Following a preliminary investigation, the European Union said Tuesday it had found no evidence that donations to the Palestinian Authority had been misused to fund terrorist activities.
There are fears that EU funds are falling into the wrong hands
In a statement in Brussels on Tuesday, OLAF said there was no proof of that. "To date, there is no evidence that funds from the non-targeted EU direct budget assistance to the Palestinian Authorities have been used to finance illegal activities, including terrorism," the office said.
OLAF worked closely together with the World Bank and the International Monetary Fund, which disburses EU funds in the Occupied Territories, as well as with Palestinian and Israeli authorities during the investigation.
"Investigation will go on"
On Tuesday OLAF stressed that the enquiry was still ongoing and final conclusions could not be drawn as yet.
"The investigation will go on and that's why every funding drive will be thoroughly examined," it said.
Palestinian leader Yasser Arafat
Earlier this month the EU was planning to send investigators to Israel to interview Palestinians held in Israeli prisons after claims that Yasser Arafat, the chairman of the Palestinian Authority, and senior officials transferred EU funds to the Al Aqsa Martyrs' Brigades, the military wing of Arafat's Fatah faction.
Fatah detainees in Israeli prison had previously told the media that they received financial support from the Palestinian Authority and were given instructions from senior security service officials on carrying out attacks on Israelis.
Biggest donor in Occupied Territories
The EU was financing the Palestinian Authority's payrolls of 125,000 employees but suspended it at the end of 2002 after Israel accused the Palestinians of a misuse of EU funds. Funding was continued after a working group at the European Parliament concluded there was no evidence for the financing of illegal activities such as terrorism by taxpayers in the EU.
A Palestinian woman, standing next to a car with its windows smashed, gestures explaining that she can't go out to buy food as the Israeli army imposes a 24-hour curfew in the West Bank town of Bethlehem in 2002.
The EU is the most important donor for the Palestinian Authority. In the past decade, it has transferred about €1.5 billion ($1.9 billion) to the Palestinian Authority.
In July the European Commission said that total aid to the Palestinians in 2004 amounted to €250 million.