Illegal in most professional settings?! 😅😂😅 This is absolutely hilarious, surely you realise that is completely and utterly irrelevant here.
Favouritism means "unfair preferential treatment". Who are YOU or the OP to decide what is fair or unfair about other people's money and how they choose to spend it?
Justify it?! The justification is that they feel like it. That's all that's required. It's their money and they get to feel any way they want and spend it as they choose. It might not be very nice from other people's perspective, and other people get ot choose to stay away from them.
And so the OP has chosen to allow people who she says are shitty grandparents that have given her kids self esteem issues access to her children for years and years and years. The grandparents are, according to the OP, just behaving as they always have. And now the OP is upset because she thinks they should behave as she wants them to, suddenly after many years of them doing the very same thing.
They're not going to. They showed who they were years ago and the OP knew precisely who they were. It's always better to accept reality, it just saves time and hassle. She's just upset now because the monetary reward is far higher this time and she wants her OTHER kids to have the same amount of money spent on them. She's put up with what she says are horrible grandparents for this long, and now all of a sudden the financial stakes are higher and she's upset.
People's choice of who they like and how they spend their money is not policed by you, or the OP, or anybody else in the real world.
The OP knew who they were. According to the her, they showed who they were years ago, so becoming enraged about it all now is many years too late. She should have removed the kids from their shitty grandparents when they first showed they were shitty grandparents, but chose not to.
Bottom line, the kids all get financial gain from their grandparents, but the grandparents get to choose how much they spend, and the OP made the choice to tolerate their favouritism many years ago. So that's that.