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December 27, 2002 No.
453

The Ginnosar File - Investigative Report in Israeli Media on Corruption Affair Involving High Ranking Israeli (and Palestinian) Officials

On December 2, 2002, the Israeli daily Ma'ariv published a lengthy investigative report, "The Ginnosar File," by journalist Ben Caspit. The report concerns the involvement of a former high-ranking General Security Service official and personal advisor to several Israeli prime ministers in managing Palestinian Authority funds for commissions, while paying kickbacks to well-known individuals. Caspit wrote that he obtained the information from Ginnosar's partner Uzrad Lev.

The exposé has sparked great interest among the Israeli public and media. On December 12, Ha'aretz columnist Akiva Eldar provided additional information on Ginnosar's connections; on December 19, Caspit and reporter Ami Ben-David wrote in Ma'ariv that Israeli Attorney General Elyakim Rubinstein had ordered an investigation of the affair. At this stage, they said, the investigation would center on a false deposition regarding Ginnosar submitted to the High Court of Justice by the chief aid to Prime Minister Ehud Barak.

Following are Caspit's entire investigation - the Ginnosar file, the addition from Ha'aretz, and the Attorney General's decision to investigate as reported in Ma'ariv:

The Ginnosar File

The $300 Million Affair: How a Former Senior General Security Service Official Set Up Arafat's Secret Financial Empire - The Full Story

By Ben Caspit

Uzrad Lev - formerly a military intelligence officer, adjutant to two chiefs of staff, businessman, and formerly Yossi Ginnosar's co-manager of the Palestinian Authority's secret bank account in Switzerland - confesses: "I couldn't go on living with the feeling that I had been party - albeit completely passive - to illegal or unethical actions, including the payment of under-the-table bribes, conflict of interest, and problematical conduct." He decided to tell Maariv everything: Ginnosar's divided loyalties, the corruption, the hundreds of millions which suddenly disappeared, and his failure to warn the authorities that some of the money may have been used to fund terrorism.

ARC was the name Ginnosar gave to the management company he set up with Uzrad Lev. In Hebrew, it is an acronym for "We Want Money." At the height of their activities, the prime minister's special envoy [Ginnosar] and the intelligence officer [Lev] made millions (of shekels), though this was only a tiny percentage of the PA funds which the two men managed to siphon off through the prestigious Lombard Odier & Cie bank in Switzerland into a complex network of holding companies and stock-market investments. Their partner in all this was Arafat's confidant and financial advisor Muhammad Rasheed[1]. These peace speculators amassed millions as hunger intensified in the streets of Gaza, and they went on cutting their deals even after the Intifada had begun to spread alarm and dismay through the streets of Israel. Two weeks ago, Ginnosar tried to hush things up: "Don't talk to anyone," he told Uzrad Lev when he heard that Maariv was investigating the matter. [Here are] all the details, all the evidence, all the laundering that went on in the affair that scandalized the country.

"I need a great deal of help," said Muhammad Rasheed. "We, the Palestinian Authority, have a lot of money sitting in the Arab Bank in Ramallah. Funds are accumulating from the profits of our finance companies and from the tax rebates we get from Israel. We want the money to go to work, to make a profit greater than the interest we're getting at the moment. I'd like you to submit a bid for a job I'm putting out to tender - for the position of financial management consultant. Put in your bid!"

Uzrad Lev listened with a great deal of interest. Half an hour earlier he had been summoned urgently by Yossi Ginnosar to a meeting with Muhammad Rasheed at the Tel Aviv Hilton. The year was 1997, the month February. The (newly incumbent) prime minister was Binyamin Netanyahu. The echoes of peace still resounded throughout the region, but the keen-eyed had already glimpsed black clouds looming on the horizon. Lev, formerly a military intelligence officer and adjutant to the chief of staff, knew Ginnosar well. The two men had been friends for a long time. He did not know Rasheed at all (apart from two meetings organized by Ginnosar in the past that had produced no results). Now he looked at the mysterious Palestinian financial expert and understood: there was no tender, no "bidding," no other submissions. It was all for show. Had he wanted, Rasheed could have hired a prestigious firm to manage the money - Merrill Lynch, for example. He needed Lev, a self-employed financial consultant and investment strategist for one perfectly simple reason: He wanted secrecy, discretion, and a clandestine, compartmentalized mode of operation. Yossi Ginnosar, an all-powerful figure in Arafat's court and Rasheed's "brother," was the key. Ginnosar recommended and approved, Rasheed bought.

Rasheed went on: "At the bank we get 5% or 6% interest. It's not worth my while to move the money if it doesn't get more than that. It's important to stress that we're not talking about pension funds here, but more flexible monies. It can be invested creatively. Risks can be taken. We shouldn't be too obvious about it, but there's room for maneuvering."

Mission: Impossible

It took Lev several days to draw up and submit a proposal. It took Rasheed 24 hours to approve it. "We've chosen you. Get to work. What do you need?" he asked Lev, who replied: "I'll get to work. I'll go to Geneva and when I come back I'll send you receipts and you'll pay me."

After the meeting, Ginnosar told him emphatically: "I want nothing from you, we're not partners. At the end, if you want, you can give me something." Lev says he knew this declaration was not to be relied upon.

His first task appeared impossible: to get the respectable, rigid Swiss banking establishment to open its doors to questionable Palestinian money. In previous years, the Swiss banking system had been rocked by resounding financial scandals. The Swiss banks' experience with handling money belonging to dictators such as Mobutu Sese Seko (Zaire) and Ferdinand Marcos (the Philippines) without proper checks or supervision had greatly raised levels of caution. Investigation were conducted, scandals erupted, banks were held accountable for their actions. The Swiss had since tightened regulations and procedures in an attempt to make it as difficult as possible for "political" money to enter the system.

