Following a report by Israel’s Channel 2 News Friday that money transferred by Knesset to settlements in Judea and Samaria were being misappropriated, Finance Minister Yair Lapid (Yesh Atid) ordered those transfers stopped.

Journalist Amnon Abramovich charged that a significant portion of the NIS 148 million ($42 million US) transferred to the settlements since 2010 were funneled illegally to the Yesha (Judea, Samaria and Gaza) Council for political — and sometimes anti-government — activities.

The funds were being quietly transferred to compensate the settlements for lost property tax revenues from halted construction.  The funds were intended to be used for security purposes, such as reinforcing kindergartens and schools.  Instead, the Center for the Renewal of Israeli Democracy (Molad) alleges some 80% of the amount was handed out to the Council, a private group which lobbies for the settlements, often against government policies which it believes put settlers in danger.

In a statement issued Saturday night, Lapid’s department said, “Since settlement construction was frozen [between November 2009 and September 2010], local councils in the West Bank have received funds to compensate them for losses incurred due to the freeze.

“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.”

According to the statement, Lapid has asked his budget director and his office’s legal adviser to investigate the matter and issue a report within a week.  It was also noted that the transfers were authorized during the tenure of Lapid’s predecessor, Yuval Steinitz.  Not alone in his indignation about the Channel 2 claim, Justice Minister Tzipi Livni is launching her own investigation.  Opposition leader Yitzhak Herzog (Labor) also expressed his dismay.  “Whoever asks why the cost of housing keeps rising and the government stands helpless can find the answer in the unrealistic grants transferred to the settlements. Tens of millions of shekels that could help in the Negev and Galilee are passed secretly to the settlements.”  He added, “I ask the prime minister and finance minister where’s the money?  I demand the state comptroller to investigate the findings to the end.”

It should be noted this is not the first time Lapid has obstructed funding transfers from the government to the local settlement authorities.  In November of last year, Lapid delayed the transfer of funds earmarked for similar purposes in accordance with the 1996 Oslo Accords.  The NIS 105 million ($30 million US) transfer was allocated by the interior ministry, pending approval of the finance ministry.