In a report into political party financing published on Thursday, State Comptroller Micha Lindenstrauss slammed several Knesset factions’ misuse of state funds in violation of legislation on party financing.

According to the Political Parties Financing Law (1973), parties receive state funding according to the number of Knesset members each has, but must restrict the use of those funds to certain party-related activities, including operating and election expenses and public relations.

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Despite this, during the audit period of March 2009 through December 2010, several parties used public funds to cover other expenses.

These included a NIS 57,000 private dinner for 60 guests (Kadima), NIS 29,000 for wedding gifts (Arab Democratic Party), NIS 20,000 for a sheva brachot dinner to celebrate the wedding of the party chairman’s daughter (Shas) and NIS 5,000 worth of copper plaques for six Gaza flotilla activists (United Arab List).

In his audit report, the state comptroller dubbed these expenses as “inappropriate” and called on parties to “exercise restraint and economy” with public money.

“I believe there should be a meticulous and strict interpretation of the term ‘expenses’ from a legislative perspective, as this is a matter of public funds given to parties to enable the workings of democracy in Israel,” Lindenstrauss said in the report.

Several factions have also come under fire in the report for failing to maintain accurate records of spending. The audit revealed that Israel Beiteinu, for example, had hired a singer at a monthly cost of NIS 10,000 (at a total cost of NIS 150,000) to carry out public advocacy work, but the party had not kept documentation about the nature of the services provided.

Kadima was similarly criticized for failing to present a complete financial report or disclose full information about its income and expenditure, including regarding the scope and nature of services carried out by a strategic consultant hired by the party.

However, two weeks ago, Kadima treasurer Itzik Hadad and two other party administrators were arrested for theft by a manager, fraud, breach of trust, forgery of official documents and other offenses, following an internal investigation by the party, which was reported to the police.

Kadima also filed NIS 249,000 of expenses that included bonuses paid to accountants as a reward for the party’s receiving a positive state comptroller’s report in the previous audit. Labor and Likud paid out similar bonuses, according to the state comptroller’s report.

“I found it was impossible to separate the connection between these [bonus] payments and the receipt of a positive report,” said Lindenstrauss, who added that the bonuses were in “bad taste.”

Two factions, Kadima and Eretz Israel Shelanu (“Our Land of Israel”) face state funding cuts as a penalty, after the state comptroller declared he had not given them a positive report.

In response to the report, a Kadima spokesman commended the party for “taking brave, drastic action that is unprecedented in Israeli politics” by reporting Hadad to the police.

The spokesman also said that “Livni has been leading efforts to ‘clean house,’ and as a result of her firm decision, the party has saved NIS 13 million since the elections.”

Eretz Yisrael Shelanu, a party within the National Union faction represented by MK Michael Ben-Ari, had not managed its finances correctly and had failed to maintained documentation of its expenditures.

Party spokesman Itamar Ben- Gvir explained that “the shortcomings reported by the comptroller are technical. We will internalize the criticism and learn our lesson.”

“This is our first time in the Knesset,” Ben-Gvir explained. “Unfortunately, we did not understand all of the rules, but we promise to improve in the future.”

Two parties, Israel Beiteinu and United Arab List were criticized for using state funds for foreign trips.

During the audit period, Israel Beiteinu spent NIS 44,000 on several trips abroad, mainly to the former USSR.

Israel Beiteinu said the trips were to maintain contact with potential voters in those countries, but Lindenstrauss said the use of public funds for the trips was unacceptable.

United Arab List spent NIS 22,000 on trips to Egypt and Jordan.

“There is no justification for the state to pay for foreign travel,” Lindenstrauss said in the report.

The state comptroller’s audit also revealed that some factions had used public funds to purchase items for donation to individuals and organizations.

Kadima spent NIS 243,000 on food parcels for Holocaust survivors, while United Arab List and Shas spent NIS 60,000 and NIS 49,000 respectively on school satchels for children.

Lindenstrauss said these activities were “worthy goals” but noted that state funding is not intended for these matters, but to help maintain democracy by assisting parties with activities and public relations.

The state comptroller also criticized the Arab Democratic Party for spending NIS 29,000 on gifts for a wedding.

“Giving gifts paid for by state funds raises the concern that [factions] are trying to influence the voting behavior of the recipients,” Lindenstrauss said in the report.

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