This situation made the task of getting Yasser Arafat and Muhammad Rasheed into the system look like mission impossible. Lev decided it was worth trying anyway, and he succeeded. Within two months, in April 1997, Muhammad Rasheed already had a properly organized investment account in Switzerland. What's more, his account was with one of the most venerable, highly respected, and well-established banks in the country: Lombard Odier & Cie, in Geneva. The bank, which is managed by seven partners, is situated in central Geneva and at present handles over SF130 billion for a variety of clients. Lev managed to take an abstract, controversial entity contaminated by terrorism, with extremely problematic management standards and controlled by a lone despot, and get its funds into the holy of holies, the crème de la crème of Swiss banking. Even today he's still not quite sure how he did it. "I took a filthy sow's ear and turned it into a snow-white silk purse," he says.

Certificate of Probity

The key figure is Richard de Tscharner, one of the senior partners at Lombard Odier. A genuine Swiss aristocrat, scion of a wealthy and well-connected family from Bern, he is a highly respected banker and his word is law. He and Lev clickedat once. Lev gave him a convincing presentation: "This is a state in the process of formation," he said. "In a few years' time, they will have billions at their disposal. It's worthwhile investing in them. They've got financial institutions, sound management; the peace process is moving forward, the atmosphere is good." To reassure the Swiss, Lev proposed a special model to de Tscharner: a "letter of limitations," to be drawn up by himself and signed by Muhammad Rasheed, on Arafat's stationery. This letter would contain a series of regulations and limitations which would ensure that the money would be "kosher" and would not be used for wrongful purposes at any time. De Tscharner expressed interest. Lev returned with a ready-prepared letter. The principal limiting regulation was the stipulation that the money could leave the account only to return to one of the branches of the bank from which it had originated. The entire investment complex would be handled by a management company established especially for the purpose. The company was given the name "Ledbury." The letter also stipulated that the money could not be used for illicit purposes such as terrorism, drug dealing, etc. It also stated that, should Lev leave his position as Ledbury's "strategic brokering consultant" for any reason, the bank could return the money to the investor within 24 hours and close the account.

This letter became Lev's personal certificate of probity. Using it, he eased his conscience, mollified the Swiss, and slept well at night, secure in the knowledge that the funds could not possibly make their way into undesirable areas.

Ledbury, a financial management company, was established in order to isolate the Palestinian financial complex set up by Lev in Switzerland from any connection with Israel. Lev set up the company, registered it with a lawyer in London, and brought the paperwork to Lombard Odier and Rasheed. In the limitations letter, he also included a regulation requiring the Palestinians to employ a top-flight accountant to oversee Ledbury's activities. This undertaking, like other similar undertakings, was never actually implemented. It was further stipulated that Yasser Arafat would appoint Ledbury's directors, and that he, Arafat, be designated the only one authorized to withdraw funds from the account. Lev finished drafting the letter and placed it before de Tscharner, who read and approved it. "It seems just fine," he said. Afterwards Lev was called to a special hearing before all the bank's partners. They sat there in the luxurious conference room and cross-questioned Lev for three hours. At the end of the process everyone was satisfied, pleased, and in excellent spirits. As for Lev himself, he couldn't believe it was all happening to him.

A Magnificent Wedding

Meanwhile, Muhammad Rasheed had gone to Gaza to obtain Arafat's permission to sign the letter, and had brought it back signed. Lombard Odier took the letter and opened the account. Lev drew up a memorandum and a set of regulations for the company, in which it was stated that all its funds were "the property of the Palestinian people." The signatories for these assets, the regulations declared, were Yasser Arafat and Muhammad Rasheed. The shareholders were the Palestinian people. The board of directors, naturally, consisted of Rasheed and Arafat. Uzrad Lev was given full power of attorney for all activities relating to the company,except monetary transfers and withdrawals. Lev gave the memorandum and the set of regulations to Rasheed. Rasheed went to Gaza, got Arafat to sign everything and returned with the signed papers and two passport photos: one of himself, the other of Arafat. Palestinian passport number 1, Arafat's passport, landed in the safe at Lombard Odier and was quickly swallowed up. The Swiss, uncharacteristically, were thrilled. It's not every day that the photo of a notorious former international terrorist lands on their doorstep. Ledbury was born. Rasheed paid in $20 million, as a first step. Things were underway. Millions continued to flow from Ramallah to Switzerland at an ever-increasing pace. The Ledbury portfolio, at its peak, was worth $340 million; most of it was with Lombard Odier, and the rest was with three other financial institutions created later. Palestinian money had beaten a path to the stronghold of world banking. The future looked rosy, profitable and overflowing with cash.

Charm and Energy

Rasheed started out as a journalist for the DFLP[2] magazineAl-Hurriyya.His first wife was a Palestinian journalist. Later he married two more women; his second wife was a young Christian woman from Ramallah, and his current wife is Deema Sarraj, daughter of businessman Imad Sarraj. Their Cairo wedding was attended by a large number of personalities in the forefront of Israeli politics, finance and society; it was remarkably splendid and showy, and quite unforgettable. Senior Israeli politicians danced alongside their Palestinian, Egyptian and Jordanian counterparts.

