Below is the translation of an article that appeared in the Israeli media in 2011.
Rabintex manufactures vests that do not meet standards and endanger human lives," claimed the company's quality control manager in court. "The managers wanted to maximize profits at the expense of product reliability," she argued. A former senior official in the defense industry stated, "If the data proves to be correct, this could harm the entire defense industry."
One of the chilling scenes in Arthur Miller's famous play "All My Sons" involves a confrontation between American industrialist Joe and his son Chris. The son, returning from World War II, accuses his father of being responsible for selling defective airplane engines to save his business, thereby causing the deaths of American soldiers.
The classic play from 1947 addresses one of the greatest fears of anyone who fights or sends their son to fight with products from the global arms industry. In every manufacturing sector, there is a conflict between maintaining product quality and maximizing profits; however, when it comes to arms factories, this conflict becomes troubling and may cost lives. Real life is not a play, but documents related to a lawsuit against the defense manufacturing company Rabintex that have come to TheMarker raise concerns about whether scenes reminiscent of the American play occurred at the Rabintex factory in Be'er Sheva. A legal conflict that has unfolded over the past two years between a former quality assurance manager at Rabintex and the company reveals disagreements over the compliance of the products manufactured and marketed by the company. Compliance that, in the case of protective equipment, could cost lives.
Rabintex specializes in the production of security products in the fields of personal protection, systemic protection, and in designing and implementing modifications and adaptations of military vehicles for the IDF and other armies around the world. Employee M, whose full name is withheld, filed for compensation from the company, claiming that her working conditions deteriorated after the company began to neglect the quality checks it performed on its products. Among other things, M claimed in court that the vests produced by the company, which were supposed to protect soldiers, allegedly did not pass compliance tests, such as bullet resistance, and were sent to customers worldwide nonetheless.
M stated that she tried to warn and change the situation within the company, but to no avail. Following this, she claimed, she fell into a severe mental state: "In the current situation, with the deterioration and the violations of the law, it's affecting me to the point that I stopped sleeping at night; I have high blood pressure, and I take homeopathic medications to calm down," she shared in court about her feelings during that time. "Everyone who worked around me knew my status." In an email M sent during that period to her direct supervisor, who resigned from the company in the summer of 2008, she wrote: "I feel like I'm in the desert alone, fighting windmills."
In its response documents, Rabintex categorically rejected all allegations of non-compliance, claiming that M was dissatisfied that her long-time supervisor was replaced and additionally found a new job at a competing company.
From profits to losses
Rabintex was founded in 1950 as a manufacturer of tents and related accessories. In 1991, it was publicly traded on the Tel Aviv Stock Exchange, and in 2007, Inspire Investments purchased 58% of the company's shares for a valuation of $50 million—17% higher than the market price of the company—becoming its owner. Thus, Rabintex became Inspire's primary holding.
Throughout 2007, Rabintex was thriving, presenting handsome contracts with the U.S. Army and executing several promising acquisitions. However, by early 2008, the direction changed, and the company began to report losses. The global climate and the company's inefficiency led to the situation where four years after the acquisition, Rabintex was worth about a tenth of what it was worth when purchased. The 2009 crisis led to a debt settlement with its bondholders, and even now, it is difficult to say that they are assured of seeing their money returned. The company's bonds are trading at a gross yield to maturity of 30%, reflecting a lack of confidence among the company's investors in its ability to repay the debt.
Behind the controlling entity of Rabintex, Inspire, is Avi Wartheim, a member of one of the wealthiest families in the economy, a nephew of multi-millionaire Mozi Wartheim, who previously served as chairman of Bank Mizrahi. In February 2011, Rabintex CEO Ehud Gennani resigned due to the company's poor condition, and Sharon Malul currently serves as CEO.
M, who holds a master's degree in mechanical engineering, joined the company in 1991—only one year after immigrating to Israel from the former Soviet Union—and remained with the company for 18 years thereafter. From 2000 to 2009, M served as the company's quality control manager, and her role was to ensure that the products met safety standards and could withstand traumas that soldiers could face in the field. However, in early April 2009, after nearly two decades of work at the company, M made a very surprising move, especially considering she was a 56-year-old woman nearing retirement; she resigned from her position and filed a lawsuit against the company.
In her affidavit, M explains that she resigned due to a tangible deterioration in her working conditions that prevented her from continuing to work for the defendant. M claims that in October 2008, "personal changes were made in the company's management, in which new, unqualified managers were appointed, whose main goal was to maximize the company's profits, even at the expense of product reliability and quality. The new management team imposed new demands on me that had not existed before, aimed at limiting me and forcing me to approve products for marketing even without thorough and responsible examination on my part."
