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Source: http://www.usefulwork.com/shark/arafatbombs.html
How Did Arafat Pay for the Karine-A
(Die Zeit) - At least 4.1 billion Euros have flowed to the PA, not including grants from individual European countries. Since June 2001 the EU has been contributing 10 million Euros a month in direct budgetary assistance, no longer for specific "project assistance." How Arafat paid 10 million dollars for the Karine-A weapons ship cargo remains a mystery. At the time of the weapons deal, Europe paid at least 10% of Yasser Arafat's day-to-day budget and 50% of all aid payments. The Israelis found payment receipts with which the salaries for terrorists were paid, through a cascade of transfers, from accounts funded by the European Union. The Germans sent their own experts from the Federal Intelligence Service (BND) to conduct an investigation. In the middle of April the BND reported that it considered the documents provided by Israel to be authentic and agrees with the Israeli conclusions. On May 2, 2002, the BND filed another report, describing "known mismanagement" and "far reaching corruption." It concludes: "At no point could it be realistically assumed that EU-funds were...100% accounted for." The EU paid in dollars for the salaries of Palestinian teachers, doctors, and police. Arafat transferred the money in shekels, at a discount of 25%. The civil servants also had 3.7% withheld as a tax, without this money being recorded in the budget as tax revenue. Not until June 4 did the EU Budget Committe decide to suspend the payments to Arafat. As long as the European Parliament doesn't affirm this decision, however, the money will keep flowing.