The leaked documents of Panamanian law firm Mossack Fonseca reveal a Palestinian “club” whose members link the financial and political worlds of the Palestinian Authority. The Panama Papers also show that Tareq Abbas, the son of Palestinian Authority President Mahmoud Abbas, held shares worth nearly $1 million in a company associated with the PA.

In September 1994, a company called the Arab Palestinian Investment Company (APIC) was registered in the British Virgin Islands. Eight months later, on May 24, 1995, a general assembly meeting was held at the Sheraton Hotel in Dubai, at which shareholders met for the first time. The first item on the agenda was accepting the resignation of someone called Khaldoun Sorour, who was listed as the sole company director for registration purposes only. He was replaced by a permanent director, Sheikh Omar Aggad – a Saudi businessman with Palestinian origins.

According to leaked minutes of that meeting, Aggad “spoke about the general goals of the company, the economic situation in the Arab world and the occupied territories, and about obstacles facing investors. He stressed that these necessitated the creation of jobs, so the Palestinian economy would not fall victim to the Israeli one.”

Open gallery view A copy of Tareq Abbas' passport, which was sent to the law firm.

In the two decades since then, APIC had grown to be a comparative economic giant in Palestinian terms. It is active in almost every Palestinian economic sphere, from food and medical equipment to public relations, vehicles and shopping malls. Since 2014, it has been listed on the Palestinian stock exchange. The CEO and head of the board of directors is Tarek Aggad, Sheikh Omar’s son.

Since 1994, the involvement of the PA in this company has also grown. It doesn’t directly hold any shares, but the Palestinian Investment Fund – which is associated with Abbas’ bureau – holds 18 percent of the firm’s shares. Only Tarek Aggad holds more – 27%.

In the past, the PA owned some APIC shares through its predecessor, the Palestinian Commercial Services Company (PCSC). But after the international community demanded that then-President Yasser Arafat introduce more transparency in the holdings and assets of the PA, the Palestinian Investment Fund (PIF) was established in 2003, following which the PA’s shares were transferred to it.

According to its website, the fund is an independent investment company whose goal is to “strengthen the local economy through key strategic investments, while maximizing long-run returns for its ultimate shareholder; the people of Palestine.” In fact, the PA chairman has great influence over the fund. In 2006, straight after Hamas won the parliamentary elections, Abbas issued a presidential decree giving himself nearly total control over the fund’s board of directors. “This presidential decree places the PIF more directly under the control of the office of the president” wrote then-U.S. consul in Jerusalem, Jake Walles, in a classified February 2006 cable that was exposed by WikiLeaks: “The billion dollar-plus investment portfolio of the PIF ... is now more securely in the hands of President Abbas with a board that is of his choosing, except for the ministerial slots.”

All change after Arafat’s death

The ties between APIC and the PA weren’t only financial but also personal. According to documents the company submitted to Mossack Fonseca, in June 2000 Mohammed Rashid was appointed to the board of governors. Rashid was Arafat’s close confidant and financial manager, serving in parallel as chairman of PIF. The termination of Rashid’s appointment to the board is apt testimony to the political nature of his appointment: he left his post in APIC along with eight other board members and senior managers on December 15, 2004, just a month after the death of his political patron, Arafat.

Rashid was also chairman of PIF, but early in 2006 – soon after Abbas’ decree placed the fund in his control – Rashid was replaced by Mohammad Mustafa, Abbas’ economic adviser. Two months later, in March 2006, Mustafa also joined APIC’s board of directors. In 2012, a Palestinian court convicted Rashid of embezzling millions of dollars, some of it taken from the PIF. Rashid does not live in the occupied territories and was convicted in absentia.

In 2011, a new member was added to APIC’s board of directors: Tareq Abbas, the PA chairman’s son. While his appointment is common knowledge, the Panama documents reveal that, as of June, 2013 he also possessed company shares worth some $982,000.

A further link to Abbas’ son exists through the public relations firm Sky, which dominates much of the Palestinian advertising market. According to attorney Kareem Shehadeh, who represents the Abbas brothers (Tareq and his older brother Yasser), Sky was established as a joint venture by the Egyptian newspaper Al-Ahram and the PCSC. It was purchased by APIC in 1999, at which time Tareq was its deputy CEO, holding less than 10 percent of its shares. He was later appointed CEO of the company and currently serves as chairman of its board of directors, on behalf of APIC.

In 2009, Reuters published a story about the Abbas brothers, according to which companies managed by the two men won tenders worth over $2 million from the U.S. Agency for International Development (USAID).

According to the report, Sky signed a contract in 2006 for producing a public relations campaign intended to improve the image of the United States in the occupied territories. Shehadeh said at the time that any attempts to argue that they were chosen due to their family ties were “unethical and baseless.”

