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Eyal Gabbai, the director of the Government Companies Authority, has sent a harsh letter to Israel Military Industry (IMI) chairman Ovadia Eli, threatening that he may lose his job if he continues to delay the company's privatization.

"IMI management is harming the implementation of the decision to privatize the company by creating delays, and by a lack of minimal cooperation with regulatory bodies," the letter said.

Gabbai ended his letter with a hint that Ovadia could be replaced: "Any functionary who does not think he can fulfill his duty has the right to leave his position."

This is the second time in a month that Gabbai has clashed with a senior manager at one of the government companies that is due to be privatized. The last time was with Oil Refineries chairman Ohad Marani, following his proposed deal to buy gas stations from Dor Alon.

The letter was accompanied by another from the deputy head of the Government Companies Authority, Shimon Ben Hamo, who listed a series of alleged delays by IMI management.

The letter revealed that IMI representatives were instructed not to hand over material to the Government Companies Authority, in contravention of the Government Companies Law. The IMI privatization advisors have been stymied for six months, after IMI demanded that before they begin their work they sign secrecy agreements. These agreements were not discussed or approved by the IMI board of directors. The financial reports of two IMI subsidiaries that are slated to be privatized first are not ready, and IMI management keeps postponing their publication, the letter said.

The financial reports of IMI itself have also not been published, and the authority does not know when it will receive them. Timetables for the publication of the sale tender have not been kept, because among other reasons, IMI representatives keep postponing meetings on the matter with the authority. Officials who were appointed by the IMI as liaisons with the authority were fired, according to Ben Hamo's letter.

Ben Hamo wrote that IMI management keeps asking the authority to advance some parts of the privatization plan - mostly the sale of the Keshet plant, which is losing money - but the board of directors refuses. "This conduct on the part of the company not only maintains the difficulties that IMI is in, but worsens them. This is instead of advancing the process that offers solutions to the company?s capital structure, the environment, the employees, etc."

In response, IMI has accused Gabbai being the source of the delays in the privatization process. IMI CEO Avi Felder wrote that the the secrecy agreements with the consultants were signed last week, and that this delay was a result of difficulties raised by the authority, and not by IMI.

He said that only one employee who was appointed to deal with the privatization had been fired, and that the reason for this was unconnected to the privatization itself.

He said that the delay in signing the reports stems from the authority, which would not clarify the government's position vis-a-vis continued support of IMI. The Keshet sale has been delayed, he wrote, since the state's position is not clear concerning the preservation of workers' rights at the factory.

"The IMI board and management are fully committed to the implementation of the government decision concerning the privatization of IMI, and intensive activities are being carried out to advance it," the IMI said.