A top Swiss private bank has denied acting improperly in its handling of a multimillion dollar account opened for former Palestinian leader Yasser Arafat.This content was published on February 9, 2005 - 16:23
A spokesman for Geneva-based Lombard Odier Darier Hentsch (LODH) said allegations that funds from the account were transferred without proper oversight were “completely unfounded”.
Arafat, who was the leader of the Palestinian cause for more than 40 years, died last November in a Paris hospital.
LODH head of corporate communications Jérôme Koechlin confirmed a report in the Financial Times newspaper, which revealed that an investment account worth at least $200 million (SFr243 million) was opened on behalf of Arafat’s Palestinian Authority in 1997.
However, he told swissinfo that the then Lombard Odier – which merged with a rival in 2002 – had acted at all times in conformity with international standards and legislation, including due diligence procedures.
An official statement issued by the bank says recent allegations by an Israeli “mediator”, Uzrad Lew, that Lombard Odier transferred $65 million to unknown destinations in 2001 are totally false.
It confirms that the amount in question was transferred to a London bank account, but says the money was used to fund an investment in a subsidiary of Egyptian telecoms company Orascom.
The Palestinian account was opened three years after Arafat returned to Gaza as the head of the newly created Palestinian Authority in the wake of the Oslo Middle East peace accords.
The FT says the LODH account, initially worth about $230 million, was the largest of at least three Swiss bank accounts opened on behalf of the Palestinian Authority in a bid to minimise Israeli control over the authority’s finances.
The other two named accounts were at Geneva subsidiaries of Lebanon’s Audi bank and London-based Atlas Capital Management, which has since merged with Swiss-based Soditic Investments.
The LODH account was closed by the bank in December 2001, following the start of the second Palestinian uprising a year earlier.
While financial institutions including the International Monetary Fund have been critical of the Palestinian investment strategy, there has been no suggestion that setting up or managing the Swiss funds was in any way an improper activity.
But controversy has been sparked by recent allegations by Lew that a 2001 transfer payment from the LODH account to London’s Chase Manhattan Bank may have been used to finance “terrorist” activities.
Lew, reportedly a former Israeli intelligence officer employed by the Palestinians to help “ease access” to Swiss financial circles, also said the bank’s initial letter of engagement was changed in 2000 to broaden the group of banks allowed to receive funds from the account.
LODH says it “categorically rejects the totally unfounded and unjustifiable allegations made by Uzrad Lew”.
It also denies that the decision by LODH to end its relationship with the Palestinian Authority was a consequence of United States pressure – in particular, the introduction of legislation two months earlier aimed at combating funding for terrorism.
The bank says the December 2001 decision followed the deterioration of the political situation in the region – a reference to the Intifada.
The IMF said in a 2003 report that all the money invested abroad by Arafat’s “reserve fund” had been returned to the Palestinian Authority – barring substantial investment losses.
It estimates that the total diverted from the Palestinian Authority budget between 1995 and 2000 may have been nearly $900 million, of which nearly $100 million was lost in poor investments.
The Orascom investment – which involved a total of $285 million via a Palestinian holding company – proved to be the most successful venture of its kind.
swissinfo, Chris Lewis
Arafat died in November 2004 and has been succeeded as Palestinian leader by Mahmoud Abbas.
The Palestinian Authority has been investigating Arafat’s chequered investment history, which resulted in the estimated loss of about $100 million dollars.
The remainder of the “reserve fund” created by Arafat – estimated at about $800 million – has reportedly been returned.
An Israeli “mediator” has claimed that funds from a Palestinian bank account in Geneva were improperly transferred to “destinations unknown”.
However, private bank Lombard Odier Darier Hentsch rejects the claims as totally unfounded.
It says the account – since closed – was managed in full compliance with all international laws and standards.
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