Rasheed is not a Palestinian. He is of Kurdish descent, and as such he is considered no threat either to Arafat or to any of his potential successors. He was formerly Abu Jihad's confidant: Abu Jihad dispatched him to Cyprus and appointed him editor of the magazineAl-Bilad. During the 1980s, Rasheed was wanted by Interpol. He has never explained why. One supposition is that he became embroiled in exporting diamonds. He changed his name to Khaled Salam to elude an international manhunt for him. When Arafat left Beirut for Tunis, a link was forged between the two men, which gradually turned into genuine blood-brotherhood (in all senses). Rasheed conducted gold and diamond deals on Arafat's behalf and proved his ability to bring in profits and handsome dividends. Gradually, he became the Palestinian leader's most trusted aide.

Rasheed is better acquainted with Israeli high society than many Israeli politicians. Once, in London, Lev asked him, "What's going to happen with Bibi?" Rasheed remained calm. "I meet with his people too," he said soothingly. He frequently boasts of these far-ranging social connections to his friends in the Arab world. Possessed of a rare intelligence, he has great personal charm and charisma, a lightning-quick mind, and plenty of self-confidence. He spends most of his time in the air, moving from continent to continent in first-class. Chronically late, he can keep senior banking officials waiting for two or three days. Then he arrives unshaven, in a state of studiedly elegant disarray, and, after five minutes of his concentrated energy and charm, manages to make everyone forget his misdemeanors.

Once, after Ledbury had been established and relations between Rasheed and Lev became closer, Lev gave Rasheed a lift from Tel Aviv to a meeting in Jaffa. On the way, on the Herbert Samuel Promenade, the two passed a group of Braslav Hassidim dancing and jumping around on the roof of a truck. "What do you think of those guys?" Lev asked Rasheed. "I'm extremely fond of them," answered Rasheed. "They are our soldiers. Do you see all these things around us here?" he asked the astonished Lev. "The hotels, the promenade, all this? All of it will be ours one day, thanks to them."

Rasheed is a keen observer of Israeli society. He constantly has meetings with Israeli leaders and public figures. He has no small number of supporters on the right. He is considered a moderate who knows what's what, someone you can take on a cattle-rustling expedition. He has a supreme ability to distinguish between what is important and what is not and to make use of limited information at the right time in the right place. He is on top of everything, without truly understanding it. He can pass through five countries in four days, holding eight business meetings on a variety of subjects and displaying a good grasp of them all. Endowed with great charm, with the ability to mobilize people and with inexhaustible energy, Rasheed has been making his way round the upper echelons for years. He lives like a prince, is wasteful as a king, and conducts himself like an emperor. Generous, cruel, charming, and eccentric, he is contemptuous of all rules of sound management, proper administrative procedure, the law, or morality.

Once, when Lev complained to him that many of his expenses were not covered, Rasheed got up from his chair, led Lev to the nearby safe, took out $60,000, and tossed it over to him. Lev demurred: Give me an official credit transfer, he suggested. Rasheed, not in the least disconcerted, instructed his aide to transfer the money. Two days later Lev discovered $100,000 in his bank account. Rasheed operates without authorization, without receipts, on his own initiative. The funds of the Palestinian people are in his exclusive charge and care. He fears no one, not even an auditor. It's just him and Arafat.

The Seeds of Trouble

Ninenteen ninety-seven passed pleasantly for the two new partners. Lev went to Ramallah almost every week, sometimes very late at night. His relationship with Rasheed grew very close. Ginnosar was disapproving. The increasing closeness between Lev and Rasheed sowed the first seeds of the trouble that would develop later in Ginnosar's relationship with Lev. Rasheed "belonged" to Ginnosar, and anyone who got too close to him found himself in hot water.

In the meantime, at least, everything was going fine. Now that Lombard Odier had accepted Palestinian money, all other doors opened. Lev added another three finance management companies to his account with the Swiss bank: Soditic, a Jewish-owned financial-management company based in Geneva; Atlas Capital, a respected London investment house; and the Samoukha family in Switzerland.

Soditic and Atlas each received tens of millions of dollars channeled to them by Rasheed, and began to invest the money within the Ledbury framework. The account at Lombard Odier grew bigger and bigger.

The Samoukha family deserves special mention. They are Jews who left Alexandria for Switzerland after the Free Officers Revolution in Egypt in the 1950s. Legend has it that they arrived with some 50 million pounds sterling in cash. Richard Samoukha, the paterfamilias, became famous for investment in convertible bonds. A lawyer by training (he graduated in London), he has two sons: Jeremy, who works in financial management in London, and Tony, who works with him in Geneva.

Even before contacting the Samoukha family, Lev discovered that Ginnosar did not really intend to let him manage the Palestinian money on his own. His historic declaration that he did not mean to be a partner turned out to be a joke. When the two men met at Ginnosar's home in Kochav Ya'ir, Ginnosar said: "Let's combine all the companies, all the activities, and establish a complete partnership between us." Lev didn't object. Ginnosar: "We'll be partners in everything. And that includes Brichrobe."

Corruption and Irregularities

Brichrobe turned out to be an offshore holding company jointly owned by Ginnosar and Professor Steve Cohen. Richard Samoukha set it up and registered it for them. Cohen, a well-known Jewish-American peace activist, who, among other things, works for billionaire Daniel Abraham's Center for Middle Eastern Peace and Economic Cooperation, speaks fluent Hebrew and is well known to all Middle Eastern leaders. He is on visiting terms with [Egyptian President] Mubarak, [Jordan's] late King Hussein, [Syrian President] Assad, [Saudi Arabia's King] Fahd, Arafat, [Ehud] Barak, and even [Binyamin] Netanyahu. A heavy, absent-minded, and talented man who for long years has made the rounds of the courts, palaces, and corridors of power in the Middle East, he shuttles between Riyadh and Jerusalem, Damascus and Ramallah, Cairo and Amman. He is especially noted for his attempts to mediate between Assad and Israel, and between Arafat and Jerusalem.

