March 13, 2002
Arafat Backs "Karin A" Mastermind Shoubaki Continued Control of Security Funds

Recently, Israel conducted a counter-terrorist operation, codenamed Operation Guardian Fortress, against the Gaza Headquarters of the Palestinian Preventative Security Service (PPSS). During the operation, a PPSS document was discovered, addressed to senior commanders of the Palestinian security apparatus and dealing with the appointment of Col. Mahmoud Awdallah to replace Fouad Shoubaki as the titular head of the PA General Security's Financial Directorate.

Shoubaki, a close aide and financial advisor to Yasser Arafat, was responsible for establishing an extensive clandestine arms manufacturing industry on behalf of the PA, and for masterminding the purchase of the 'Karine A' arms ship and its cargo of heavy weapons which were intercepted last January by Israel in transit from Iran to the Palestinian Authority.

According to the newly revealed document, Awdallah was appointed personally by Arafat on 13 July to head the Financial Directorate, the position held formally by Shoubaki until he was implicated in the 'Karine A' affair. The document details how Shoubaki stood behind the selection of Awdallah, and further describes how, when the choice was brought into question, Arafat cast his full weight in support of the Awdallah.

The document also states that the incarcerated Shoubaki, "conducts many affairs of the central Financial Directorate via his cell-phone", while maintaining "a very close relationship" with Awdallah.

Evidence, in the form of an official PPSS document, now exists which indicates that Yasser Arafat continues to mislead the world community, by lending his full support to the undermining of the internationally-brokered understandings which served as the basis for Shoubaki's transfer from the 'Mukataa' (Arafat's cordoned-off headquarters in Ramallah) to a Jericho PA prison following Operation Defensive Shield last April, in order to stand trial for terrorism. Despite the formal appointment of a replacement, Shoubaki, who is now 'imprisoned' awaiting trial in Jericho under US and British supervision, continues to conduct the financial affairs of the PA's General Security Financial Directorate by proxy, through his cellular phone and his replacement and crony, Mahmoud Awdallah.

Translation of Discovered Document Appendix A

The Palestinian National Authority
The Preventative Security Service
Gaza Strip

14/7/2002

TO: Deputy Director for Operations [of the PPSS]

RE: The Appointment of Col. Mahmoud Awdallah as Head of the Armed
Forces Financial Directorate

- Two days ago, Monday 12/7/2002, Mahmoud Awdallah, who has been appointed by the President [Yasser Arafat] as head of the Financial Directorate, arrived [in the Gaza Strip].

- Col. Awdallah stayed in the home of Jihad al-Haj, which is situated opposite the Jebaliya municipality.

- Yesterday, Tuesday, Awdallah went to the office of Gen. [Abd el Razak] al Mejaida [Director of the Palestinian General Security Service and Commander of the National Security Forces in the Gaza Strip], who then contacted the President [Arafat] and informed him of Awdallah's arrival. The President requested that Gen. Al Mejaida carry out the decision [regarding Awdallah's appointment].

- Yesterday, Tuesday, Haj Mutlak [the head of the Administrative and Organizational Department of the Palestinian General Security Service] issued a directive following upon the President's decision, ordering the appointment of Col. Mahmoud Awdallah as head of the Financial Directorate.

- Our contacts have informed us that Col. Fouad Shoubaki [the former head of the Financial Directorate] stands behind this appointment. When the decision was about to be reversed, the President reiterated his insistence that Mahmoud Awdallah be appointed to head the Financial Directorate.

- Col. Shoubaki conducts many affairs of the central Financial Directorate via his cell-phone. He maintains a very close relationship with Col. Mahmoud Awdallah. A reception held in honor of the latter was attended by Hindi el Shoubaki [the Brother of Fouad Shoubaki], also known as Abu el Walid, and other members of the Shoubaki family.

Head of the PA Security Apparatus Affairs Bureau

[Signed]

Head of the Department for Local Operations

[Signed]