A family of American duty free tycoons that own hundreds of airport stores across the US invested over a million dollars in a controversial Israeli settler winery, whose vineyards are built on seized private Palestinian land.

In 2007 the Falic family of Florida, who own Duty Free America, purchased 32,000 shares in Psagot winery in the occupied West Bank, becoming majority shareholders and directors, according to a copy of the contract shown to The Independent.

The 4.1-million-shekel (£915,000) injection of cash allowed the winery, located in a settlement – which are considered illegal under international law – to expand from a comparatively small family business to an award-winning international producer, monitors have said.

Just a year after the purchase, the company, which is currently locked in a legal battle with the EU to try and reverse regulations requiring settlement produce to be labelled, began building a new winery complex and visitor centre to attract foreign tourists. It also began purchasing additional grapes from other settlements, as well as Israel-proper vineyards and now exports 70 per cent of the 400,000 bottles of wine it produces every year.

Israeli settlements are deemed illegal under international law and together with land grabs are widely considered to be serious obstacles to peace between Israelis and Palestinians.

Israel largely disputes this. However Israeli officials confirmed to The Independent that at least part of Psagot winery’s vineyards are built on private Palestinian lands, and so are illegal even under Israeli law. They also confirmed that there is a 2003 Israeli demolition order (number 252/03) out against the personal home of Psagot CEO Yaakov Berg, a home which is located within the vines.

The Independent tried repeatedly to reach Psagot winery and the Falic family lawyers for comment but did not receive a reply.

Mr Berg, in a previous interview with The Independent, denied that there was anything illegal about the location or purchase of his lands. Mr Berg is currently fighting a legal battle in the European Union’s highest court against EU regulations that maintain produce must be labelled that they come from Israeli settlements in the West Bank, a move he said was discriminatory and antisemitic.

The Israeli Democratic Bloc, which aims to expose anti-democratic trends, published an investigation into Falic interests together with the Associated Press this week, saying that the family has donated at least $5.6m (£4.5m) to settler groups in the West Bank and East Jerusalem. The Democratic Bloc separately confirmed the information about Psagot to The Independent, adding that from their research, the purchase of Psagot winery shares was among the Falic family’s single largest investments in the West Bank.

Mr Simon Falic defended his family’s investments and donations, telling AP that they were all legal. “I also firmly believe that Jews have the right to live anywhere in the world. For that reason, the idea that the mere existence of Jewish life in any geographical area is an impediment to peace makes no sense to us,” he said.

He added the promotion of Jewish life in his opinion should not “imply the exclusion of anyone else, including Christians and Muslims”.

But Israeli rights workers and researchers have expressed concern that large-scale investment in “aggressive” settler projects deals a devastating blow to hopes of a speedy resolution to the Israeli-Palestinian conflict and the concept of a two-state solution.

They said that Psagot is one of a few dozen Israeli settlements which specialises in private land grab for use of mainly vineyards and it is “wine washing” the theft of Palestinian property.

“This money facilitates the illegal land grab of Palestinian lands allowing Psagot to upgrade from a modest family business to a medium-sized winery,” said Dror Etkes, an Israeli researcher who has spent two decades monitoring the Israeli settlement enterprise and heads up watchdog Kerem Navot.

“People who are purchasing Duty Free projects should know where their money goes,” he told The Independent.

Hagit Ofran, part of the settlement watch team at Israeli NGO Peace Now, agreed, saying since the investment Psagot had become a popular tourist attraction, “normalising” illegal settlement enterprises. Palestinian landowners had called it “wine-washing”.

“Not only does this project involve a land grab but they made it a tourist attraction, that is meant to normalise the settlements and encourage visitors to visit these places as if it was Tuscany, not an occupied territory,” she said.

She added that it was worrying that the Falic family are among the largest donors to prime minister Benjamin Netanyahu during several election campaigns.

In this April 22, 2019 photo, Simon and Jana Falic pose for a photo as they participate in a blessing during the Jewish holiday of Passover, at the Western Wall, the holiest site where Jews can pray in Jerusalem's old city (AP/Tsafrir Abayov) ((AP Photo/Tsafrir Abayov))

The Democratic Bloc, which had access to similar documents, confirmed The Independent’s findings. It said that of all the Falic family’s investments in the West Bank – which include a gas station, a biblical theme park and dairy factory – the money poured into the winery was among the largest.

In total, a joint investigation with AP showed that the Falic family has donated at least $5.6m to settler groups in the West Bank and East Jerusalem over the past decade, “funding synagogues, schools and social services along with far-right causes considered extreme even in Israel”.

The investigation said the family supported the ultranationalist Jewish community in the West Bank’s occupied city of Hebron, whose members include several prominent followers of a late rabbi banned from Israeli politics for his racist views, and whose movement is outlawed by the US as a terrorist organisation.

The years the Psagot vineyards were built - all are over private Palestininan land (Dror Etkes) ((Photo: Dror Etkes))

The probe also said that the family has backed Jewish groups that covertly buy up Palestinian properties in East Jerusalem and helped fund an unauthorised settlement outpost in the West Bank.

The Psagot vineyards are located next to Psagot settlement, which was established in 1979 on lands the military said it seized for security purposes. According to Mr Etkes, the vineyards currently stretch over 84 dunams (roughly 84,000 square metres) of private Palestinian land. Prior to the 2007 investment from the Falic family, they only had 57.

Palestinians who own the land told The Independent they started losing access to their fields in the area in the late 1990s as the settlers violently expanded their vineyards. They were finally sealed out when the Israeli military built a security fence enclosing the land in 2003, in the middle of the Second Intifada. They claimed they have tried over the years to fight the settlement expansion in the area in Israel’s courts, which had agreed to remove some caravans on private land. That has yet to happen.

This version is disputed by Mr Berg who said he legally purchased all the land from the Israeli authorities. He maintained no violence is inflicted upon the Palestinian population, who now live in the shadow of the military base.