TEL AVIV — In an extraordinarily public confrontation, the Israeli government's overseer of state-owned companies has moved to sack Rafi Maor, the chairman of Israel Aerospace Industries (IAI), on grounds of "improper stewardship unworthy of the company."
But Maor, a successful industry executive and former IAI manager prior to his appointment as chairman in November 2013, is fighting back, insisting his accuser, Government Companies Director Ori Yogev, is abusing his position and potentially endangering national security in the process of a "baseless personal vendetta."
The two have been clashing for more than two years, largely over IAI's powerful labor union and its longtime, former union boss – now a cabinet minister – and Maor's role in readying the state-owned firm for initial privatization.
In a 28-page letter published with the Tel Aviv Stock Exchange, Yogev detailed the firm's poor financial performance and numerous instances of alleged irregularities, which he believes are grounds for removing Maor.
Dated Jan. 11 and sent to Israel's finance and defense ministers as well as eight other relevant officials, Yogev's letter cites the firm's "very weak performance" relative to global defense industries in general and the Israeli defense industry in particular.
"The net profit of the company for 2014 amounted to $27 million relative to sales turnover of $3.8 billion (0.27%) and in the last nine months of 2015, the company showed a net loss of $9 million. This downturn stems from exogenic sources such as intensified global competition and changes in the civilian markets, but also endogenic sources such as low managerial flexibility and compensation agreements that make it difficult for the company to compete with global industries," Yogev wrote.
Among his laundry list of alleged offenses, Yogev claims Maor mismanaged IAI’s board of directors,; weakened or limited the effectiveness of IAI’s president and senior executives,; and failed to implemented reforms needed for government-directed privatization plans.
Yogev flagged Maor’s "exceptionally numerous overseas travels," which served to undermine the effective functioning of IAI President Yossi Weiss and top corporate executives. He noted that in 20 months, Maor traveled travelled abroad 21 times at a cost of $136,000, compared to the previous IAI chairman, who travelled seven times during his 27-month tenure at a cost to the company of $30,076.
"The activities of a government company by law are conducted by the general manager of the firm and its employees, and not by members of the board. Therefore, overseas trips by a director of the company need to be for special reasons that require the director's presence abroad," Yogev wrote.
In the boardroom, wrote Yogev, Maor made a practice of selectively setting agendas, monopolizing discussions and restricting the ability of Weiss to report on company business. "Even in the time allotted [to Weiss to speak in meetings], Maor would interrupt the managing director and not allow him to update the Board in the way he felt appropriate, arguing that there was not enough time or that [Weiss'] input on certain subjects were either irrelevant or not relevant to the forum."
Yogev noted further that Maor's behavior in the boardroom in recent years "does not allow for free exchange among board members; directors are wont to express views that are contrary to the position of the chairman."
Yogev gave Maor until the second week of February to file his comments before he made a final determination to exercise his regulatory authority to fire for cause. During that time, he insisted that Maor could not make use of IAI attorneys or personnel to assist him in preparing his responses.
In his preliminary response, Maor assailed Yogev's letter as "aberrant" and "baseless" and motivated by personal reasons that "are unclear to me." What is clear, Maor wrote in his Jan. 12 reply – copies of which also went to the defense and finance ministers who are ultimately responsible for his position – is that Yogev's claims "lack any and all professional worth."
According to Maor, Yogev intended to turn the IAI Board into "yes men"; something he wouldn't allow. "Perhaps that's my big sin," Maor wrote.
Further, Maor accused Yogev of acting in ways "where the end sanctifies any means, including use of media leaks, compromising of commercial secrets of the company and potential harm to state security."
Maor said the defense and finance ministers to whom he is ultimately responsible know that he has been a successful chairman of IAI. He indicated that a full and detailed response would be forthcoming.
Email: Bopallrome@defensenews.com.
Opall-Rome is Israel bureau chief for Defense News. She has been covering U.S.-Israel strategic cooperation, Mideast security and missile defense since May 1988. She lives north of Tel Aviv. Visit her website at www.opall-rome.com.
