Identifier
Created
Classification
Origin
06JERUSALEM4915
2006-12-07 13:36:00
CONFIDENTIAL//NOFORN
Consulate Jerusalem
Cable title:  

LETTER FROM PA PRESIDENT ABBAS TO THE SECRETARY

Tags:  EINV EFIN KWBG 
pdf how-to read a cable
VZCZCXYZ0000
OO RUEHWEB

DE RUEHJM #4915/01 3411336
ZNY CCCCC ZZH
O 071336Z DEC 06
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5975
INFO RUEHTV/AMEMBASSY TEL AVIV IMMEDIATE 2363
C O N F I D E N T I A L JERUSALEM 004915 

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/STEINGER; NSC FOR ABRAMS/DORAN/WATERS;
TREASURY FOR NUGENT/HIRSON; L FOR JONATHAN SCHWARTZ

E.O. 12958: DECL: 12/06/2016
TAGS: EINV EFIN KWBG
SUBJECT: LETTER FROM PA PRESIDENT ABBAS TO THE SECRETARY
CONCERNING LEGAL ACTION AGAINST THE PALESTINE INVESTMENT
FUND

Classified By: Consul General Jake Walles for reasons 1.4 (b) and (d).

C O N F I D E N T I A L JERUSALEM 004915

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/STEINGER; NSC FOR ABRAMS/DORAN/WATERS;
TREASURY FOR NUGENT/HIRSON; L FOR JONATHAN SCHWARTZ

E.O. 12958: DECL: 12/06/2016
TAGS: EINV EFIN KWBG
SUBJECT: LETTER FROM PA PRESIDENT ABBAS TO THE SECRETARY
CONCERNING LEGAL ACTION AGAINST THE PALESTINE INVESTMENT
FUND

Classified By: Consul General Jake Walles for reasons 1.4 (b) and (d).


1. (U) Action request for the Department in paragraph 2.


2. (C) President Abbas has written to the Secretary
regarding an attempt to take control of the Palestine
Investment Fund (PIF) as a result of a U.S. court ruling in
the Ungar case. The PIF has retained its own U.S. legal
counsel to defend its interests in this matter. In his
letter, President Abbas describes the plaintiffs' attorneys'
attempts to dismiss the existing PIF board and their threats
against the law firm retained by the PIF. The Consulate
General requests Department assistance in taking any
appropriate steps to shield the Palestine Investment Fund and
the PLO office in Washington from court action in the United
States.


3. (C) Note: American citizen Yaron Ungar was killed in June
1996 when the vehicle he was traveling in was fired upon in
Israel. His estate filed a civil suit against the
Palestinian Authority (PA) and Palestinian Liberation
Organization (PLO) in March 2000 under the Anti-Terrorism Act
of 1991. The PA/PLO's U.S. legal counsel sought to use a
sovereign immunity argument and did not specifically contest
the plaintiffs' complaint, so the judge entered a USD 116
million default judgment against the PA/PLO. The plaintiffs'
attorneys have been aggressive in seeking ways to collect the
judgment, including by seeking to take over the PIF and all
of its commercial assets. We understand the PA Presidency is
seeking to engage new U.S. legal counsel to contest the Ungar
creditors and seven other similar cases against the PA/PLO in
the United States, including a USD 1 billion suit. End Note.


4. (SBU) Begin text of letter dated November 28, 2006,
addressed to the Secretary:

Dear Secretary Rice,

I am writing to bring to your attention and seek your
assistance in addressing serious crisis that is facing the
Palestine Investment Fund (PIF). The crisis relates to a

court ruling that was issued by the United States District
Court for the District of Rhode Island (the court) against
the PIF. The court ruling was issued in the case between the
Estate of Yaron Ungar et al (Ungars) against the Palestinian
Authority (PA) et al (Ungar case). The PIF is not a party to
this case. On September 19, 2006, the court decided that
"all of the Palestinian Authority's ownership rights in the
Palestinian Commercial Services Company (PCSC) and in the
Palestinian Investment Fund (PIF),and all rights, benefits
and interests of the Palestinian Authority in all property,
assets and credits, of any type, that are titled and/or owed
to the PCSC and/or to the PIF are assigned, transferred and
conveyed to the Estate of Yaron Ungar, ...etc." On October
20, 2006, the counsels of the plaintiffs in the Ungar Case
sent letters to the directors of PIF, claiming that their
clients are the "new owners of the PIF", and that the "new
owners" have dismissed the current directors of the fund,
effective October 17, 2006, and appointed a new "Board of
Directors".

