How Gazan cash got buried in tunnels

A major corruption scandal involving the smuggling tunnels between Egypt and the Gaza Strip is making waves throughout the Strip.

The affair began shortly before Israel's incursion into Gaza in December, when tunnel owners affiliated with the ruling Hamas party offered Gazans an opportunity to invest in the goods smuggled through the tunnels. It was a good investment, they argued, because goods bought in Egypt can be sold in Gaza for two or three times their purchase price. To market their proposal, they hired salesmen who solicited investments from thousands of Gazans, primarily prominent businessmen.


Soon, the smuggling profits proved insufficient to pay off all the investors. At that point, the tunnel owners began operating a classic Ponzi scheme: They used money from new investors to cover the shortfall in the smuggling profits and enable them to pay off the old ones.

One of the key figures in the scheme was Ihab al-Kurd, a businessman affiliated with Hamas. When the scheme went bust he tried to flee, but was ultimately arrested by Hamas security forces. Other people involved in the affair were also arrested, including both tunnel owners and the people they hired to solicit investments.