Corruption at the Palestine Investment Fund?

Ashby Monk

I read an intriguing article this morning that had some rather serious allegations of corruption and even theft within the Palestine Investment Fund. The accusations come from a former Palestinian Authority security official Muhammad Dahlan; he says that one billion dollars (or more) have gone missing from the PIF since leadership was transferred from Arafat to Abbas. Now, since I’m utterly lacking in any deep insights about internal Palestinian issues, let’s turn to Elliot Abrams of CFR for an interesting perspective on all of this:

“The PIF was funded mostly by assets “under Arafat’s control,” as it was politely put: that is, money Arafat stole but that was recovered. It appears that at least $800 million was in the Fund by the beginning of the previous decade. Today, the Fund’s spiffy web site ( says that it has $800 million in assets and has distributed $600 million over the years to the PA. But Dahlan’s allegations are not the only ones one hears from Palestinians. Management of the fund was in the capable hands of Salam Fayyad until the Hamas election victory in 2006; it was then separated from the PA government to avoid sanctions imposed against the PA. But that independence from the government has led to charges of corruption, lack of oversight and accountability, and self-dealing. As one article put it, ‘Mohammad Mustafa, the chairman and CEO of the PIF, doubles as Abbas’s chief economic adviser. As has been the case since its inception, the board is dominated by prominent businessmen, some of whose companies have taken part in ventures in which the fund has important asset stakes.’”

So Abrams neither discredits nor legitimizes the Dahlan claim, while adding a few claims of his own to the corruption stew. If all of this is true, the PIF would be in the same camp as the Libya Investment Authority under Gadaffi!

But I’m not buying it (especially the billion dollar heist part). It’s just too hard to believe. The PIF on display today seems remarkably transparent and accountable.

Consider this: The PIF does two internal audits – one by PricewaterhouseCoopers and one by an internal audit unit – in addition to the external audit it conducts with Ernst & Young. The latter independently verifies PIF’s financials in accordance with international auditing standards. Moreover, the State Audit and Administrative Control Bureau audits the PIF’s governance and financial systems and, in addition, scores the performance of its internal auditing systems. And, on top of all of this, the PIF is partners with US OPIC, UK DFID, and the World Bank’s IFC; you have to imagine these organizations are doing some serious tire-kicking and due diligence before getting involved. Right?

To be clear, I don’t have any special insights into the (in)accuracy of the allegations nor do I know much about the internal political dealings of the Palestinian Authority. But I can say that this fund looks to be pretty well governed. In fact, the PIF has even been praised by the World Bank for its transparency. In this environment, how does somebody make off with over a $1 billion dollars?

It’s a story fit for the big screen! I can even picture Deniro as Abbas planning his billion dollar caper. It’d be fantastic. But, unlike Goodfellas, this is a movie that probably won’t be “based on a true story”. (At least I hope it’s not…)

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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