The Current State of Peres

After years of speculation that the architects of the Sharon plan had an economic motivation up their sleeve, Deputy Prime Minister Shimon Peres, the original architect of the Oslo process, told the AP that he was involved in engineering a major operation to convert the confiscated beachfront property of the Jewish communities in Gush Katif into a profitable oasis, saying that “We could convert a settlement into a Club Med,” he said.

“Our fighters need rest and recuperation after their hard labors,” one Palestinian official said told AP, without any denial whatsoever that the definition of the Palestinians who are slated to inherit the Jewish communities property is exactly as the Palestinian spokesman says it is: “fighters”, who will continue their military struggle to liberate the rest of Palestine, once Gush Katif and the Northern area of the Shomron are handed over to the Palestinian Authority.

The history of Shimon Peres’s direct involvement in the economic support system for the Palestinian military struggle is not new, ever since Peres convened press conference in January 1998 and June 1999, to develop an investment fund to support the Palestinian infrastructure, known as the ” Peace Technology Fund”, which this week announced that it would discontinue its activity.

Although Peres had announced that he was providing funds for the Peace Technology Fund through the good offices of the Peres Center for Peace, registered as a non-profit organization in Tel Aviv, an examination of the publicly available books of the Peres Center for Peace show that no funds were ever expended on behalf any such investment in the Peace Technology fund, which was managed through the Evergreen Investment Fund in Canada, controlled by chairman Jacob Burak, who managed the fund, and raised $65 million for it. The fund had invested $20 million to date in enterprises in the PA, including shares of Palestinian communications company PalTel Palestine Telecommunications Co. -Itisalat (PSE: PALTEL) (the Palestinian equivalent of Bezeq (TASE: BZEQ], the Ramallah shopping mall, and a Palestinian mortgage bank.

In January, The Israel Resource News Agency asked the Knesset Ethics Committee to examine if Mr. Peres had a personal role in the establishment and in the profits accrued from the Peace Technology Fund

The fund’s first investment, a $9 million, 3% stake in Paltel, a Palestinian telecommunications company, was announced in Business Week in June 1999, one month after Mr. Peres assumed his ministerial position.

The article reported, “A venture capital fund founded by former Israeli Prime Minister Shimon Peres has taken a $9 million, 3.3 percent stake in Paltel…. The investment is the first by the peace fund, which was established last year by Israeli and Palestinian investors.”

The price of Paltel’s shares jumped from 2.5 Jordanian dinars in May 1999 to 4.5 in August of that year, a nearly $10 million profit from the fund’s investment. The increase in the stock price has been widely attributed to a monopoly license granted in August 1999 by the Palestinian Authority to Paltel that gave the company the exclusive right to offer wireless services in the West Bank and Gaza Strip.

Israel Resource News Agency asked about the possibility that Mr. Peres profited from the Paltel investment and also asked whether Mr. Peres knew in advance, through government contacts while he was an Israeli minister, that the authority was going to grant the exclusive contract.

Other questions surround Mr. Peres’s involvement in the procurement of a $22 million investment in the fund by the Palestinian National Authority, also allegedly made while Mr. Peres was a government minister. The PNC is a monetary branch of the Palestinian Authority.

The response of the Knesset ethics committee was that it is not an investigative body and can only determine whether documented activities violate government rules.

The Knesset ethics committee has asked for further detailed information about whether Mr. Peres’s current multimillion-dollar investments in Palestinian enterprises.

If Mr. Peres is found to have violated the Israeli government’s official code of ethics, he would be required to vacate his post. His departure likely would undo Mr. Sharon’s current unity government between Likud and Mr. Peres’ Labor party and could precipitate new elections in Israel.

Peres would not be the only person in the Israeli government elite involved in Palestinian business enterprises.

Back in December 2002, Israel Resource News Agency uncovered the fact that Weissglass, then the office manager of Prime Minister Ariel Sharon, indeed represented the casino resort interests of the Palestinian Authority, which built their first casino in Jericho, which was jointly owned by Arafat and an Austrian firm headed by Martin Schlaff, one of the financiers of Ariel Sharon’s election campaign in 1999.

Two Israeli journalists, Amos Harel and Avi Issacharov, have just published a book titled The Seventh War, in which they report that Weissglass actually celebrated the electoral victory of Ariel Sharon in the company of Muhammad Rashid on election night in February, 2001. Rashid was the Palestinian appointed by Arafat to manage the casino in Jericho.

From October, 2000, when the casino in Jericho closed down by the Israeli army with the outbreak of hostilities, Weisglass had publicly lobbied the Israeli army to re-open the casino. However, commander of IDF operations in the central region of Israel, General Yaakov Ohr, responded that the Jericho casino had been used to launder funds to purchase weapons for terror activity. When Weisglass threatened to sue General Ohr for making such a statement, Ohr did not back down. Weisglass did back down.

Weisglass and Peres, who are next door neighbors in Ramat Aviv, are working together on the Club-Med arrangement. Whether either Israeli official stands to profit from this arrangement will come out of an investigation that needs to be conducted and well financed.