M states that she was prohibited from entering the ballistics lab where quality, compliance, and product quality checks are conducted—effectively demanding her approval of products without verifying that the tests were carried out properly. "The goal of the defendant was to try to 'work' the examiner (in the tests conducted on company products, examiners representing the customer are present to ensure the products' compliance—Y.P. and H.A.), and therefore did not want me in the lab," M asserts in the lawsuit. According to her, she understood that "they want to trick the examiner, because there were batches of raw material that were not suitable for production but were nevertheless sent out. This was known in production meetings."
In her affidavit, M adds, "I emphasized that I am not ethically willing to sign off on the compliance of products without actual proof of their compliance. The defendant circumvented me many times by approving products for marketing without having passed my inspection."
Did not meet the standard
To prove her claims, M presented to the court a series of laboratory reports of shipments of vests intended for customers in Spain, Mexico, and Greece, which were approved for production and marketing despite not meeting the NIJ standards of the U.S. Department of Justice, which define the requirements for weapons sold in the U.S. and constitute the globally recognized standard. M claims that these were just a few examples.
For instance, M claims that a shipment of vests produced for a customer in Mexico did not meet the American standard, but the company decided to present it as compliant, and it was approved despite the fact that the shooting tests conducted on the vest were dangerous. When it comes to vests, testing for bullet resistance refers, among other things, to the depth of the indentation created in the vest when hit by a bullet. According to M—and as shown in laboratory reports appended to the lawsuit—the trauma depth (the indentation) of a bullet in the vest in some cases measured 47-53 mm instead of the required 44 mm. According to an expert in the field who looked at the data, "a trauma depth exceeding the standard may be dangerous depending on the impact location and shooting conditions—and in any case, these are standard requirements, and this is a deviation."
According to an industry source, once a company like Rabintex sends the vests to a customer, in some cases—specifically when dealing with a foreign army that purchased them—further stringent tests may be conducted to verify their quality. However, in other cases, when it comes to a private customer, they may reach stores directly and be purchased by anyone.
According to a ballistic expert we spoke to, "a deviation in trauma means that the product does not meet the standard. If the requirement is trauma up to 44 mm and they deviated—then it is not compliant. If someone takes responsibility for this, that is their issue.
"If a company labels a product as 'approved' when it has not been approved, they can be sued. It's not like buying a TV and discovering it malfunctions after four years instead of five. This is serious, as we are talking about vests, and such matters endanger human lives."
M claims that she warned against the dangers in the production of the products, and nevertheless, her supervisors approved the shipments. In one email she sent after discovering borderline and non-compliant results in shooting tests of vests, M wrote to her supervisor: "How can you approve production without quality assurance clearance??? Is there a new procedure at Rabintex??? I am requesting explanations." In a reply email, her manager stated that all tests conducted met NIJ standards and that only in one case "the trauma was borderline," and that it was unnecessary to conduct too many destructive tests since it involved a minimal quantity of ten vests.
In court, Rabintex responded that "a number of samples (approximately ten items) were sent to the customer only after being checked and validated in our laboratory, and the product was found compliant in the ballistic tests conducted in our laboratory. After the shipment of samples, the order was canceled for marketing reasons." Laboratory reports presented by M in court also showed that in some cases, the number of layers contained in the vests did not meet the standard.
"On the face of it, if this data were proven correct, it would appear to be a serious moral failure of the current management of the company," said a former senior official in the Israeli defense industry who examined the data to TheMarker. "Such conduct could potentially damage the entire Israeli defense industry and its image, not just Rabintex," he added.
The investigation of Y, who served as the company's quality assurance manager for 16 years until resigning in August 2008, raises a similar claim. Y stated in court that "what Rabintex did borders on criminal; it also got entangled with the U.S. Department of Justice," and explains M's motives: "When you see that the company is committing flagrant illegal acts and you are part of it, you cannot later claim that you were not part of it. When you see customers being lied to, you can't say you weren't part of it. True, I was no longer at the company, but I know very well what went on there."
In his testimony, Y corroborated M's claims, stating that her presence in the ballistic lab—where she was removed for test approvals—was essential. "There is a difference between pressure to produce with control and oversight and producing and marketing products that endanger human lives," Y said in his testimony.
Strange resignation
M refused to cooperate with the article, but according to the protocols, it appears that the employee retained some loyalty to the company: "I know there are things that are industry secrets," the plaintiff states in the protocols, "but the lawyer explained to me that when I submit this here—it is not to reveal secrets."
Rabintex’s witnesses also testified that she was a good employee who did not wish to disclose the company's secrets and saw the conflict with the company as merely a workplace dispute. Y defined M in an affidavit submitted to the court as an extremely disciplined, reliable, dedicated, and honest employee, who to the best of his knowledge never considered leaving Rabintex.