The PIF was incorporated in 2003, in response to calls from
the United States government (USG) and the European Union
(EU) for increased transparency and accountability within the
Palestinian Authority institutions and affiliates. It falls
under the supervision of my office, and encapsulates the
investments that are held for the benefit of the Palestinian
people. Accordingly, the U.S. Office of Foreign Assets
Control (OFAC) General License #4 (dated April 12, 2006)
explicitly authorizes U.S. persons to "engage in all
transaction otherwise prohibited under 31 C.F.R. parts 594,
595, or 597" with PIF. Since 2003, the PIF has been headed
by a nine-member Board of Directors (BOD),with majority
members of prominent Palestinian private sector leaders.
Currently, the Chief Executive Officer (CEO) of the PIF is
Dr. Mohammad Mustafa -- a prominent private sector
development specialist who had been serving at the World Bank
in Washington for the last 15 years, and whom I selected to
become my economic adviser in November 2005.

PIF has retained the prestigious New York-based LeBoeuf,
Lamb, Green & MacRae (LeBoeuf) law firm to take the necessary
legal measures to defend its interests in this case, as well
as in any other litigations that are brought against it
before U.S. courts. Recently, the counsels for the
plaintiffs in the Ungar Case sent letters to LeBoeuf



threatening them to take legal action against them because of
their representation of PIF, and requesting that they remove
themselves from such representation. LeBoeuf remains
committed to representing PIF, and is taking the necessary
legal actions against such outrageous and illegal behavior
from the plaintiffs. The counsels of the PA are also taking
the necessary legal steps to counter such assaults.

Today, the PIF serves as an enabling catalyst for sustainable
economic and social development in the Palestinian
Territories. This is achieved through undertaking and
partnering in strategic investment projects in the areas of
energy, information and communication technology, real
estate, tourism, among other sectors. The PIF is committed
to transparent and accountable corporate behavior, free
market economy, and strives to build a pool of top notch
professionals who would become the future leaders of
Palestine. Currently, tens of thousands of Palestinian men
and women are employed by projects and businesses that are
either owned or managed by the PIF.

We are aware of a number of other cases that are brought
against the PA on the same basis. Those cases are
politically motivated, and primarily aim at causing the
collapse of the Palestinian institutions through bankrupting
them, and at jeopardizing the Palestinian-U.S. relations.

With the current status of the mentioned litigations before
the U.S. courts, substantial portions of PIF,s assets in the
U.S. are either frozen or are in jeopardy of confiscation.
Should such assets be confiscated or transferred to the
plaintiffs, the Palestinian economy and private sector would
be severely damaged and is likely to collapse. Such outcome
would not serve U.S., Israeli or Palestinian national
interests. To the contrary, it may cause the Palestinian
Authority to collapse; push tens of thousands of Palestinian
families into a vicious circle of poverty and unemployment
-* an environment that nurtures radicalism, violence and
terrorism; and would sharply increase anti-U.S. sentiments in
Palestine, as well as the Arab and Moslem worlds.

Therefore, and given the political aspects and likely
ramification of these dramatic developments, I seek your kind
assistance in addressing this serious matter. I will ask my
economic adviser and the CEO of the PIF -* Dr. Mohammad
Mustafa to follow up on this matter with U.S. Consul General
in Jerusalem Mr. Jacob Walles.

I am confident that, through the joint work of our teams, we
will be able to achieve an outcome that would serve the
interests of the USG and PA, and would be in concert with the
law.

Sincerely,
(signed)
Mahmoud Abbas
Chairman
Executive Committee of the Palestine Liberation Organization
President
Palestinian Authority

End text of letter.


5. (U) Post will pouch the original letter.
WALLES