat has accumulated, in personal accounts, 800 million dollars from the coffers of the
Palestinian National Authority, of which he is president.

The same source indicates that CBS is claiming that the Palestinian National Authority annually deposits
100 million dollars in the personal accounts of Arafat’s wife who currently lives in Paris, and that the sums
diverted by Arafat come from aid funding regularly sent by the international community for programmes
to help the Palestinian population.

What information does the Commission have about this alleged diversion of funds? Does it know, or has it
succeeded in clarifying whether these alleged facts involve the possible diversion of Community funds?

Has it approached the Palestinian National Authority, or will it do so, with a view to clarifying its version
of the facts, and making it aware of the need for financial and budgetary rigour?

What implications could these accusations and their possible confirmation have on the current and future
granting of financial aid to the Palestine National Authority? Specifically, what financial transparency
criteria does the Commission believe it needs to reinforce and demand as a pre-condition for maintaining
the scheduled aid?

Answer given by Mr Patten on behalf of the Commission

(15 January 2004)

The Commission is aware of the claims in the recent CBS Programme referred to by the Honourable
Member. These claims concern commercial activities,
investments and off-budget revenue which were
detailed in an International Monetary Fund (IMF) report of 15 September 2003. These activities took place
over the period 1995-2000, and amount, according to the IMF, to approximately USD 898 million. They
do not involve Union funds.

The Commission is also aware of claims of payments by Mr Arafat to the personal account of his wife.
The Palestinian Authority’s (PA) Ministry of Finance has informed the Commission that such payments of
the order of tens of thousands (not millions) of dollars have been made from the budget of the President.

C 88 E/146

Official Journal of the European Union

EN

8.4.2004

With regard to the Palestinian commercial activities, investments and off-budget revenue referred to in the
IMF report, the Commission formally obliged the PA to consolidate these funds into the Palestinian
Investment Fund under the full control of the Ministry of Finance. This has been achieved by the PA
Finance Minister Salam Fayaad. These funds are now being audited by the international firm, Standard and
Poor’s, and the results to date of this audit have been published on the Internet. It is a direct result of the
conditions attached to the Commission financial support that this practice of off-budget accounts has
ended.

In compliance with conditions attached to Commission’s financial support, the PA is required to provide
extensive budget and expenditure reporting. This is now published on a monthly basis, broken down by
wages, operating expenses and transfers and is available to the Palestinian Legislative Council
for
parliamentary scrutiny.

As concerns the current and future support to the Palestinian Authority, the Commission will continue to
attach reform conditions which require the PA to continuously improve the system of financial control,
sound financial management, and overall accountability.

The Commission is, furthermore, supplementing this conditioned support with customised institution
building programmes to strengthen the administrative capacity of the PA. An example of this is an
extensive training programme for Ministry of Finance staff on modern methods of internal audit.

(2004/C 88 E/0155)

WRITTEN QUESTION E-3449/03

by Peter Skinner (PSE) to the Commission

(20 November 2003)

Subject: Smokes Direct, Spain

A company named Smokes Direct is operating in Malaga, Spain, offering consumers cigarettes without
having to pay any further duty or VAT. A complaint has been made by one of my constituents after
purchasing such cigarettes which were then seized by HMCE upon entry into the UK due to non-payment
of duty. Smokes Direct advertise stating that they can act as agents on behalf of the consumer to purchase
and courier the cigarettes to a third party, who is not involved in payment in any way, therefore requiring
no further duty to be paid. The cigarettes would then be classed as a gift between the third party and the
consumer so Smokes Direct, as an agent, are acting on behalf of the buyer in assisting in the delivery of a
‘gift’.

After referring my constituent to Council Directive 92/12/EEC (1) it remains unclear as to whether Smokes
Direct, a profit-making organisation, can advertise themselves as being able to act as agents and not
vendors and the technicalities of what classes as a ‘gift’
in such circumstances. Can the Commission
therefore investigate the actions of this company and confirm whether or not this practice is legal?

(1) OJ L 76, 23.3.1992, p. 1.

Answer given by Mr Bolkestein on behalf of the Commission

(18 December 2003)

The Commission informs the Honourable Member that the position regarding the intra-Community
movement of cigarettes and other excise products subject to Union harmonised rules is contained in
Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to
excise duty and on the holding, movement and monitoring of such products.