[Congressional Record Volume 145, Number 123 (Tuesday, September 21, 1999)]
[Extensions of Remarks]
[Pages E1911-E1912]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   U.S. DISTRICT COURT FINDS PATTERN OF RACKETEERING BY PALESTINIANS 
                       AGAINST U.S. FIRM IN GAZA

                                 ______
                                 

                      HON. JAMES A. TRAFICANT, JR.

                                of ohio

                    in the house of representatives

                      Tuesday, September 21, 1999

  Mr. TRAFICANT. Mr. Speaker, in 1995 the United States and the 
Palestinian Liberation Organization (PLO) signed the Gaza-Jericho 
Agreement to encourage American investment in Gaza and the West Bank, 
as a follow-on to the Oslo Peace Accord between Israel and the PLO. 
Bucheit International Limited, a 90-year-old, family-owned business 
based in Youngstown, OH, agreed to be the model company for U.S. 
investment in Gaza under the Builders for Peace program.
  After investing $4.4 million in the area, however, Bucheit has 
experienced a myriad of problems, including: transportation and 
standards barriers, a mismanaged regulatory system, and unethical, if 
not illegal, activity, which

[[Page E1912]]

have resulted in Bucheit's default on a $1.1 million loan from the 
Overseas Private Investment Corporation (OPIC) loan. Furthermore, 
Bucheit International has experienced numerous unethical and 
questionable activities in its dealings with Cairo Amman Bank of Gaza. 
For example, Bucheit has discovered that corporate accounts were opened 
without proper corporate documentation; corporate checks denominated in 
dollars were endorsed and cashed by individuals, without first being 
deposited into the corporate account; canceled checks were not 
returned; corporate funds in excess of $100,000 were used to guarantee 
an overdraft facility of a private individual, without knowledge or 
approval by the corporation; and a letter of guarantee was written by a 
bank without notifying Bucheit, in violation of Bucheit management's 
strict instructions. In addition, Bucheit's plant and equipment were 
stolen and continue to be operated illegally. Moreover, the Palestinian 
Authority (PA) has pocketed Bucheit's value-added-tax (VAT) 
reimbursement from Israel as well as kept the income tax deducted from 
Bucheit's payments. Without access to its funds or equipment, Bucheit 
is currently in default of the $1.1 million OPIC loan.
  Recently, Bucheit filed a civil RICO (Racketeering, Influence and 
Corrupt Organizations) complaint against the Cairo Amman Bank in Gaza 
for misappropriating loan proceeds advanced to Bucheit from OPIC. On 
August 17, 1999, U.S. District Judge Kathleen McDonald O'Malley found 
that the Cairo Amman Bank engaged in a pattern of racketeering activity 
that caused the failure of Bucheit's precast concrete plant in Gaza. 
Specifically, the court ruled that there existed an ``enterprise'' made 
up of the Bank, Bank employees, an influential Bank customer and other 
persons, and the Bank knowingly participated, directly and indirectly, 
in the conduct of the affairs of the ``enterprise'' through a pattern 
of wire fraud. Judge O'Malley awarded Bucheit roughly $15 million in 
damages. Included in that amount is the $1.4 million due OPIC.
  I find it troubling that the House-Senate conferees on the Foreign 
Operations Appropriations for Fiscal Year (FY) 2000 are considering the 
addition of $400 million for the Palestinian Authority, while an 
American investor and the United States government have been blatantly 
ripped off. To date, the Palestinian Authority has neither authorized 
an official, internal investigation into the existing ``enterprise,'' 
nor has it meted out proper punishment to the individuals involved.
  As a result, I have requested that the House-Senate Conferees on the 
Foreign Operations Appropriations for FY 2000 withhold the $15,206,403 
owed Bucheit International, which includes a $1,436,837 loan repayment 
for OPIC, from the $400 million appropriation for the Palestinian 
Authority.
  Unpunished, the guilty parties will continue with their illegal and 
unethical behavior to the injury of future American investors, the U.S. 
government and the Palestinian people. To create jobs, growth and 
higher income, a nation must convince its own citizens as well as 
foreigners that they can safely invest: fair tax laws and fair 
enforcement, independent courts enforcing the law consistently and 
upholding contract rights, strong banks that safeguard savings, and 
vigilance against hidden ties between government and business interests 
that are inappropriate.

                          ____________________