However, Rabintex’ witnesses, R, the manager of the Rabintex factory in Be'er Sheva, and G, the current quality assurance manager at the factory, explained that M was never among the senior management who had the authority to approve the development and production of products, and that her resignation stemmed from her difficulty in accepting changes in management within the company. They claim that the new supervisor, G, who replaced Y, did not get along with M, complained about her, and felt that she did not accept his authority, did not follow his directives, and did not correct the mistakes he identified in the sewing work for which she was responsible for the quality.
In the protocol, G states that M "was not responsible for product safety, but was responsible for the quality of the sewing products." He adds that M "was a dedicated employee who had opinions on how to manage things. Some of them I did not accept, and it seems she was unhappy about that."
Rabintex also claims that there was no deterioration in M's working conditions, and that she was not forced to approve the production of products that were not compliant. Rabintex’s witnesses explain, among other things, that M was not responsible for product safety but rather for textiles, and that her removal from the ballistic lab during the tests was in line with procedures. Additionally, Rabintex argues that the plaintiff's sole intent was to tarnish the company's reputation and that she resigned because she found another job. The company claims this, despite Y stating that M's subsequent job offered her a lower salary than she earned at Rabintex.
Regarding the specific allegations raised by M concerning product quality and compliance with standards, Rabintex refused to engage in a professional discussion within the courtroom: "The company does not intend to be dragged into a professional discussion regarding compliance with this or that standard... Questions that, with all due respect, the court does not have the tools to examine."
Rabintex further alleged that the products that M raised doubts about and presented laboratory reports for had passed further external laboratory tests that found the products compliant—and all this occurred after the employee was no longer working at the company.
As of today, the court has ordered both parties to reach a settlement regarding M's severance pay. The attorneys have declared that they authorize the court to decide on a settlement, with the dispute between them relating to M's entitlement to receive an additional 28% of her severance pay. The settlement is expected to be presented in the coming weeks. The other questions raised in the lawsuit regarding the company's products will remain unanswered.
**Rabintex: "Baseless claims"**
In response to TheMarker, Rabintex stated that it is "a public company, and as such it has managed its long-standing business activities in the business arena and through its reports to public investors, not in a journalistic manner. We regret that an important financial newspaper has decided to give publicity to baseless claims raised in a lawsuit wherein the complainant has cast aspersions on the company and its employees with the aim of achieving personal profit.
"Since its establishment, the company has built a strong reputation in the field of personal protection, being the exclusive supplier of helmets to the IDF and other security forces in Israel. Moreover, the company exports its products to a long list of advanced armies worldwide, and its products have received professional recognition as reliable and high-quality products.
"Without addressing the substance of the baseless claims of the complainant, we underscore that the vast majority of the orders received by the company from its customers go through a rigorous series of approvals at the Be'er Sheva plant and/or at the end customer. Only after the customer checks, or receives approval of ballistic compliance from an external laboratory regarding the quality of the products delivered to him in accordance with the specification requirements, is the sale approved.
"Rabintex has long-term relationships with its customers, both old and new, thanks to which it has built a reputation as one of the most advanced manufacturers of personal protection products. This reputation is stronger than any defamation from any party driven by unrelated interests.
"This, as well as the fact that so far the company's products have helped and continue to help protect the security of hundreds of thousands of soldiers around the world, including in Israel, speaks more than anything else to the importance the company attributes to the reliability and quality of its products."
**IDF in a letter to Rabintex: "We view with seriousness the non-compliance of the helmets"**
There may have been compliance issues with products intended for use by the IDF. Rabintex was awarded a tender to produce helmets for IDF use. One of the documents presented in court, specifically by Rabintex, is a letter the company received from the Ministry of Defense (the IDF Procurement and Production Administration) regarding the order for lightweight helmets it produced for them.
The letter refers to a report of deficiencies found in an acceptance test conducted on the helmets. Among other things, it states: "We view with seriousness the non-compliance, particularly with regard to the functional defect of the asymmetry between parts of the chin strap. The examination department was instructed to reject shipments if this defect is found."
However, when we approached the IDF for a response on the matter, the IDF spokesperson stated that "Rabintex supplied 62,000 helmets out of the 76,000 ordered. All deliveries were made after the required tests and to the satisfaction of the defense establishment. There are no known product returns for those ordered."
When we approached again and asked about the document presented in court, the IDF spokesperson stated that "this is not a defect or flaw in the helmets' original design. The helmets passed rigorous and thorough inspection before being delivered to soldiers in the field. When the helmets arrived with the soldiers, it became clear that the helmet design around the chin was uncomfortable for the soldiers, and therefore the Ministry of Defense turned to the company requesting a change in the structure to make it more comfortable. The company sent representatives to the units and taught the soldiers how to modify the structure themselves—since it's a simple technical process."