Humanitarian aid group World Vision lost two major donors on Friday, one day after an Israeli court charged the charity's head in Gaza with funnelling money to Hamas fighters and buying weapons.
Australia suspended funding to World Vision projects in the Palestinian territories, while Germany's Federal Ministry for Economic Cooperation and Development (BMZ) said it had indefinitely put on ice payments to the Christian charity totalling 1.5 million euros (1.66 million dollars).
The moves came after World Vision official Mohammad El Halabi appeared in an Israeli court in Beersheba on Thursday facing charges of using charity funds to support the Palestinian extremist group Hamas.
Australia’s Department of Foreign Affairs said the allegations were "deeply troubling," adding that officials were seeking more information from World Vision and Israeli authorities.
"We are suspending the provision of further funding to World Vision for programmes in the Palestinian Territories until the investigation is complete," the department said in a statement.
Germany's BMZ said in a statement "that there will be no disbursements until further notice."
"Should the allegations turn out to be correct, Hamas is deliberately putting the humanitarian aid security of its own population in jeopardy," a ministry spokesman said.
"Providing for the Gaza Strip is not possible without international support," he added.
Halabi, director of the Gaza branch of World Vision, was arrested June 15 at the Erez Crossing between Israel and the Gaza Strip, Israel's security agency Shin Bet said Thursday.
More than 7 million dollars a year, or 60 per cent of the annual budget for World Vision's Gaza branch, was diverted to Hamas by El Halabi, according to the Shin Bet press release.
But Hamas' spokesman in Gaza, Abdulatif al-Qanou, said in an emailed statement on Thursday that Halabi is not in contact with Hamas nor connected to the movement.
The Gaza Strip has been under a tight Israeli blockade since 2007 and neighbouring Egypt has also closed its border to the region. The isolated territory has one of the highest unemployment rates worldwide, according to the World Bank.
Israel welcomed Australia's decision on Friday, with a foreign ministry spokesman urging all donors to aid projects in the Gaza Strip to scrutinize their local partners' activities.
World Vision said on its website that it denied any involvement in political, military or terrorist activities and that it hoped that Baradi would receive a "fair legal process."
World Vision is a worldwide Christian humanitarian aid charity set up in the US in 1950 and is active in nearly 100 countries. In 2015 it had annual revenue of just over a billion dollars.
The Australian government has given World Vision more than 5 million Australian dollars (3.8 million dollars) over the past three years for aid projects in the Gaza Strip, Australian broadcaster ABC said.
The BMZ became involved in a project to support farmers in the Gaza Strip in June, the BMZ spokesman said.