World Vision Australia CEO Tim Costello said he was "shocked and completely mystified" to learn Israel had charged World Vision Gaza office project manager Mohammad El Halabi for funneling millions of dollars from the charity to Hamas, which the Islamist militant group denied.
The Australian Government has given the US-based Christian group more than $5 million over the past three years for projects in the Gaza Strip, the ABC reports.
But Mr Costello said World Vision's program in Gaza is only around $2 to $3 million a year, and yet somehow the organisation has been charged with diverting $50 million through Mr El Halabi who he said had been with World Vision for 10 years.
"If every cent has been diverted, it doesn't add up to $50 million," he said.
"I've been there, the [Australian] Department of Foreign Affairs has been there, PwC [professional services firm PricewaterhouseCoopers] audit our books."
World Vision is there for Palestinian children and wants a fair legal process, he said.
"Those children have suffered war three times in the last seven years. They are profoundly traumatised.
"Obviously there is great tension between Gaza and Israel. We don't buy into that.
”Based on the information available to us at this time, we have no reason to believe that the allegations are true. We will carefully review any evidence presented to us and will take appropriate actions based on that evidence."
Mohammad El Halabi, World Vision's manager of operations in Gaza, was arrested by Israel on June 15 while crossing the border into the Gaza Strip.
A senior Israeli security official says Halabi, who has run the group's Gaza operations since 2010, had been under extended surveillance, and had confessed to funnelling some $7.2 million (USD)a year, about 60 per cent of the World Vision's Gaza funding, to pay Hamas fighters, buy arms, pay for its activities and build fortifications.
“Money was used to fund Hamas and pay armed wing fighters, and food and health packs intended for Gaza residents were also given to Hamas operatives, rather than to their intended recipients, the poor and meek of Gaza” the official said.
He alleges that some of the money Halabi was accused of taking had been used to buy arms for insurgents in Egypt's Sinai peninsula, that also borders Israel, and that a Hamas military base was built with $80,000 (USD) of the funds.
Yoav Mordechai, Israeli Coordinator of government activities in the Territories, says the evidence is clear.
“After a long investigation, it’s clear that Hamas is using the money which the world donates to international organisations such as World Vision in Gaza, and the evidence is the confession of the detainee Mohammad El Halabi ... that he was transferring money to Hamas, millions of dollars.” he said.
Hamas denies the claims, saying the group has “no connection (to Halabi) and therefore, all Israeli accusations are void and aim to suppress our people.”
World Vision Australia CEO Tim Costello told SBS the charity is "absolutely shocked and surprised" by the allegations.
"I've been [to the Palestinian territories], the Department of Foreign Affairs has been there, PwC audit our books," Mr Costello said.
"We absolutely have nothing to do with terrorism, we have really strict screening by third parties."
DFAT suspends World Vision Palestine aid
The Department of Foreign Affairs and Trade has suspended provision of further funding to the charity World Vision for programs in the Palestinian territories until further notice.
Tim Costello says DFAT has done "what it needs to do" considering serious charges have been leveled.
"We really want to get to the bottom of this because we are utterly confused by this," Mr Costello told SBS.
Mr El Halabi's lawyer has told Israel's Haaretz newspaper his client denies any links to Hamas.
He says the fact the investigation has taken over 50 days proves there is a problem with the evidence.
Israel had previously maintained a gag order on the case.