A British charity is on the verge of collapse this week, after further investigations into alleged misconduct by the Israeli poverty charity, Hazon Yeshaya, came to light.

Last month the British Friends of Hazon Yeshaya, which runs soup kitchens and professional training for Israel's impoverished, commissioned a Deloitte audit into the work of the charity in Israel. The JC understands that if the suspicions of the UK trustees are confirmed by a formal Deloitte report, the activities of the British Friends will cease. Its website has already been taken down. The charity has no assets left in the UK, as it transfers all the money it raises straight to Israel.

British HY raises around £750,000 a year, but on Wednesday there was no indication by the trustees whether action would be taken to try to recover donations if it were proved that funds had been misused. The British charity has two directors, Spencer Gelding, former business director of Laniado UK, and Yael Simon, former chief executive of Laniado UK. Neither was available for comment.

A British HY fundraising dinner was still being advertised this week for February 2012. Mitzvah Day volunteers have helped in HY soup kitchens in Israel.

Hazon Yeshaya was founded in 1997 by Rabbi Abraham Israel, who lived in poverty in Paris as a child after his family fled persecution in Egypt.

Suspicions about the charity's conduct were first raised by the Canadian Friends, who sent a charity investigator to Israel in August. As a result of his investigations, which found that the charity was not making the 14,000 meals a day it claimed, Canada cut ties with the Israel charity.

But in November, backed by other international supporters, the Canadian Friends hired private investigators, ex-Mossad operatives, to "infiltrate" the charity, and the investigators filed a 100-page report on the company's alleged wrongdoings.

These international donors have now hired Israel's biggest law firm, Herzog Fox Ne'eman (HFN), and are now considering legal action. Meanwhile Deloitte Israel has written to HFN, stating it was unable to conclude its investigation because the charity refused to turn over financial information.

But a spokesman for Hazon Yeshaya in Israel said that as far as the charity was concerned, investigations were ongoing. She said: "We cannot respond to speculation about an audit that has not been completed. Deloitte has not yet carried out a full audit of our activities, so any rumours as to their conclusions are premature, irresponsible and damaging.

"We continue to serve food and provide training and dental treatment to those who are destitute and depend on our services, with the help of the wonderful volunteers and donors who continue to support our vital work."

Specific details of the alleged misconduct are still unknown. A source, who did not want to be identified,representing HY's former supporters in Canada, US, Hong Kong, Australia, South Africa and Israel, said: "We approached Abraham to give us information about it, and he refused."

He said those who raised the original concerns about the charity were opposed to using Deloitte. "That was the wrong approach in our view. He [Rabbi Israel] will put on a show for them."

The Canadian Friends closed in mid-September. "It's a shock of epic proportions," said the charity's former supporter. "Thank God, there are people who are backing us. But so far, I cannot add the UK to that list."

Investigators established that the Claims Conference, which distributes Holocaust restitution, were donating to Hazon Yeshaya, but ceased in 2009. Claims Conference auditors said in January 2010 that "it did not receive satisfactory responses" from Hazon Yeshaya. The Claims Conference's report was submitted to the Israeli Ministry of Welfare and Social Services. A spokesman for the ministry said it, too, had ceased its relationship with HY three years ago.

Two senior members of HY in Israel have left, Dr Mori Bank and Sheldon Ritz, who was a Hazon Yeshaya director.

In Britain, the Charity Commission's guidelines say: "Trustees of charities are legally responsible for ensuring that charitable funds are properly used. Trustees are publicly accountable, and have legal duties and responsibilities under charity law to safeguard their charity, its funds and property.."

Shimon Cohen, spokesman for the British Friends, said: "We are concerned that the needy people that Hazon Yeshaya is meant to help, do get the support they require. We are awaiting formal notification from Deloitte Israel before considering the next course of action."

The JC understands the trustees, who are said to have been horrified at the original allegations, are considering simply closing the charity without pursuing donations which may have been misused.