Mr. Arafat used a holding company to buy stakes that ranged from $285-million (U.S.) in Egyptian mobile phone company Orascom Telecom Holding SAE and its affiliates to about $30-million in private equity, mostly in the United States. These included $3.2-million in Herndon, Va.-based Simplexity Inc., which makes electronic-commerce software, $2.1-million in New York- and Boston-based Vaultus Inc., which makes software for wireless computers, and $1.3-million in New York-based Strike Holdings LLC, which owns the Bowlmor Lanes bowling alley in Manhattan's Greenwich Village.

Mr. Arafat, who died on Nov. 11 at age 75, disclosed $799-million of investments in documents the Palestinian Authority has released over the past two years that show he didn't just invest in building basic services in the West Bank and Gaza.

At a time when the authority was starved for funds, Mr. Arafat's money managers placed bets from Tel Aviv to Silicon Valley on venture capital funds, software startups and telecommunications companies.

"Arafat was notoriously secretive, and he spread the money all over," says Rachel Ehrenfeld, director of the New York-based American Center for Democracy and author of Funding Evil: How Terrorism Is Financed and How to Stop It. "He didn't give the public a view of the investments until the donor community protested about corruption."

Mr. Arafat and his money managers invested abroad through Palestine Commercial Services Co., a Ramallah-based holding company owned by the Palestinian Authority and known by its initials, PCSC. Mr. Arafat controlled PCSC through his financial adviser, Mohamed Rachid, according to Palestinian legislators Hanan Ashrawi and Azmi Shuaibi. Mr. Arafat appointed Mr. Rachid as PCSC's chairman, a June, 2004, World Bank report shows.

One PCSC subsidiary started investing $25-million in venture capital funds and Internet startups on April 4, 2000 -- three weeks after the Nasdaq composite index peaked. The funds have since lost about two-thirds of their value.

Mr. Arafat made the investments abroad with tax money that he "diverted" from the Palestinian finance ministry, according to a September, 2003, International Monetary Fund report on the Palestinian economy. Israel collected import taxes for goods destined for the territories and then passed the funds to the authority.

Israel halted the payments after violence erupted in the West Bank and Gaza in September, 2000. By the end of 2002, the Palestinian Authority owed its ministries and suppliers as much as $531-million, or 10 per cent of gross domestic product, the IMF report says.

In 2002, Mr. Arafat handed control of PCSC to a new Palestine Investment Fund, which then hired New York-based Standard & Poor's, a McGraw-Hill Cos. unit, to value the investments.

In May, 2004, the fund released its first annual report, which covered 2003 and was audited by the Amman, Jordan, office of Ernst & Young, a member of New York-based Ernst & Young International, which provides accounting and auditing services in 140 countries. The report showed the Gaza City-based Palestine Investment Fund had profit of $40.1-million in 2003 on revenue of $85.1-million.

The report also revealed that PCSC held a $6.8-million account of venture capital investments at New York-based Citigroup Inc., the world's biggest bank. "Citigroup does not have any accounts for Yasser Arafat, and we never have," company spokeswoman Shannon Bell said in a Nov. 19 statement.

Citigroup chief executive officer Charles Prince, 55, declined to answer questions about the account. There is no indication that Citigroup was aware that Mr. Arafat controlled PCSC.

Getting Mr. Arafat to hand over the holdings was like pulling teeth, says Ms. Ashrawi, 58, a former member of his cabinet. Mr. Arafat gave in to pressure from aid donors such as the European Union and from his finance minister, Salam Fayyad, the IMF's former representative in the territories, she says. They demanded that Mr. Arafat turn over the investments as a condition of further aid, she says.

Most of the bigger investments held by the Palestine Investment Fund are in the West Bank and Gaza, such as the wholly owned Cement Co., valued at $54-million, which Mr. Arafat ran as a local monopoly until 1996; a $71-million stake in the Palestinian Authority's joint venture with BG Group PLC, Britain's third-largest natural gas producer, to explore for gas off the Gaza Strip's Mediterranean shore; and a 35-per-cent stake in Palestine Cellular Communications Co., the only mobile telephone service based in the territories, valued at $36.9-million.

Mr. Arafat also invested around the world through PCSC. The fund owns 25 per cent of Algiers-based Orascom Telecom Algeria SpA, valued at $185-million, and 22 per cent of Tunis-based Orascom Telecom Tunisie SA, worth $75-million, according to the annual report and asset valuations.

The companies run networks in Algeria and Tunisia for Cairo-based Orascom Telecom Holding, the Middle East's biggest mobile phone company.

In the United States, Mr. Arafat's money managers set up Delaware holding companies for the sole purpose of making investments for PCSC, says Zeid Masri, 38, an American of Palestinian heritage who handled some of the investments and is managing partner of SilverHaze Partners LLC.

McLean, Va.-based SilverHaze manages an undisclosed amount of money for wealthy families, says Mr. Masri, who's distantly related to two of the seven directors on the Palestine Investment Fund's board: Maher Masri, the Palestinian minister of national economy, and Sabih Masri, chairman of Palestinian Telecommunications Co. and the Nablus-based Palestine Securities Exchange and a director of Amman-based Arab Bank PLC.

To invest in Strike Holdings, which owns Bowlmor Lanes in Greenwich Village and bowling alleys in Miami, Bethesda, Md., and New Hyde Park on New York's Long Island, Mr. Masri says he created a holding company called Onyx Funds LLC. Onyx, which is 100-per-cent owned by PCSC, was incorporated on June 1, 2002, in Delaware. Its only holding is the $1.3-million of Strike Holding shares, S&P's valuation of Onyx states.

© Vernon Silver, "Bloomberg News"