[Congressional Record (Bound Edition), Volume 145 (1999), Part 15]
[Extensions of Remarks]
[Page 22111]
[From the U.S. 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 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.

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