In June 2012, Foreign Policy also published a story on the Abbas brothers, dealing with their assets and wondering whether their business success was connected to their father’s position. Among other things, the article stated that Tareq, according to statements made by APIC, was involved with two more of its companies: He is deputy CEO of the Arab Palestinian Shopping Center Company, which owns several centers throughout the territories; and he is also on the board of directors at Unipal General Trading Company, the leading distributor in the territories. It distributes food, international-brand cigarettes, cosmetics, etc. According to APIC’s website, Abbas still holds these posts.

The missed link

Abbas’ presence at APIC testifies to the superficiality of the due diligence conducted by the Panamanian law firm Mossack Fonseca regarding its clients’ conflicts of interest. According to international standards, the firm was supposed to check if its clients were “politically exposed persons” (PEP) – through government officials, family members or business associates. If someone is identified as such, the firm is expected to pay special attention that the person is not involved in money laundering, tax evasion or other corruption offenses.

The documents indicate that the investigation of Abbas did not reveal him to be the PA chairman’s son. This could be the result of a misspelling of one of his middle names (compared to his passport, which was sent to the law firm). However, some of the investigation involved a Google search, and the page of results attached to the investigation suggests the correct name spelling was used in the search. Nevertheless, the link was still missed.

Other prominent figures on APIC’s board of directors were identified by the Panamanian law firm. For example, Tarek Aggad was identified as a PEP due to his being on the board of directors at the PIF. Mohammad Mustafa was identified since he was serving as the deputy prime minister and economics minister at the time, and because he was also CEO of the investment fund. Khaled Osseili, another member of the APIC board of directors, was identified since he had served as mayor of Hebron in 2007.

Another person who was identified as a political figure was Dr. Durgham Maraee, an Israeli lawyer who is currently PIF’s representative on APIC’s board of directors (together with Mustafa). Maraee was identified as a PEP since he is on the PCSC board (the previous incarnation of the investment fund). Maraee is currently also the CEO of Wataniya Mobile, one of the two large cellular phone companies in the Palestinian Authority. PIF is one of the major shareholders in his company, holding 34 percent of its shares.

The links between PIF and Wataniya Mobile have often raised eyebrows. Then-U.S. Consul Walles touched on the matter in another document that was exposed in WikiLeaks, dated April 2009. Wataniya was about to go public at that time. The Palestinian prime minister at the time, Salam Fayyad, was negotiating with Israel with the aim of allocating frequencies so the company could commence its operations. At the same time he was negotiating with its competitor, PalTel, which was trying to renew its license. “The interplay among the existing operator, the new licensee, the PA, and the GOI has provided a number of opportunities for collusion and double dealing,” wrote Walles, adding that Mahmoud Abbas’ “role in this, however, is complicated by the fact that the second mobile telecom provider (Wataniya) is largely capitalized by the Palestine Investment Fund (PIF), and [Abbas’] own economic adviser, Muhammad [sic] Mustafa, is both the Chair of the PIF and the CEO of Wataniya Palestine.”

Walles added that “it is also widely believed among Palestinians that [Mahmoud Abbas’] son, Yasser Abbas, has a financial stake in Wataniya.” The Abbas brothers’ representative flatly denied this in conversation with Haaretz. Furthermore, a similar claim was made in December 2007 on Israel’s Channel One News. Following that broadcast, the Abbas brothers filed a defamation suit against the Israel Broadcasting Authority. Ultimately, a mediated agreement led to the channel issuing a clarification, stating that “any suggestions the two brothers had shares in Wataniya were false and that apologies were extended to anyone who felt wronged by the original broadcast.”

Speaking on behalf of the Abbas brothers and APIC, attorney Kareem Shehadeh told Haaretz, “APIC is a publicly listed company in Palestine whose shares are traded daily on the stock exchange. It is subject to oversight by the renowned Deloitte accounting and auditing firm, and complete and transparent details of its dealings appear in an annual report that appears on its website. APIC’s operations are supervised by the Ministry of Commerce and the Palestine Capital Market Authority.”

Another source noted that “Tareq Abbas is a salaried employee at APIC, from this dates from before the time his father became the Palestinian Authority’s president. As far as I know, he has no involvement with the investment fund or the Palestinian Authority. Khaled Osseili is a private Hebron businessman who has served on the board of APIC since its inception, before and after he was elected Hebron’s mayor. Again, as far as I know, he was never a senior official at the Palestinian Authority. Durgham Maraee and Mohammad Mustafa are also on the APIC board, as representatives of the Palestinian Investment Fund.”

The office of Mahmoud Abbas did not respond to requests for a response to this article.