After HRF Complaint: EIB Admits Due Diligence Failures Over €1 Billion in Investments Linked to Illegal Israeli Settlements

The European Investment Bank (EIB), the lending arm of the European Union, responded on 13 April 2026 to a complaint submitted by the Hind Rajab Foundation (HRF) in 2025. The complaint concerned more than €1 billion in European investments in three Israeli entities involved in illegal activities in the Occupied Palestinian Territory. These entities — Bank Leumi, Electra Limited and Alstom Transport SA — are listed in the United Nations database because of their involvement in illegal settlement activities in Palestinian territory. Despite clear international legal obligations and repeated reports by monitoring organizations, the EIB funds multiple projects that directly involve these blacklisted entities.

In its final report, the EIB acknowledged several flaws in the allocation process. For example, it admitted that the list of ineligible postal codes was based on an outdated list from 2022. The EIB’s Complaints Mechanism identified further serious shortcomings in the checks performed by the Bank to ensure that European funds were not disbursed to final beneficiaries in breach of its own guidelines. The EIB also confirmed that, as a result of HRF’s complaint, several changes were made to the internal allocation of funds to final beneficiaries.

During a call with HRF, the EIB further revealed that it could not guarantee that EIB funds had not been used by final beneficiaries in Israel involved in weapons and ammunition. This places the EIB, its Member States and shareholders, as well as individual magistrates, under severe legal risk.

The EIB approved more than €1 billion in investments in Israeli entities blacklisted by the United Nations, despite admitting that these investments cause reputational damage to the EIB and the European Union.

The Hind Rajab Foundation is scrutinizing more than €1 billion in EIB investments involving Bank Leumi, Electra Limited and Alstom Transport SA — entities listed in the UN database for their involvement in Israel’s illegal settlement enterprise.

Bank Leumi

The EIB further disclosed, during the call with HRF, that it does not have insight into the amount of funds that ultimately end up as commission with the intermediary, Bank Leumi. The total investment involving Bank Leumi amounts to €761 million.

Bank Leumi is listed in the UN database because of its role in facilitating the expansion and maintenance of illegal Israeli settlements in the Occupied Palestinian Territory. The bank provides loans for projects in illegal Israeli settlements, including the construction of housing units, industrial sites, hotels, residential complexes and public buildings. In addition, Bank Leumi invests in regional and local councils of illegal Israeli settlements in order to develop infrastructure and public facilities and to provide municipal services to residents of those settlements. Bank Leumi is also financing the construction of the Blue Line Project of the Jerusalem Light Rail network, which connects illegal Israeli settlements in occupied East Jerusalem with the city centre and its western side.

Electra Limited and Alstom Transport SA

The EIB further revealed that, in its investment involving two other Israeli entities, Electra Limited and Alstom Transport SA, with a total investment of €250 million, it continued to pursue the investment despite due diligence highlighting reputational risks and despite the involvement of one Politically Exposed Person in the investment project.

Electra Limited has close links with the Israeli military, including through its participation in a consortium constructing an army training base in the Negev region. With regard to Alstom Transport SA, the EIB’s own services acknowledged that the company was involved in several illegal activities in the Occupied Palestinian Territory. These include multiple forms of involvement in the illegal Jerusalem Light Rail system, such as the construction and equipment of the Red Line and bidding for the illegal construction of the planned Blue Line. Alstom also supplied equipment to the illegal Tel Aviv-Jerusalem railway, which further fragments Palestinian land and the Palestinian people.

The European Union and International Law

The EIB’s final report rests on an erroneous understanding of the relationship between the European Union and international law. It falsely states that resolutions and decisions adopted within the UN system do not produce any legal effect on the European Union. It also incorrectly interprets the ICJ Advisory Opinion, failing to recognize that the obligations set out in that Opinion draw on existing obligations under the UN Charter, decisions of the Security Council, international human rights law, international humanitarian law and the law of State responsibility.

The obligations arising from these bodies of law, including the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, the International Convention on the Elimination of All Forms of Racial Discrimination and the Fourth Geneva Convention, are binding on all EU Member States both by treaty and as a matter of customary international law.

HRF to Escalate Accountability Efforts

 The Hind Rajab Foundation is neither convinced nor satisfied by the updates made to the EIB’s due diligence mechanism, which remain insufficient in light of the gravity of the legal, financial and institutional risks identified. HRF is now conducting a deeper and more comprehensive examination of all matters arising from the EIB’s final report, its disclosed due diligence failures, and the legal risks created by its continued financing of entities involved in illegal settlement-related activity.

HRF will continue to pursue all available legal, institutional and public accountability mechanisms to ensure that the EIB, its Member States, shareholders and responsible officials are held accountable for any role they may have played in enabling or facilitating violations of international law. This work forms part of HRF’s broader and ongoing commitment to challenging impunity, including financial and institutional complicity, wherever it contributes to the maintenance of Israel’s illegal settlement enterprise and the broader system of unlawful occupation.