Now Lev realized that Professor Cohen did not just talk about peace - he also made a good living from it. Cohen met Ginnosar in the course of their joint activities on behalf of Israeli POWs and MIAs. Cohen pleaded Ginnosar's case with Arafat, introduced him to thera'is[i.e. Chairman Arafat], and paved his way into the inner circle. In return, Ginnosar set up Brichrobe together with him, and, through the good offices of Muhammad Rasheed, the two men made millions. Ginnosar now told Lev: "I want this money also inside - as part of our joint venture."

Lev didn't understand what money he was talking about. "We get money from cement and fuel deals between the Palestinian Authority and Israel," Ginnosar explained to him. "From July onwards, I want you to start getting your share, too. I want to reduce Steve's percentage. He doesn't do anything, he wanders round the world charging all the expenses to the company. There's no reason he should get 50%. He can make do with a third."

Lev listened with interest, and warning bells began to sound in his mind: "If Ginnosar can do that to Cohen today, he can do the same to me tomorrow." In any case, Lev knew that Ginnosar was not serious, and that he had no intention of giving him a share of Brichrobe's profits. This was simply Ginnosar's way of taking control of the financial network Lev had put together for the Palestinians in Switzerland. I'll bring you into Brichrobe, he proposed to Lev, and you bring me into Ledbury.

Lev understood what was happening, but was powerless to prevent it. He took Ginnosar to Richard de Tscharner. "I'd like you to meet the Israeli closest to Arafat," he told Tscharner. "He's got the whole political issue, both in Israel and with the Palestinians, at his fingertips. He can answer all your questions."

De Tscharner had a number of questions. At that time, stories and investigative reports were appearing about corruption and irregularities in the PA. Every time something of this kind was published, de Tscharner would call Lev and demand an explanation. Every time Muhammad Rasheed turned up for a meeting with de Tscharner in Geneva, the banker would ask him searching questions. Rasheed would usually give a "guest performance" and soothe de Tscharner. Ginnosar, too, took his turn at explaining things away.

Financial Adventures

Meanwhile, the partnership between Lev and Ginnosar began to take shape. Samoukha started up an offshore holdings company for them under the name of Gromingo Holdings. The company received the management fees directly from Lombard Odier and from the other financial managers (Soditic, Atlas, and Samoukha) and divided them among Lev and Ginnosar's private companies. The two men reached an agreement with de Tscharner and Rasheed as to the fee they would receive; it would be in direct proportion to Ledbury's investment portfolio. Under the agreement, the money would not be paid by the Palestinians, but by the bank and the financial institutions alone (who also paid the Palestinian share, co-ordinated with Rasheed, and deducted it from the account). In this way, Ginnosar and Lev avoided receiving money directly from the Palestinians. At the height of their activities, they raked in about $2 million a year (before deductions) - $1 million each in management fees. The money was paid out every quarter.

Ginnosar decided that Rasheed, too, should get a share of the commission. He forced Lev to accept that a certain percentage of the commission be deducted for Rasheed. "He set the whole thing up for us," said Ginnosar. "We've got to pay him." Money flowed felicitously between the various holding companies, and was divided between the various partners, Ginnosar, Rasheed and Lev. Rasheed, who was following the investments with acute interest, took Lev aside one day for a private conversation: "Listen, Uzrad," he said, "drop everything, close down all your other businesses, come and work exclusively for me. I'll make you a rich man, like I did Yossi." Lev did not pick up the gauntlet.

One day Ginnosar initiated a conversation with Lev. "Rasheed's got a separate account here with Samoukha," he said. "How do you feel about managing it for him?"

Lev didn't know what he was talking about. "What account?"

Ginnosar: "A private account of his own, money goes through there."

Lev: "What money, a salary from the Palestinian Authority?"

Ginnosar: "Yes, yes, a salary... I'll explain later."

Lev realized at once that something was wrong. He got the documents relating to the account, the balance of which was at the time about $3 million. He noticed that large sums of money were being paid into the account every quarter. It was obvious to him that these payments were a discreet form of under-the-table bribery - kickbacks.At this stage, Lev did not know where the money was coming from. Together with Tony Samoukha, he drew up an investment plan for Rasheed. Rasheed was enthusiastic. "Take greater risks!" he urged Lev from time to time. "Don't worry about anything, don't be afraid!"

Those were the heady days of hi-tech. The bubble got bigger and bigger and Rasheed was accountable to no one. His favorite share was the Israeli company Checkpoint, which had been recommended to him by Lev. He saw that it was doing well and every so often asked Lev to purchase more and more shares for him. In general, Rasheed enjoyed financial adventure. He never withdrew money from this account and appeared to draw his living [expenses] directly from the PCSC [Palestinian Commercial Services Company]. He kept the Swiss account for fun, speculation and pleasure. This was the illicit, clandestine money. These were the kickbacks. Not that Rasheed's "labors" always bore fruit. Once he invested in Commerce speculative shares, which collapsed completely.

Barak Ignored Them

Lev, in the meantime, began to put the pieces of the puzzle together and see the whole picture. Here and there he caught scraps of conversations between Ginnosar and Samoukha; he heard things from Rasheed; he noticed transactions and numbers in the bank account, and he understood. He understood that Rasheed was, in fact, getting the money from Brichrobe, i.e., from Ginnosar and Cohen, who received the funds in the form of commission on the fuel and cement deals in Israel. It was a case of "you scratch my back and I'll scratch yours," with everyone doing favors for everyone else. Ginnosar always knew when Rasheed was due to receive money, and how much he was going to get. Lev would ask him ahead of time, so he could plan Rasheed's investments, and Ginnosar would report: "He's due to get money next month, about $300,000-$400,000."

