(Refiles to give full name of Adalah-NY)

By Daniel Trotta

NEW YORK, June 20 (Reuters) - The U.N. children's fund UNICEF has severed ties with an Israeli billionaire and financial backer due to his suspected involvement in building settlements in the occupied West Bank, UNICEF said on Friday.

Lev Leviev, a real estate and diamond mogul who is one of the richest men in Israel, has supported UNICEF with direct contributions and indirectly by sponsoring at least one UNICEF fund-raiser.

He is chairman of Africa Israel Investments <AFIL01.TA>, a conglomerate whose units include Danya Cebus, which the Arab rights advocacy group Adalah-NY charges has carried out settlement construction, considered illegal by the United Nations.

UNICEF decided to review its relationship with Leviev after a campaign by Adalah-NY and found "at least a reasonable grounds for suspecting" that Leviev companies were building settlements in occupied territory, a UNICEF official said.

"I can confirm that UNICEF has advised Adalah in New York that it will not be entering into any partnerships or accepting financial contributions from Lev Leviev or his corporate people," Chris de Bono, a senior adviser to the executive director of UNICEF, told Reuters.

"We are aware of the controversy surrounding Mr. Leviev because of his reported involvement in construction work in the occupied Palestinian territory," de Bono said, adding that it was UNICEF's policy to have partners who were "as non-controversial as possible."

UNICEF could not say how much Leviev had donated as an individual. In his only known partnership with UNICEF, Leviev last year donated jewelry to a fashion event in France that benefited the French national committee for UNICEF, de Bono said.

Representatives of Leviev's jewelry and real estate businesses were not immediately available to comment on Friday, in part because of religious observances after dark in Israel. (Editing by Todd Eastham)

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