State Comptroller Matanyahu Englman found Likud and Labor noncompliant in his audit of their 2024 faction accounts on Tuesday, ordering NIS 150,000 in state funding withheld from Likud and NIS 75,000 withheld from Labor.
The report examined the current accounts of 17 Knesset factions that received state funding between January 1 and December 31, 2024. Fifteen factions received positive audit reports, while Likud and Labor did not.
The audit covers the factions’ routine income and spending during the Knesset term, not their election campaign accounts. Under Israeli party-financing law, factions receive public money for ongoing operations between elections. The comptroller said that money is meant to maintain the factions’ “organizational and ideological connection with the public.”
The comptroller’s sanction is financial: part of the public funding otherwise due to the faction is withheld. It is not a criminal fine. The most serious findings concerned Likud’s membership-registration process. In Likud, registered party members vote in primaries that help determine the party’s Knesset list. That means the membership roll can influence who chooses the party’s Knesset candidates.
According to the comptroller, Likud failed to properly verify the identities of those registering as party members or the source of payments made on their behalf.
The audit found widespread repeated use of the same payment methods. In credit-card payments, which accounted for about 60% of Likud’s membership payments, 16,346 cards - about 41% of the cards used - paid for more than one registrant. Of those, 2,059 cards were used to pay for several people with different surnames, who did not appear to have a family connection.
A similar pattern was found in bank transfers, which accounted for about 40% of the payments. The audit found that 13,236 bank accounts - about 46% of the accounts used - paid membership fees for more than one person. Of those, about 1,039 accounts were used to pay for several registrants with different surnames, who likewise did not appear to be related.
Practice illegal under Israeli law
Englman said the findings raised concern that membership fees may have been paid by someone other than the party member. Under Israeli law, paying another person’s membership or registration fee in order to give them voting rights in internal party elections can constitute a criminal offense.
The comptroller did not determine criminal liability. His finding was that Likud’s lack of controls raised that concern, and his sanction was the withholding of party funding.
This conduct, “is serious,” Englman said. “This is a situation that raises concern that membership fees were paid by someone else, which could constitute a criminal offense. Including these members in the voter roll could skew the selection of candidates for the Knesset.”
The comptroller stressed that Likud had already been warned about the issue in a previous audit. Likud had said then that it checked registration forms, credit-card payments, and bank payments to prevent third-party registration or repeated use of payment methods. Englman found those checks insufficient and said the party had to adopt controls to verify registrants and payment methods.
In the current audit, Likud told the comptroller that its computerized membership system did not include a mechanism to flag repeated use of the same credit card for more than one applicant, nor did it flag mismatches between the cardholder’s name and the applicant’s name. The party said its procedure relied on the applicant’s declaration that the card used was personal and in their name.
Englman rejected that approach, saying passive reliance on declarations was not enough. Because membership lists directly affect party primaries, he said factions must operate “adequate, comprehensive and effective” controls in real time to verify each registrant and payment method.
Likud told the comptroller it would conduct a thorough review and take the steps needed to correct the deficiencies.
The audit also found that Likud recorded salary supplements, salary updates, and benefits for administrative officials based on oral decisions, without a written mechanism or written documentation.
Labor Party violations
Labor was also found noncompliant after the comptroller determined that it had accepted a prohibited loan through Beit Arlosoroff, a party corporation under its control.
According to the audit, Beit Arlosoroff took a NIS 1.6 million loan from another corporation, of which NIS 750,000 was transferred to Labor in September 2024. Labor also signed a guarantee for the entire loan.
Labor told the audit team that the company transferred the money because the party was facing cash-flow difficulties due to delays in receiving state funding for the 2024 municipal elections. The party argued that the practice was permitted and not explicitly prohibited by law.
Englman rejected that position, saying the circumstances showed this was not a regular transfer of company funds to the party, but rather a loan taken to pass money to the faction.
“It was also found that Labor acted contrary to the law when it received a prohibited loan through a party corporation under its control,” Englman said.
Beyond Likud and Labor, the audit pointed to broader financial problems among Knesset factions. The 17 audited factions reported total income of about NIS 168.2 million in 2024, of which NIS 147.6 million (88%) came from state funding.
Ten sitting factions had accumulated deficits totaling about NIS 81.2 million by the end of 2024. Englman warned that factions were repeatedly using current public funding, which is meant for ongoing activity between elections, to cover deficits from previous election campaigns.
The comptroller also flagged money that has not been returned by parties no longer represented in the Knesset. According to the report summary, seven defunct parties have yet to repay about NIS 43.8 million in loans and excess advances, while Kulanu and Telem have not returned about NIS 3.7 million left in their coffers.
“The reality in which 10 serving factions have accumulated deficits totaling NIS 81 million, while nine parties that have ceased to exist are not repaying huge debts of some NIS 44 million to the state treasury, or are avoiding returning surpluses of around NIS 4 million left in their coffers, is inconsistent with their duty of trust and public responsibility,” Englman said.
“I call on the Knesset to address this issue in order to ensure that the debts are returned to the state treasury and to prevent such cases from recurring in the future,” he said.