Days, weeks, and months passed like this. The various partners continued to get quietly richer. Rasheed got Ginnosar a cut on every deal and Ginnosar repaid him by discreetly transferring an appropriate sum. The peace process continued to wither. Ginnosar continued shuttling between the various government offices, well-connected in every regime, a welcome visitor everywhere. Ginnosar's influence was at its peak during Barak's term in office. He went on nighttime missions nearly every week, from Barak to Arafat and back again. En route he would sometimes telephone Lev: "I'm on my way to the old man," he would report. "Your pal Ehud is completely out of his mind, believe me," he would say.

Later, Ginnosar found his way to Camp David, too, to the decisive peace conference at which Arafat and Barak met with Clinton to try to end the Israeli-Palestinian conflict. Sources close to Barak said this week that the former prime minister had been warned frequently by senior Israeli intelligence officials not to use Ginnosar for sensitive missions because of conflict of interests. Barak ignored them. Finally, when the [Israeli] Attorney General prevented Ginnosar from joining the Israeli delegation at Camp David because of Ginnosar's flat refusal to reveal the nature of his deals with the Palestinians, Barak found a solution: Ginnosar was invited as a member of the American delegation. The main thing was to get him there. At Camp David he played a decisive role. He was forever at Barak's shoulder, begging him to "talk to Arafat," putting pressure on all the parties, trying to push things forward, trying to mediate. On the one hand, it is clear that the peace process is indeed important to Ginnosar, not only for financial reasons. On the other hand, it's just as clear that he got rich from it.

ARC: 'We Want Money'

The Lev-Ginnosar partnership continued as before. To change their tax planning, they closed down Gromingo and started another company in its place, called Financial Equities. They brought in Samoukha as a partner, and then moved their base of operations to Cyprus. From there they moved on to Holland, where they hired the services of a local financial management company called Citco. Meanwhile, Samoukha had received his slice of the Palestinian pie, and he opened an investment portfolio with Ledbury (of about $40 million from Ramallah, Lombard Odier, and Soditic, on Rasheed's instructions).

At one point, Ginnosar and Lev opened an office in Israel as well, on Tashah Street in Tel Aviv, near Kikar Hamedina. This office was a separate Israeli economic entity which had no connection with their activities abroad.

The economic situation in Israel began to deteriorate; there were no profitable deals to be made, and Rasheed, of course, came to their aid. At a meeting with Lev in Ramallah, he spoke of some "friends and associates" who wanted to invest. "Let's set up a fund for them abroad," said Rasheed. Lev understood that the people in question were senior [Palestinian] security apparatus officials, perhaps also even members of the cabinet - all household names in Israel - who had accumulated millions and wanted to invest as well. He hastened to dampen Rasheed's enthusiasm. "It's impossible to set up a fund for them directly," he said. "Just imagine what would happen if senior IDF officers and government ministers were to do something like that in Switzerland. That's not how things work. I've got a different solution. Let's move their money to the Cairo Amman Bank and appoint the bank as trustee. The bank will set up a fund - with Soditic, let's say - and that's how we'll get around the problem."

Rasheed was enthusiastic. The fund was established and $20 million was transferred to the bank, which set up a trusteeship and started a fund at Soditic. The fund was called "Super A-Din." Management commission on the fund was paid to Walid Najjab, one of Rasheed's aides and associates, who had a company called MCS. He paid Ginnosar and Lev's share in the form of commission to their Israeli company, which had taken the name ARC - a Hebrew acronym for "We Want Money." In this way, Ginnosar and Lev were provided with convenient funding and money to cover the expenses of running the company in Israel: Their company signed a consultancy agreement with Najab's company, Lev acted as consultant, the commissions were paid, tax on the commissions was duly and lawfully deducted, and everyone was happy. Or, in other words: ARC received a consultancy fee from MCS, whose fee from Soditic was charged to Super A-Din, the Palestinian officials' account - which in turn was managed by the trusteeship of the Cairo Amman Bank. Perfect!

The Executive Branch

In 1999, apparently under pressure, Rasheed suddenly decided to appoint an accountant to audit Ledbury, as had been stipulated in the letter of limitations. In Ramallah he introduced Lev to an Arab named Atallah, the local representative of the big accounting firm Deloitte & Touche. Ginnosar got wind of what was going on and put a stop to it. "Forget it!" he shouted at Lev, "What do we need an accountant for?"

Lev stammered that Rasheed had asked for one. Ginnosar said: "So what? If he asks you to jump off the roof, will you do that, too?"

Lev didn't jump. Ginnosar managed to make the accountant suggestion go away. Things at Ledbury continued to be conducted in secret, without accountants. In all the years it was active, Ledbury never held so much as a single board meeting. No internal supervisory or auditing systems were ever set up; there were none of the usual checks and balances - nothing. Rasheed and Ginnosar did what they liked with the company.

Lev was their executive branch. At one point Ginnosar, who was noted for his wariness, cautioned: "Too many people are already familiar with the name Ledbury." That name is being bandied about in too many places. The company's regulations were reevaluated, and the name was changed. Ledbury became Crouper, though apart from the name everything remained as before.

