Analysis
Rafael’s secrets are leaking - where are the watchdogs?
As former executives join Ondas, oversight bodies appear paralyzed.
There is no gentle way to say this: Rafael, the prestigious and celebrated government defense company that delivered Iron Dome, the Iron Beam, Trophy (Windbreaker), and numerous other battlefield-defining technologies, urgently needs responsible oversight. What is unfolding looks less like normal business activity and more like a dangerous loss of control.
Over the past year, at least ten former senior executives and managers, including its CEO until two years ago and four former vice presidents with deep exposure to sensitive information, have moved to senior roles at the American holding company Ondas.
At the same time, Ondas, which refuses to disclose the identity of its primary investor, continues to make generous acquisition offers for Rafael subsidiaries that hold invaluable defense knowledge belonging to the State of Israel. Meanwhile, Rafael’s chairman, CEO, and board appear disturbingly complacent.
No Rafael executive, past or present, inherited this company from a wealthy aunt. It is a state asset built over decades with public funds, and it demands stewardship accordingly.
When a senior defense official tells Calcalist in frustration that “Rafael is already completely permeated by Ondas,” while Chairman Yuval Steinitz tours television studios praising the company’s achievements and CEO Yoav Turgeman does not actively stem the steady migration of senior talent to Ondas,someone must take the wheel.
This is happening even as the ink is barely dry on a long-delayed and highly critical Government Companies Authority report into the controversial 2019 acquisition of drone company Aeronautics for approximately NIS 850 million, alongside businessman Avichai Stolero. That deal raised serious governance questions, yet Rafael’s leadership now appears to be operating perilously close to similar red lines.
How can it be considered reasonable that a foreign company, staffed by Rafael’s own former senior executives, is seeking control of subsidiaries such as mPrest (developer of the Iron Dome control system), Controp, or Aeronautics, all of which are involved in classified defense projects?
For Rafael, the Aeronautics deal should have been a warning sign, a case study in poor governance, excessive secrecy, and decision-making shielded from public scrutiny under the banner of national security. Precisely because of that experience, Rafael should now be exercising extreme caution, especially when facing Ondas, whose acquisition push is reportedly being led by its former VP of marketing, Oshri Lugassy.
Even more troubling, Ondas now employs key figures behind the Aeronautics deal, former CEO Yoav Har-Even and former VP of M&A Moshe Maor-Miara. Has no alarm bell sounded within Rafael? Is no one asking fundamental questions?
The funding behind Ondas also warrants scrutiny. Until recently, it was virtually unknown, yet it has suddenly launched an acquisition campaign against Israeli defense companies, backed by what appears to be massive capital, reportedly close to $1 billion raised in a recent funding round. The company refuses to disclose its main investor. That alone demands oversight and transparency.
To be clear, Ondas is operating within the rules of capitalism. It raises capital, invests it, seeks to acquire assets, and aims to maximize returns. It is entitled to offer generous compensation to attract talent.
The larger question is: where is the State of Israel? Where are the regulators and gatekeepers responsible for safeguarding critical national defense assets developed over decades in Rafael’s facilities and in Technion laboratories? These technologies provide Israel with its decisive military edge. Yet astonishingly, oversight bodies appear dormant.
At present, only the Director of Security of the Defense Establishment is reportedly delaying Ondas’s attempt to acquire mPrest in a deal valued at approximately $100 million. If Ondas proceeds with efforts to acquire Aeronautics from Rafael, as recently reported, the same division will again be forced to decide.
Its head, Yuval Shimoni, faces a difficult balancing act. On one hand, he must protect classified assets at the heart of national security. On the other, Defense Ministry Director General Amir Baram has articulated a policy of encouraging capital inflows into the defense-tech sector, arguing that the state lacks sufficient resources to fully fund its growth.
Whatever decision is ultimately made will likely occur behind closed doors, without transparency or public accountability, as is customary in Israel’s defense sector. Whether approval is granted or denied, the reasoning will remain confidential. History shows that secrecy is not a guarantee against failure.
The Defense Ministry received detailed questions from Calcalist regarding its oversight procedures and involvement in Ondas’s moves. It did not respond. As both regulator and primary customer of defense companies, it bears responsibility.
The Government Companies Authority also received extensive inquiries. Rafael is a state-owned company; the Authority has board representation and cannot plausibly claim ignorance. Yet following the inquiries, it merely asked Rafael about its enforcement of cooling-off periods for former executives. Why did it act only after media prompting? Where are its proactive control mechanisms?
Both the Defense Ministry and the Government Companies Authority have earned scrutiny regarding the adequacy of their oversight. Publishing critical reports years after problematic deals is not sufficient. Lessons must be implemented in real time.
Just days ago, the committee overseeing senior government appointments approved a second term for Steinitz as Rafael chairman. He is eager to advance an IPO to strengthen Rafael’s global market position amid rising geopolitical tensions. But before pursuing a public offering, Rafael’s leadership would do well to put its governance house in order.
Capital markets reward transparency. Recent history justifies caution.
