Charity says 78,000 people are in urgent need of help, while its CEO insists that no money has been funnelled to Hamas

Britain’s biggest Islamic charity is due to resume its operations in Palestine in defiance of a ban on working in the territory after Israel’s defence ministry described the aid group as a “terrorist organisation”.

Islamic Relief, a Birmingham-based charity that works in 44 countries, said an internal inquiry had not revealed any evidence to corroborate Israel’s claim that it should not be allowed to work in the West Bank because it had been collecting money for Hamas and its offices were run by terror operatives.

In an exclusive interview with the Guardian, Islamic Relief’s chief executive, Mohamed Ashmawey, said months of work has turned up nothing and the charity would return to its “humanitarian work” in Palestine.

Two days after the ban was announced the charity’s West Bank offices were raided. Computers were smashed, files taken and the office safe blown apart. Islamic Relief, which is widely regarded as a pillar of the UK establishment, immediately halted its work in the West Bank – leaving 78,000 people hungry and hospitals without incubators and dialysis machines.

The charity, which spent £172m last year on aid, said it had alerted the UK’s Charity Commission and begun its own investigation as well as hiring external consultants to look into its operations. It also decided not to use any of the £20m raised by the Gaza Crisis Appeal, run by the Disasters Emergency Committee, until it had established the truth behind the allegations.

The case of Islamic Relief highlights an increasingly common complaint from charities that the need to vet staff, partners, suppliers and beneficiaries is taking up an ever-increasing proportion of their resources. Ashmawey said the charity has screened all of its 2,500 employees for “terror links” using software that checks against 540 databases. The executive, who used to work for General Motors in the US, says he also checked the past 276 companies staff in the Palestinian territories had worked for.

He said only one employee was found to have a “problem” – and that was because he had worked for the Islamic University of Gaza, which is proscribed as a terrorist organisation only by Israel. “The US gives it money,” said Ashmawey.

“Now we are contemplating resuming business because we are talking about 78,000 people – that is, orphans, widows, the elderly, the sick – and feeding them or caring for their health. These people have suffered over the past few months because of the Israeli ban.”

On Thursday night, the Disasters Emergency Committee, an umbrella group comprising 13 of the biggest UK charities, gave its backing to Islamic Relief. “The DEC has considered the independent audit report which reviewed Islamic Relief’s operations in Israel and the occupied Palestinian territories. We are satisfied that Islamic Relief has robust systems in place to ensure aid money is properly accounted for and spent appropriately. The DEC is not aware of any evidence that Islamic Relief has used aid funds inappropriately in Israel and the occupied Palestinian territories.”

The charity has come under fire from sections of the press, notably a two-page article in the Jewish Chronicle that questioned the charity’s “historical presentational problem”, highlighting past links to extremist preachers and radical groups.

In both instances, Islamic Relief said its name had been used to bolster fundraising efforts without its consent. “Everybody wants to stick with Islamic Relief because the community trusts us. If we are guilty, it is that we are not aware of websites using our name without our permission. It’s something we are working on,” said Ashmawey.

However, last month the United Arab Emirates, a US and British ally, put Islamic Relief on a terror watch list along with 85 groups including al-Qaida and Islamic State. “It was shocking to us,” said Ashmawey, who thinks the charity has been caught up in the UAE’s battle against the Muslim Brotherhood, whose ideology of political Islam has been seen as a threat to ruling regimes in the Middle East.

Ashmawey said the problem was that a founder of Islamic Relief and a trustee, Essam al-Haddad, had left the charity in 2012 to join the then Muslim Brotherhood presidential candidate Mohamed Morsi in Egypt. After the army seized power in Cairo, Haddad was arrested.

“No point in denying history. Yes, this gentleman is one of the founders of Islamic Relief,” said Ashmawey. “And he served Islamic Relief as a trustee for so many years. He resigned on the day he joined Morsi. He was leading in the capacity of trustee with so many other trustees who have nothing to do with that particular group and they were making decisions in a democratic way for the benefit of mankind.”

He added: “No external organisation or political agenda influences, let alone controls Islamic Relief.”

“If this is a crime to have someone as a founder as a member of the Muslim Brotherhood they will have to close 50% of the mosques in the west because they also had founders from this group.”

Ashmawey said that Islamic Relief have 60 days to challenge the decision in the UAE courts, but was “still working to find a (local) law firm who is willing to fight our case. If we cannot find one then we may have to hire from London.”

The charity commission says that “Islamic Relief’s trustees have acted appropriately by informing the regulator proactively and promptly, both in relation to the designation and the more recent designation by the United Arab Emirates.”

While Britain continues to support the efforts of Islamic Relief – the charity has income of £3m this year from the Department for International Development – there is concern about how it can operate unhindered. The Israelis could enforce bans on travel and crucially transferring money.

Tom Keatinge from the Royal United Services Institute pointed out that states were alighting on the findings of the Financial Action Task Force – the inter-governmental body looking at how to stop terrorist funding – which earlier this year warned that non-profit organisations are particularly vulnerable to abuse, and the ones most at risk are those that operate in close proximity to an active terrorist threat.

Ashmawey acknowledges that such restrictions have already cost “hundreds of thousands of pounds” in trying to “clear our name”. “Israel can do these things (bar travel and cash transfers) but we do operate under the Palestinian Authority. We would welcome any help from ministers here.”

A spokesman for the Israeli embassy said it stood by its original designation of Islamic Relief, which he said “funnels millions of dollars a year to Hamas institutions. The decision to designate the charity as an ‘unlawful association’ is part of Israel’s action to curb Hamas terror activity.”