Lapid halts all money transfers to settlements over allegations of misuse

JERUSALEM (JTA) — Israel’s Finance Minister Yair Lapid halted the transfer of all state funds to the settlements after a television report that the money was being misused.

The order announced Saturday night by the Finance Ministry came after a report on Israel Channel 2 Friday night that money 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 Yesha Council for advocacy purposes.

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Lapid reportedly halted all money transfers to the settlements while the allegations are investigated. He 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 more than $42 million in secret payments from the previous government as compensation for losing out on city taxes from houses that were not built during the ten-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 they were made on orders of the Prime Minister’s Office, the Times of Israel reported.