Israel’s defense giants collide as IAI and Rafael fight for control of know-how
Executive moves become the latest front in a long-running feud.
Another front has opened in the long-running battle between Israel Aerospace Industries (IAI) and Rafael over defense contracts in Israel and abroad. In recent weeks, fresh tensions have emerged surrounding the recruitment of a senior executive from IAI to Rafael.
At the center of the dispute is Adi Dulberg, VP & GM, Intelligence, Communications & EW Division at Elta Systems, an IAI subsidiary. Dulberg is nearing the end of his term and is expected to leave IAI for Rafael, where he would take on a parallel role.
Calcalist has learned that IAI is furious over the move and is seeking to block it “at any cost,” as one senior defense-industry figure put it, while sharply criticizing Rafael CEO Yoav Turgeman. Turgeman himself served as CEO of Elta until about two years ago, before crossing over to Rafael.
IAI executives view Dulberg’s expected move as an attempt by Rafael to appropriate critical knowledge assets and fear it could encourage further defections. “This is primarily an uncollegial move, especially between two government-owned companies whose mission is to serve the state’s security,” a senior IAI source familiar with the matter told Calcalist. “It is impossible to ignore the fact that Turgeman knows Elta extremely well and understands the significance of such a move.”
Turgeman managed Elta for about five years and previously held several senior positions at IAI, including director of the Malam plant and head of the Arrow missile program. His transition to Rafael took place roughly two months after the outbreak of the October 7 war, and he assumed the CEO role without a cooling-off period. At the time, senior IAI officials did not conceal their concerns, noting that Turgeman had been exposed to some of the company’s most sensitive business plans and trade secrets.
One of IAI’s key fears was that Turgeman would initiate overlapping activities at Rafael that would compete directly with Elta in contested markets. This concern is heightened by Rafael’s recent expansion in the space sector, including the development of intelligence satellite concepts that challenge areas in which IAI has operated for decades. Complicating matters further is the strained relationship between IAI CEO Boaz Levy and Turgeman, who previously competed for the top job at IAI, a contest ultimately won by Levy.
In an effort to ease concerns surrounding his move, Turgeman reportedly signed an agreement committing to refrain from involvement in Elta’s core activities. IAI had hoped that even after a one-year period, Turgeman would continue to avoid actions related to Elta. “Nearly two years have passed, and now it’s ‘I can do whatever I want,’” a senior official involved in the matter said. “A senior vice president is about to move to a direct competitor, into the same role, and no one is setting boundaries. Where is the Government Companies Authority?”
Dulberg, who is at the center of the dispute, is currently completing a seven-year term at Elta, as required by civil service regulations governing term limits. From IAI’s perspective, however, the conclusion of his term does not signal the end of his career at the company. IAI has proposed extending his tenure for an additional three years or alternatively appointing him to another senior role within the group.
The timing of Dulberg’s departure coincides with Rafael’s ongoing process to appoint a new Deputy CEO and Director of its Intelligence Division, replacing Yuval Miller, who was appointed CEO of Rafael subsidiary Controp three months ago. Controp specializes in electro-optical systems for security applications.
Not everyone sees Dulberg’s potential move as problematic. “He has completed a lengthy term at Elta, and his expertise is highly specialized,” a senior defense-industry official told Calcalist. “He cannot suddenly change professions. If he doesn’t move to Rafael, he will likely go to Elbit or another private defense company.”
The dispute has meanwhile been brought to the attention of the Government Companies Authority, headed by Roi Kahlon. According to a senior industry official, “Someone needs to step in and prevent a scenario in which government-owned companies systematically poach each other’s top talent.” Calcalist has learned that the authority intends to examine the appointment process and its implications once the matter reaches Rafael’s board for approval.
The dispute comes against the backdrop of Rafael’s rapid growth in recent years, accelerated further since the October 7 war. The company has sharply expanded its workforce amid a surge in orders and recently reported a record order backlog of $22.5 billion, approaching the $25.2 billion backlog reported by Elbit Systems, controlled by Mikey Federman. IAI’s backlog stood at $26.5 billion at the end of the third quarter, a figure expected to rise following the $3.1 billion Arrow missile deal signed with Germany last week.
In response to the controversy, Rafael stated: “The company has established a professional search committee for the position, and many candidates have submitted their applications. The committee has not yet completed its work. We regret that various parties are spreading irresponsible messages regarding professional processes that are still underway.” IAI declined to comment.
