Israel's Interior Ministry Fraudulently Transferred $16m to Settlements

Money meant to compensate for funds that West Bank regional councils would have been eligible to receive from Jewish Agency if they were inside Green Line.


The Interior Ministry transferred a grant of 62 million shekels to regional councils in the territories in December, falsely claiming that the funds compensated the regional authorities for aid they would have been eligible to receive from the Jewish Agency if they were not over the Green Line.

Interior Ministry documents list the reason for the grant as “originally intended to compensate the communities that meet the criteria for receiving aid from the Jewish Agency, which are not eligible for aid because they are over the Green Line.”

However, the regional authorities do not meet the criteria for Jewish Agency aid because the Jewish Agency stopped handing out grants to young communities in 2003, due to financial difficulties.

“We do not provide grants to the regional councils for young settlement,” said a Jewish Agency official. (The official said the agency does provide other assistance for parts of the north and south of the country, such as programs to bring in new immigrants and assist in their absorption, help youth at risk, construct public buildings and help college students, entrepreneurs and businesses.)

All the same, the state continues to transfer hundreds of millions of shekels to the regional councils in the territories — despite the state’s promise to the High Court of Justice to cut the funding.

The grants received by regional councils in the territories include an Oslo grant (2.5 million shekels), a security grant (37 million shekels), a security needs grant (20 million shekels) and a “young settlement grant” for only some of the regional council.

A 24 million shekel young settlement grant goes to the Megilot, Jordan Valley and Golan Heights regional councils and the Ma’aleh Ephraim local council. A 38 million shekel grant goes to the Gush Etzion, Hebron Hills and Binyamin regional councils. These are significant amounts for these regional authorities, which have a hard time creating real revenue.

A special grant of 20 million shekels was also provided in 2014 because of the kidnapping of three Israeli teenagers from the West Bank.

MK Stav Shaffir submitted a High Court petition against the Finance Ministry last year over the grant. The state told the court it had decided to gradually eliminate the funding.

“A decision was made this year to reduce the funding that is transferred to young settlement gradually over the next several years until it is completely abolished,” the state said. “We have a tangible example of the fact that the amount that is transferred to young settlement is not assured in advance, and there is no way to include it in the framework of the Budget Law.”

The grant was supposed to be cut to 85 percent of the grant from the year before — meaning it would cost the state 9.5 million shekels less.

Instead, the Interior Ministry ordered in December that the full amount be transferred because of heavy pressure from the settlers and their representatives in the government. As an alternative, a decision was made to establish a committee that would examine the grant.

A spokesperson for the Finance Ministry said: “In light of the Interior Ministry’s request regarding regional authorities’ needs and their reliance on these amounts, and after approval from the Justice Ministry, young settlement grants were transferred in amounts similar to those that were transferred last year.”

A Justice Ministry official said a committee was investigating the continued provision of the grant.

“When the response to the High Court of Justice was written, it was based on the decision to reduce the grant gradually until it was abolished,” the official said. “However, after the response was submitted, the decision was changed at the request of the Finance Ministry’s director general, and a decision was made to establish a committee to probe the continued provision of the grant in the fiscal year 2015 and later on.”

The Interior Ministry told a different story.

“The funds are provided to the local authorities on the basis of a budgetary amendment that is approved by the Knesset’s Finance Committee, which determines which communities will be eligible for the funds,” a ministry spokesperson said. “The Interior Ministry transfers the funds to the local authorities in accordance with the budgetary bylaws and the criteria set down in the procedures and orders.”