Behind the Headlines American Scholar Linked to Arafat Account Denies Charges by Joe Berkofsky

A leading American Jewish supporter of the Middle East peace process is denying reports that he made millions of dollars from a slush fund involving Yasser Arafat and an Israeli envoy.

Stephen P. Cohen, a national scholar with the Israel Policy Forum and president of the Institute for Middle East Peace and Development, told JTA on Tuesday that he never had business dealings with the Palestinians.

Cohen long has been involved in both behind-the-scenes and public efforts to forge Israeli-Palestinian ties.

But he denied last week’s report in the Israeli daily Ma’ariv that he helped Israeli envoy Yossi Ginossar illegally transfer $300 million in Palestinian Authority funds to a secret Swiss bank account controlled by Arafat, the P.A. president.

“I was not involved in any way, at any time, with investment of funds or banking of the Palestinian Authority or of its leadership,” Cohen told JTA in a prepared statement. “The Ma’ariv story about such funds is simply not about me, and I know nothing about that story.”

With Ginossar having served as a private channel to Arafat for three Labor Party prime ministers who were strong backers of the Oslo accords, fallout from the scandal is hitting the peace camp in the United States.

Some have questioned whether the affair will further hamper groups still advocating Israeli-Palestinian peace at a time when their mission already has been badly damaged by the Palestinian intifada.

“It may make it more difficult for the one group that has been most closely identified with Stephen P. Cohen — the Israel Policy Forum,” said Lewis Roth, assistant executive director of Americans For Peace Now.

Cohen also denied that he took a cut from cement and gasoline deals between Israeli and Palestinian companies. Ginossar aide Ozrad Lev told Ma’ariv that commissions from such deals netted millions of dollars for Cohen and “at least $10 million” for Ginossar.

“At the suggestion of Yossi” Ginossar, “we created a small company. We concluded one deal of this kind on behalf of an Israeli company. The Israeli company, and only the Israeli company, compensated our company for our services,” Cohen said.

“I made contacts between business people in Israel and the Arab world and advocated prosperity as a key element in peace consolidation,” he continued. “I tried to help a few Israeli and American companies find partners in the Arab and Palestinian world.”

The “cooperative business was not my primary focus,” Cohen said, “but it was perfectly consistent with my attempts to bridge the societies.”

Cohen would not comment further on the specific nature of his financial dealings with that Israeli company, nor discuss how much he had earned from the arrangement.

Martin Irom, a public relations consultant for the Israel Policy Forum, said he did not know how Cohen came to know Ginossar, a former top official in the Shin Bet intelligence service.

Irom said Cohen has been active in attempts to improve Israeli-Palestinian links since 1975, has taught at Hebrew University in Jerusalem and travels to Israel frequently.

“He knows a lot of people in and out of government very well,” Irom said.

Irom also downplayed Cohen’s role in the affair. In the first of two Ma’ariv stories on the issue, Cohen was mentioned only once, “in one paragraph at the end of a 36-paragraph story — I know, I counted,” Irom said.

Cohen “is, at best, peripheral to this story,” he said.

According to an English translation of the initial Ma’ariv story, Ginossar worked with Arafat financial adviser Mohammed Rashid to funnel the $300 million from the Arab Bank in Ramallah to the respected Swiss bank Lombard Odier & Cie. in April, 1997.

According to Ma’ariv, Ginossar persuaded the Swiss bank to open the account, using Arafat’s passport and other personal papers, for an offshore front company named Ledbury. The name later was changed to Crouper after the Israelis grew concerned that too many people knew about the fund.

Ginossar also set up an offshore firm called Brichrobe, and “another partner in the same company was Prof. Steve Cohen,” Ma’ariv reported.

“Through the company, the two receive regular commissions from deals between Israel and the Palestinian Authority,” and gave set percentages to companies Rashid owned, Ma’ariv reported.

Richard Samuha of Geneva, a member of a prominent Swiss-Jewish family that handles investments, ran a shell game of dummy companies to obscure the money “in an endless circle,” Ma’ariv reported.

Ginossar has denied profiting from the peace process.

Israeli leaders approached him to make “use of my special connections with the Palestinians as a private citizen,” he has said, adding that any allegation to the contrary is “baseless and wicked.”

Lev, Ginossar’s partner, said he began to have qualms over the account when Rashid suddenly withdrew $65 million after the intifada started. The money could not be traced, and Lev said he began to fear it was being used to fund terrorism.

Israeli Prime Minister Ariel Sharon has asked the Mossad intelligence agency to determine if any of the money from the account was used to fund terrorism. The Israeli police also are investigating the affair.

The scandal has hardly been mentioned in the Palestinian press. Palestinian Authority officials have said the scandal is an Israeli smear campaign against Arafat.

How the allegations against Cohen will affect American groups working for Israeli-Palestinian peace remains unclear.

Many members of such groups privately expressed shock over the reports, but would not speak publicly about Cohen.

“The fact that there is a cloud hanging over one member of the pro-peace community is not something that will affect the logic” of the peace process supporters, one peace activist said.

“Might it hurt an organization or two? Yes,” the activist said. “Is it going to hurt the pro-peace community? No.”

Several officials of the Israel Policy Forum refused JTA requests to discuss the developments, instead issuing a joint statement through Irom.

Cohen “has assured IPF that the reports are not true, and we have no reason to doubt him,” Irom quoted the officials as saying.

In his statement, Cohen said that “none of the organizations, institutions or news media, think tanks or individuals, with whom I have worked bear any responsibility for my private business initiatives.”

Malcolm Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations, said it was “too early” to assess how the scandal would affect pro-peace groups.

Still, “this matter has serious implications — the whole question of Palestinian funds, how they were directed, how they were used,” Hoenlein said.

The Israel Policy Forum does not belong to the Conference of Presidents.

Cohen and others predicted that critics of the peace process would try to capitalize on the charges.

One of those critics, Morton Klein, president of the Zionist Organization of America, said he would speak out against anyone involved in financial improprieties with the Palestinians, no matter their politics.

As for Cohen, “he’s apparently been making millions out of deals with the Palestinians, which makes his views at a minimum suspect and without credibility,” Klein said.

“Arafat understood that by affording Stephen Cohen the opportunity to make money,” it “would cement their relationship,” Klein said, referring to the report that Cohen and the others profited from gas and cement deals between Palestinians and Israelis.

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