Transfer of funds for settlements stopped over allegations of misuse

JERUSALEM (JTA) — Israel’s finance minister halted the transfer of state funds to the settlements following a television report that the money was being misused.

Yair Lapid reportedly stopped the transfers on Saturday while the allegations in a report on Israel Channel 2 the previous night are being investigated.

According to the report, more than $42 million given to the settlements by the previous government to offset losses from a West Bank construction freeze were used inappropriately, specifically by being transferred to the settlers’ Yesha Council for advocacy purposes.

Lapid called on those investigating the issue — including the head of the budget division, the accountant general and the legal adviser — to submit their conclusions in a week, Haaretz reported.

Channel 2 reported that the settlements received the money in secret payments as compensation for losing out on city taxes from houses that were not built during the 10-month settlement building freeze that ended in September 2010.

Thousands of housing construction starts were delayed during the freeze. The funds were transferred as “security grants,” according to Channel 2.

“In light of reports that those same funds are not serving their original purpose, such as security and school and kindergarten maintenance, but are being transferred in an allegedly illegal way to the Settlers’ Council, which uses them for political ends, some of which contravene government policies, the finance minister has ordered an immediate freeze on future payments,” the statement Saturday night from the Finance Ministry said.

Likud Party government minister Yuval Steinitz, who served as finance minister when the payments were authorized, confirmed that the payments were made on orders of the Prime Minister’s Office, the Times of Israel reported.