In the meantime, as time passed, Lev discovered more and more about Rasheed's financial activities. What he already knew turned out to be no more than the tip of the iceberg. Samoukha maintained a wide network of companies for him. The most important of these was called Cassandra, whose code name among the associates was "Ronsar." There were other companies: Nurel, Waladi, Bonification, and more. Ginnosar asked Lev to "organize" all the companies for him. "He shouldn't be out in front," he said. And so they all met in Geneva: Rasheed, Lev and Ginnosar. Rasheed's brother, Arfan, a TV cameraman and producer who lives in Florence, was also invited, as was Umar Sarraj, Rasheed's father-in-law. The two men, Arfan and Umar, were registered as holders of the controlling interest in Rasheed's network of companies. He himself [sic] received full power of attorney for all transactions, without ownership, but with full signatory privileges. All this helped Lev realise the tremendous degree of closeness and comradeship between Rasheed and Ginnosar.

He understood why Ginnosar needed to pay Rasheed a percentage of the management fees - legitimate in themselves - which they both (i.e. Ginnosar and Lev) charged the banks. There's a system at work here, Lev said to himself. There's a whole well-organized system and I'm part of it. The system's simple: Rasheed can't take a direct percentage on PA deals with Israeli companies. That's why he brought in Ginnosar and introduced him as a broker. Ginnosar charges the commission and pays Rasheed out of it. Steve Cohen, who made the initial contact, is a partner.

Lev compared the sums he saw in Rasheed's account every quarter with the sums he saw paid in to Brichrobe, and the penny dropped. He decided to keep quiet. He would get the reports and pass them on, without comment, to Ginnosar, who looked after Rasheed's accounts personally with Samoukha. Every sum, every transfer. Sometimes Ginnosar would decide on his own initiative to invest Rasheed's money in various deals.

On more than one occasion, Ginnosar involved the PA in financial adventures of this kind. This was the case with a huge deal that included a large investment in an American company called Space Imaging, which operated satellites for graphics applications. Samoukha saw an opportunity to buy options in the company for $6 million, and brought the proposal to Lev. Ginnosar immediately mobilized Rasheed, who invested $3.75 million of the PA's money in the deal. Everything was done with Palestinian money, without reporting to anyone, without authorization. The company in which the money was invested was not traded on the stock exchange, and in the end the investment yielded no profits. Ginnosar and Lev received options of 10%. Lev realized that Ginnosar regarded PA funds as a handy pool of investment money which could be used for a variety of financial adventures, and that in Rasheed he had found a partner for these activities.

One evening in 1998, Rasheed called Lev and invited him to a dinner being held by Martin Schlaf at the Jericho casino. "You should come," said Rasheed. "We can have a business meeting at the same time." Lev and his companion got into the jeep and set out. On the way, the mobile phone rang. Ginnosar was on the line, speaking from Washington. He'd heard about the dinner and called at once. "Where are you going?" he asked Lev. "To the casino, to see Rasheed," Lev replied. "Stop! Turn around at once and go home! Don't go there," ordered Ginnosar. "No-one must connect us with the casino, there must be no link."

At this stage, Lev already knew that Ginnosar was very much connected to the casino. He knew that he often flew to Vienna for work meetings with Martin Schlaf, the owner of Casinos Austria, which operated the Jericho casino. He knew that the casino in Jericho was the most profitable one in the company's chain, with a daily turnover of a million dollars and extremely low operating costs. He decided to go to dinner at the casino anyway. When he met Rasheed, he poured his heart out. "I can't go on like this," he told Rasheed, "Yossi goes too far, I don't have the energy for all his nonsense." Rasheed soothed him: "Uzrad, forget it. We've got a great future, everything will be fine."

A Tense Exchange

Relations between the two men grew increasingly strained. In 1998, Ginnosar told Lev of the showdown he was planning with Steve Cohen. "I've got to reduce his percentage, he doesn't do a thing," he complained. At the same time, Ginnosar continued to restrict Lev and obstruct his relations with Rasheed. That same year, the directors of Soditic decided to close the Palestinian account. One of the company's senior officials, who was also a leader of the Jewish community in Switzerland, discovered that Muhammad Rasheed and Yasser Arafat had an investment account with his company, and was furious. At the time, Ginnosar was staying at the Klum Hotel in St. Moritz, and he summoned Lev urgently from Israel. They all met at the hotel: Ginnosar, Lev and the heads of Soditic. The atmosphere was gloomy. The Swiss agreed to continue to keep the Super A-Din account, as it was under bank trusteeship, but wanted to get rid of the Palestinian money as quickly as they could. "We don't want that money," they said. Around July 1998 the account with Soditic was closed, and the money was transferred to the remaining accounts: Lombard Odier, Atlas and, primarily, the Samoukhas (who handled the money in an account called Atlanticommunion), bringing the Samoukha portfolio up to around $40 million by early 1999. Trouble was in the wind.

Confrontation between Lev and Ginnosar became more frequent. At one stage, Ginnosar demanded they stop working with Atlas, after it emerged that their 1998 deals had yielded negative results. Lev insisted on keeping them. They also quarrelled over the investments of their Israeli company, ARC, and Ginnosar proposed to Lev: "Buy my share of the company, I want out!" Lev had no alternative but to agree. The arguments with Ginnosar took a great deal of emotional energy. The financial celebration, too, was coming to an end. The year 2000 ushered in a period of falling shares and other areas of investment worldwide. Ledbury's returns began to drop off. Spirits drooped with them.

