A former head of Israel's spy agency now runs the defense arm of a U.S.-listed contractor, which critics call a straight conflict of interest and a bad deal for American taxpayers.

• David Barnea left his job as Mossad director in June and two months later became global president and chairman of the defense division of a Nasdaq-listed American firm.
• That firm has spent the last three years buying up Israeli defense companies, including drone and missile-defense outfits, and folding them into a U.S. parent.
• Some early backers and executives tied to the company have faced U.S. lawsuits alleging securities fraud and racketeering, plus past links to the WorldCom accounting scandal.
• The worry: Israeli-run firms wearing an American badge get access to U.S. military technology, data, and Pentagon contracts that would be unthinkable coming from any other country.
• Meanwhile Pentagon spending has climbed to $1.5 trillion a year while sailors deployed in the Middle East live in poor conditions.

Outlook: Expect a fight over Section 219 and other provisions in the defense budget bill, though the corporate takeovers are already done and hard to unwind.