The defense establishment and Finance Ministry are operating a secret, extra-budgetary fund, through which money is transferred to the Palestinian Authority.
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The fund's existence was revealed in the state's answer to the Supreme Court in response to a petition filed by the Kohelet Policy Forum. State's attorney Yael Morag Yako-El wrote that Israel had committed to transferring the Palestinians a "loan" of NIS 100 million ($28.86 million). "The source of this amount is an extra-budgetary fund managed by the Civil Administration and Finance Ministry's Budgets Department," she wrote.
The existence of the fund is unknown to anyone involved in such matters. Just one month ago, the Knesset's Foreign Affairs and Defense Committee discusses payments to the Palestinians. The fund was not mentioned in that discussion, despite being attended by dozens of government representatives, including the Finance Ministry's Adviser to the Director-General Arava Elfassy, Col. Elad Goren, the head of the Civil Department of the Coordinator of Government Activities in the Territories (COGAT), and legal advisers from various government ministries.
They answered questions posed to them by members of Knesset who raised concerns the government was not being entirely forthright regarding certain expenditures, claiming they were presenting the whole picture. None of them told any of the MKs and other participants in attendance about the existence of such a fund, or that it was used to transfer money to the PA. It should be noted that an extra-budgetary fund is not a common tool used by the government and that creating and managing one requires special approval from the Finance Ministry's Accountant General.
Although aid agreements between Israel and the PA are supposedly strictly economic in nature, the state insists on not revealing them to the public. Attorney Yako-El further wrote in her response to the KPF's petition that the state was prepared to present the agreements to the court, but only "behind closed doors, and only to the court." According to the state, this information, "if revealed, could harm the country's national security and its foreign relations."
Attorney Ariel Erlich, who submitted the petition on behalf of the Kohelet Policy Forum, said in response: "We petitioned the High Court of Justice against the transfer of funds because the Finance Ministry refused to reveal the agreements and affirm that all transfers were in accordance with the law. We had hoped to receive clarifications in the wake of our petition, but to our surprise, a new rabbit was pulled out of the hat: a secret 'extra-budgetary fund.' We're talking about an astronomical sum of NIS 100 million as a 'loan.' As for the existence of this fund, the Finance Ministry never bothered to inform anyone. Theoretically, this is a gross violation of the law. After all, if the law stipulates what and how you are permitted to transfer to the PA, the state cannot create extra-budgetary funds to bypass this prohibition."
He added: "This whole story reeks of a cover-up, breaking the law, and funding terror. We hope the court won't allow the Finance Ministry to continue obscuring and blowing smoke. The citizens of Israel need to know whether public funds are transferred to fund terror through the circumvention of the Knesset's laws."
The Finance Ministry said in response that the "fund is sourced from payments pertaining to the use of lands, including quarries, along with media bodies as well. The sums that are deposited in the fund are earmarked for such matters. It should be noted we have answered questions posed by various Knesset members before, within the relevant contexts, about the loan."
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