In February 2000, Ginnosar called Lev and requested an urgent meeting at the Reviva and Celia Cafe in Ramat HaSharon. "I can't go on like this," he said. "I feel I'm being screwed. I set everything up. You're doing nothing, and you're enjoying the money." Lev asked what he suggested. "Either we change the way things are divided up between us," said Ginnosar, "or I bring the whole thing down. If I go to Arafat, in a split second there'll be no account, no Ledbury."

The conversation was conducted in quiet, tense tones. Lev: "Don't threaten me! Suggest something!" Ginnosar: "I'll make a proper suggestion. Let's meet in Geneva."

In the meantime, the date of the regular "clients' meeting" at Lombard Odier was fast approaching. Outwardly, Ginnosar and Lev behaved as usual. But inwardly a storm was brewing. Lev made an abortive proposal: they should continue to split everything - but this should henceforth extend to ARC, which at the time was exclusively his. Ginnosar, for his part, added fuel to the fire when he demanded that the new division of profits should apply retroactively from January 2000. Lev realized he was in trouble. Under pressure, and from lack of choice, he agreed to Ginnosar's demands: the new system of allocation gave two thirds to Ginnosar, one third to Lev. At the same time, Lev spoke to Rasheed and demanded that he settle matters and put everything back as it had been.

In June 2000 they met at a Tel Aviv hotel , without the knowledge of Ginnosar, who was in Camp David at the time trying to persuade Ehud Barak to make just one more small gesture to Arafat. Lev, meanwhile, was trying to persuade Rasheed to put pressure on Ginnosar to make a gesture to him. Rasheed agreed: "I won't let it happen," he promised Lev. "I won't let him do that to you. How much are you owed?"

The Whole World Searches

Lev, hurt by Ginnosar's behavior, explained: "He can't just break up a partnership and dictate that things should be divided differently. He brought in the client, but I brought in the banks. There's no reason for all this." Rasheed: "I've made at least $10 million for Yossi. How can he do this? I won't let him. I swear to you on the lives of my children that I'm with you. I'll make it up to you."

Rasheed unexpectedly paid $100,000 into Lev's account, as the first stage of compensation. Lev kept up the pressure and got another $200,000 from Rasheed - $300,000 compensation in all. By his own calculations, he is owed a further $200,000, but by then there was no one for him to take it up with.

In late August 2001, de Tscharner abruptly summoned Ginnosar and Lev to an urgent meeting in Geneva. He told them that Rasheed had suddenly withdrawn $65 million from Ledbury. Ginnosar was shocked. He had known nothing of this ahead of time, and, naturally, Lev hadn't been informed. That was the beginning of the end for Ledbury. Ginnosar and de Tscharner went to meet Rasheed in Cairo and the three agreed that the account should be gradually killed off. Ledbury, which had become Crouper, died a peaceful death. Where did the money go? That's not clear. Rasheed claims it went legitimately to the proper places. But the rest of the world is still frantically searching for the Palestinian sources of funding and for Arafat's secret bank accounts.

The Conspiracy of Silence

How Ginnosar Tried to Hush Things Up

Lev has had a number of conversations with Ginnosar recently in which the latter put heavy pressure on him not to disclose the full facts. He told him "not to talk to anyone and to be wary of phone calls, even between us."

Lev: "How nice that they should catch us and hang us high [because] we managed the money. We were consultants."

Ginnosar: "That's not a good word. We were brokers. I always told you, don't say we managed the money!"

Lev: "He'll say, they were here every month for a business meeting."

Ginnosar: "He can say what he likes, you say what you like, you say it's not true... You ought to know that that's one of life's basic rules."

Lev: I'm No Saint

Ginnosar's passive partner is a former intelligence research specialist, and is well aware of the possible consequences of making the affair public. And no, he has no desire for revenge.

"I was part of that system for a long period," admits Uzrad Lev. "I was a party, albeit a passive one, to illegal and unethical actions. It's hard for me to live with this. Even though I was part of the whole business, I'm glad to help expose it now." Lev, 42, is no saint. He knows this. For years he reaped considerable profits in the form of commissions he received for the strategic management of the Palestinians' bank accounts in Switzerland.

An agreeable discovery: I've known Lev for more than 30 years, since primary school in Holon, where we were in the same (class). For the past 20 years, since our military conscription, we haven't really kept in touch. Lev is the product of Israeli military intelligence. He was assistant to the head of military intelligence's bureau chief (Amos Gilad was bureau chief, Ehud Barak was head of military intelligence at the time); he was adjutant to the chief of staff; he specialized in research and knows how to read intelligence material. He is fully aware of the significance of the economic activity to which he was party, and knows very well what consequences to expect now that the affair has been made public.

You have to admit there's an element of revenge here.

"Rubbish! Revenge is of no use in business. If I'd wanted revenge I'd have taken it a long time ago."

What's actually wrong about what Yossi Ginnosar did, for example?

"First of all, there were unethical aspects to his activities, in my opinion. Especially the whole business of payments under the table. Apart from that, he's not allowed to have interests on the other side.

"The first person to realize the problematic nature of Ginnosar's activity was, in my opinion, the present prime minister, together with his son. They limited it and narrowed it down, they didn't let things continue."[3]

Ginnosar: The State Used Me

"In my activities in the service of the State - as the emissary of its leaders and its institutions - during my period of service in the General Security Service, my time as coordinator on behalf of the prime minister on matters relating to POWs and MIAs and thereafter, I was guided exclusively by boundless loyalty to the State, to my mission and to those who had entrusted me with it. The gratitude and appreciation I have received from the country's leaders and the heads of the security services over the years are evidence of this."

