To read the full report (Hebrew) click here

In March 2015, Israel’s Attorney General recommended that the state stop funding the Settlement Division – a section of the World Zionist Organization that effectively controls construction throughout Israel and the West Bank. This came after severe mismanagement in the division was exposed. The Attorney General’s position was recently reinforced by a scathing report issued by the State Comptroller, who found corruption in the division.

Members of Knesset from HaBayit HaYehudi (the hawkish Jewish Home Party) leaped to the defense of the division – unsurprisingly, given that it serves as a conduit for transferring public funds to West Bank settlements and party cronies. MK Bezalel Smotrich even proposed a bill that would override the Attorney General’s directives and essentially maintain the status quo. The bill, ensuring limited transparency only, passed in late December 2015. Smotrich stressed that it would merely legalize the status that the division has held since before Israel was founded.¹ In fact, the new law allows the division’s managers to continue practicing cronyism and discriminatory funding.

After Molad’s 2014 exposé, the Settlement Division became the subject of a public storm.² Although the division is financed entirely by the taxpayer, its management has systematically refused to disclose how its budget is allocated. Members of Knesset, journalists, members of the Zionist Executive and civil society organizations have all inquired in vain as to why the division’s budget grows several times over every year, where the money goes, and how its beneficiaries are chosen. Despite repeated promises by the division’s management, a single pertinent answer is yet to be received.

Shielded by lack of transparency and no supervision, severe misconduct such as discriminatory funding and corruption has developed in the Settlement Division. A government resolution from 2004 formally obliges the division to work to strengthen the Negev and the Galilee (the southern and northern rural areas of Israel, respectively) and to distribute funding equally.³ Indeed, the division has consistently claimed that it distributes funding equally between all areas in Israel.⁴ However, according to Finance Ministry data exposed by Molad in Israel’s leading daily Yedioth Ahronoth, in the first half of 2014 the division channeled at least 75 percent of its funding of local authorities to settlements in the West Bank.⁵ It also financed dozens of non-profits and activist centers closely affiliated with the Jewish Home Party, some of which even serve as local extensions of the party and operate in wealthy neighborhoods such as Ramat Aviv Gimel. This sharply contradicts the government resolutions concerning funding of such centers, which stipulated that they must operate in underprivileged areas. The data (in Hebrew), now available on the Accountant General’s website, reveal that although intended to assist underprivileged communities, the Settlement Division has become a secret settler slush fund.

The investigative report at hand shows how, far from the public eye, the division’s budget for direct funding almost doubled in the second half of 2014. Before Operation Protective Edge in Gaza in July-August 2014, this budget amounted to 432 million shekels; after the operation, it shot up to 806 million.  More than a year after the operation in Gaza, its impact on the division’s priorities in 2014 can now be examined. It appears that despite the financial crisis in southern Israel, the division continued to primarily support settlements and even increased this support.

Key findings

• After the mid-2014 operation in Gaza, there was an increase in the Settlement Division’s discrimination of underprivileged communities in favor of West Bank settlements. According to Finance Ministry data, even after the division’s budget doubled following the operation, settlements continued to receive more funding: 65 percent of the division’s direct funding was funneled to settlements, and only 10 percent to communities in southern Israel.⁶ In 2014, the division invested 26 shekels in a single resident of the Hof Ashkelon Regional Council in southern Israel, compared to 1,497 shekels – 58 times more – in a resident of the Har Hevron Council in the West Bank.
• Despite the devastating consequences of the operation in Gaza for Israeli communities living nearby, most of the funding earmarked for social resilience in those areas was in fact channeled to settlements.⁷ Israeli councils in the West Bank received 13.5 million shekels for such activity – more than 10 times what councils bordering Gaza received (1.3 million).
• Following Molad’s research, the Justice Ministry ordered that the urban branch of the Settlement Division, which finances activist centers, be closed.⁸ In practice, the division doubled funding of these centers, focusing on those affiliated with the Jewish Home Party. This transfer of funds is currently under investigation by the Attorney General.
• The Settlement Division transferred funds to persons suspected of corruption. Molad’s research uncovered that in the last two years, the settlement transferred 600,000 shekels without a tender to Mahut, a non-profit to which a top member of the Jewish Home Party belongs.⁹ Another 30 million shekels were channeled without tender to the non-profit Ayalim, two months before the organization’s chairman Matan Dahan was arrested as part of the “Yisrael Beiteinu affair”.¹⁰ The police investigated ties between the division and Ayalim, and Dahan’s investigation ended with a recommendation to indict him.¹¹
• The Israeli taxpayer paid for a promotional TV program about the Settlement Division on Channel 10. The division paid 240,000 shekels for a program that showed it in a favorable light, hosted by a popular Israeli TV presenter.¹² From 2011 to 2014, the division’s PR budget was 625,000 shekels – more than 1.5 times the amount of direct funding transferred to the Hof Ashkelon Regional Council that borders Gaza.
• Senior members of the division are misleading the public with skewed figures and contradictory reports. Molad’s examination of documents sent out by the division over the past year reveals an array of errors, imprecise statements and inconsistencies in budget reports. This is unprofessional management at best and an intentional skewing of the facts, at worst.