Palestinian Economy Minister Hassan Abu Libdeh has been charged with financial wrongdoing, court sources said on Tuesday, piling pressure on Prime Minister Salam Fayyad's beleaguered government.

There was no immediate comment from Abu Libdeh, who has always denied accusations of corruption. Under Palestinian law he will no longer be able to work as a minister and his functions will be frozen pending a verdict.

Open gallery view Palestinian President Mahmoud Abbas, center, and Prime Minister Salam Fayyad, second from left, in Ramallah earlier this month. Credit: Reuters

A court source said the first hearing in the case, which includes allegations of embezzlement and insider trading before Abu Libdeh took office in 2009, would be held on December 12.

Abu Libdeh's legal woes come at a particularly sensitive time, with Fayyad warning of an impending economic crisis because of Israel's refusal to hand over tax funds to the Palestinians following their bid for greater UN recognition.

He is the second minister to face graft charges in recent months, with the agriculture minister leaving office in August after receiving a court summons. He also denied wrongdoing.

The Western-backed Fayyad had been hailed in the past for battling widespread corruption in the occupied West Bank, and the loss of two senior cabinet figures after official investigations represents a blow.

A court source said the first hearing in Abu Libdeh's case, which includes allegations of embezzlement and insider trading, would be held on December 12.

A third senior government figure, Labour Minister Ahmad Majdalani, also faced pressure to resign on Tuesday because of unguarded comments broadcast on local radio, when he branded union workers as "sons of whores."

A small crowd of protesters gathered outside Fayyad's offices on Tuesday to demand his removal.

Fayyad's problems have been compounded by his inability to name replacement ministers because of so-far fruitless reconciliation talks between Palestinian President Mahmoud Abbas and the Islamist group Hamas, which governs in the Gaza Strip.

Under the terms of an original May accord, the two sides agreed to set up a transitional unity government, bridging the rival political factions in Gaza and the West Bank. However, no progress has been made since then on the make-up of a cabinet.

Even if there are two ministers left, this government will remain," Yasser Abed Rabbo, the secretary general of the Palestine Liberation Organization (PLO), said on Monday.

Besides a dwindling cabinet, Fayyad's most immediate problem is how to avoid a financial meltdown.

He has warned he will not be able to pay the salaries of about 150,000 workers this month if Israel does not release the customs dues it collects on the behalf of Palestinians.

Israel froze the transfers on November 1, a day after the Palestinians won UNESCO membership over Israeli and U.S. objections as part of their drive for statehood at the United Nations in the absence of peace talks.