"Throughout the entire period of my activities on behalf of the State, when I worked with the Palestinian Authority and other Arab elements in the region, I was working at the request of the State, making use of my special connections with Palestinians as a private individual. I did this on a voluntary basis, paying all the expenses this entailed from my personal account, and I made a significant contribution, not only during the period of the peace process, but also directly, to the security of Israeli citizens, sometimes even to the point of literally saving human life."

"Any attempt to hint otherwise and to cast aspersions on these services is malicious and totally unfounded."

"The State, in this area, used me and my contacts, rather than the other way round. I have never asked for any credit or recompense, nor would I even mention it, were it not for the malicious hints dropped in questions posed to me by the journalist before the article was published. All my activities as a businessman were conducted in accordance with the law, and the necessary reports were properly submitted to the relevant authorities as the law demands."

"The questions sent to me by the journalist prior to the publication of the article would appear to attribute to my private business activities details which are either inaccurate or untrue."

"Over the years the State of Israel and Israeli commercial bodies have made attempts to maintain business and trade activities with every possible Arab entity. The way the question is formulated leads me strongly to suspect that this is an attempt to take advantage of the tragic situation which exists between us and the Palestinians today in order to sling mud at business activity which was normal and acceptable at another time."

"The general impression created by the way these questions are formulated is that, in my contacts with the Palestinian Authority I was acting in an official capacity on behalf of the State, while at the same time furthering my own private business interests. This presentation of the facts has no foundation in reality, as the situation was totally otherwise."

"As a private individual with special contacts among Palestinians and other Arabs, I was approached by Israel leaders precisely because of these very contacts, and asked to use my services to promote State interests and security. They did this because of their total confidence in me, on the basis of their knowledge both of myself and of the services I have rendered to the State."

Ginnosar Before and After

Time was when Yossi Ginnosar was one of the Sharon family's regular callers. According to the press, one "Yossi Ginnosar from the General Security Service" was among the elect to whom Sharon granted an invitation to the candle-lighting ceremony in the Muslim quarter 15 years ago. This was the same Ginnosar on whom Sharon hastened to sic the legal advisor to the government, on suspicion that he had not done enough to ensure that his financial dealings with the Palestinians be kept separate from [his] political mediation services. It will be recalled that Elyakim Rubinstein did not order the investigation of Sharon's friend Aryeh Ganger (who also held U.S. citizenship); it can be safely assumed that Ganger's missions for the prime minister in the White House did no damage to his business dealings.

Rubinstein also did not, four years ago, order the investigation of the mysterious mission to Austria by Dov Weisglass, then Sharon's attorney. Weisglass went with Eitan Bentsur, then Sharon's director-general at the Foreign Ministry, and Omri Sharon, the minister's [Sharon's] son. The travelers claimed that the visit was aimed at promoting contacts with the Palestinian representatives in the matter of the ceasefire in the territories. The media claimed that the visit was aimed at promoting the opening of the Jericho casino, in the matter of the interests of Weisglass's client, businessman Martin Schlaf. Muhammad Rasheed, who stars in media reports of Ginnosar's business dealings, represented the Palestinian interests in the casino.

It is worthwhile knowing that it was Avi Pelosoff's law firm that closely accompanied Ginnosar's business dealings with the Palestinians. Pelosoff is the husband of Dalia Rabin-Pelosoff, who was until recently deputy defense minister - which raises an even bigger question mark about the claim that the issue at hand is non-kosher business dealings with elements in the PA.[4]

A-G Rubinstein:

'Criminal Investigation of Ginnosar Should be Launched' On Suspicion of False Representation to High Court of Justice

Police source: 'No choice but to investigate Ehud Barak'

Attorney-General Elyakim Rubinstein ordered police to launch a criminal investigation against businessman Yossi Ginnosar on suspicion that he gave a false representation to the High Court of Justice by means of a false deposition signed by Danny Yatom, [then] head of the Political and Security Headquarters in the office of [then-Prime Minister] Ehud Barak. He also ordered an examination of Israeli businessmen's involvement in managing Palestinian monies and economic ties between them and Palestinian businessmen.

Maariv has learned that the investigation conducted by the National Fraud Squad will focus on the deposition submitted to the Supreme Court in response to an appeal by MK Tzvi Hendel. According to the deposition, there was no conflict of interests between Ginnosar's dealings with the PA and his sensitive political missions in the service of PM Ehud Barak.

The investigators seek to show the economic ties between Ginnosar and the PA in general, and [between Ginnosar and] Muhammad Rasheed in particular. They especially want to prove that Ginnosar received funds from Palestinian elements. It is thought that this connection will not be difficult to prove, and hence also to charge Ginnosar with one of the offenses linked to misleading the High Court or submitting a false representation to it.

It is not inconceivable that the investigation will branch out into other directions if police investigators can prove that Ginnosar in fact acted as a civil servant even though he was not. At this stage, other directions of investigation are being explored. However, as has been noted above, the main emphasis is on the deposition.

A-G Rubinstein himself said in a press interview that the investigation will reach top political echelons. "The picture now unfolding necessitated a police examination. This examination is now underway. Also being examined is the deposition submitted at the time by Danny Yatom, which stated that Ginnosar had no ties with the PA. Danny Yatom did not lie; he signed the deposition, and what he said was what was prepared and in accordance with the material that was [before him]."[5]


[1] On the bank documents, Rasheed spelled his name "Mohamad Rachid."

[2] Democratic Front for the Liberation of Palestine

[3] Ma'ariv (Israel), December 2, 2002. Ben Caspit.

[4] Ha'aretz(Israel), December 12, 2002. Akiva Eldar.

[5] Ma'ariv(Israel), December 19, 2002. Ben Caspit and Ami Ben-David