Defense Chief Halts Israel Military Industries' Privatization

Avigdor Lieberman is dissatisfied with the head of the Government Companies Authority and his handling of another company, Israel Aerospace Industries.

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Advanced Israel Military Industries weapons systemsCredit: Moti Milrod

Defense Minister Avigdor Lieberman told a Knesset committee Monday that he has halted the privatization of Israel Military Industries because he is unhappy with the director general of the Government Companies Authority, Ori Yogev.

The dispute relates not only to Israel Military Industries but also to Israel Aerospace Industries and past relations between Haim Katz, a former union boss at IAI, and Yair Shamir, a former and perhaps future chairman at the company, whom Lieberman has nominated to return in that role.

With Yogev at the helm of the Government Companies Authority, Lieberman told the Knesset Foreign Affairs and Defense Committee that he has no confidence that the privatization process will remain “clean and untainted, so I have ordered the privatization process halted until the entire issue is reexamined.”

As Lieberman put it, "Ori Yogev has been the person in charge of government companies for almost four years at this point, and he bears personal responsibility for the damage to one of Israel’s premier industries. He is endangering the livelihood of about 100,000 people who directly and indirectly earn a living from Israel Aerospace Industries.”

Lieberman also weighed in on the proposed appointment of Shamir as IAI chairman. Shamir is a former agriculture minister and the son of  late Prime Minister Yitzhak Shamir.    

Lieberman called the delay in the appointment’s approval “reckless” and an effort to prevent the company from getting back on its feet and even to force it into bankruptcy to have it privatized down the road.

Shamir served as chairman of Israel Aerospace Industries for no compensation. Lieberman approached him in June about returning, and Shamir agreed.

IAI has been without a chairman since September. It has run into trouble in recent years as it has lacked huge contracts. The company hopes that a visit to Israel later this year by Indian Prime Minister Narendra Modi will lead to final approval of a major contract for the Indian army.

The delay in approving Shamir’s appointment stems from opposition in a nominating committee that screens candidates for such positions in government companies. The committee is chaired by Yogev.

Sources also said Yogev was keen to advance the privatization of Israel Military Industries but is holding up Shamir’s appointment because of Shamir’s past contacts Katz, who is now social affairs minister.

While Shamir was chairman of Israel Aerospace Industries, Katz stymied structural reforms at the company and had shaky relations with Yogev as well.

The sources say that by seeking to halt the privatization of Israel Military Industries, Lieberman is essentially responding to the delay in approving Shamir’s appointment at IAI.

The privatization of IMI has been held up for more than a year, first by the Finance Ministry until the state comptroller’s office looked into the bidding process.

There was only one bidder – Elbit Systems. Since then there have been further inquiries into the Elbit bid.

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