Pegasus project turns spotlight on spyware firm NSO’s ties to Israeli state

Back in 2017, few would have disputed that Israel and Saudi Arabia were regional foes. Officially, the countries had no diplomatic ties. Yet for a small group of Israeli businesspeople attending secret meetings with Saudi officials in Vienna, Cyprus and Riyadh that summer, there were signs relations were warming.

The businesspeople represented NSO Group. Their mission was to sell the Saudis NSO’s weapons–grade spyware system, Pegasus.

According to a person who attended the meeting in June 2017 in Cyprus, a senior Saudi intelligence official was “amazed” by what he saw. After a lengthy and technical discussion, the Saudi spy, who had brought a new iPhone, was shown how Pegasus could infect the phone and then be used to remotely operate its camera.

“You don’t need to understand the language to see they were amazed and excited and that they saw what they needed to,” the person said.

NSO Group had been given explicit permission by the Israeli government to try to sell the homegrown hacking tools to the Saudis. It was a classified arrangement and resulted in the sale later being sealed in Riyadh in a deal reportedly worth at least $55m.

“In Israel there is a strong political movement to make diplomacy through business,” said the person, speaking on the condition of anonymity. “Business first, diplomacy later. When you make a deal together, it opens a lot of doors to diplomacy.”

It is common for governments to help companies export their products. NSO, after all, employs former Israeli cyber-intelligence officials and retains links to the defence ministry.

But revelations about how repressive states such as Saudi Arabia, the United Arab Emirates, Azerbaijan and others have used NSO’s technology to target human rights lawyers, activists and journalists raise questions for Israel and have put the issue under fresh scrutiny.

The disclosures threaten to put diplomatic pressure on Israel, amid questions over whether it is using the licensing of NSO’s spyware for political leverage – and allowing the software to be sold to undemocratic countries that are likely to misuse it.

A recent transparency report released by NSO Group acknowledged the company was “closely regulated” by export control authorities in Israel. The Defense Export Controls Agency (DECA) within the Israeli defence ministry “strictly restricts” the licensing of some surveillance products based on its own analysis of potential customers from a human rights perspective, the company said, and had rejected NSO requests for export licences “in quite a few cases”.

Moreover, NSO was also subject to an “in-depth” regulatory review by Israel on top of its own “robust internal framework”.

Within NSO, the process Israel uses to assess whether countries can be sold the technology is considered a “state secret”. A person familiar with the process said officials in both Israel’s national security council and prime minister’s office had been known to give their input.

In the case of Saudi Arabia, sources familiar with the matter said the kingdom was temporarily cut off from using Pegasus in 2018, for several months, following the murder of Jamal Khashoggi, but was allowed to begin using the spyware again in 2019 following the intervention of the Israeli government.

It is unclear why the Israeli government urged NSO to reconnect the surveillance tool for Riyadh.

However, the 10 countries that the forensic analysis for the Pegasus project suggests have actually been abusing the technology all enjoy trade relations with Israel or have diplomatic ties with the country that have been improving markedly in recent years.

In two NSO client countries, India and Hungary, it appears governments began using the company’s technology as or after their respective prime ministers met the then Israeli prime minister, Benjamin Netanyahu, in high-profile encounters intended to boost trade and security cooperation. It is understood no countries that are considered enemies of Israel – such as Turkey – have been allowed to buy NSO’s wares.

“Markets dictate what works, I don’t dictate … the only place I have actually intervened … is cybersecurity,” Netanyahu said in a press conference in Hungary in 2017 as he stood next to the country’s prime minister, Viktor Orbán.

What remains unclear is whether Israel’s intelligence agencies might have special privileges with NSO, such as access to surveillance material gathered using its spyware. One person close to the company, who asked to remain anonymous, said it was a frequent topic of speculation. Asked whether Israel could access intelligence gathered by NSO clients, they replied: “The Americans think so.”

That view was supported by current and former US intelligence officials, who told the Washington Post, a partner in the Pegasus project, that there was a presumption that Israel had some access – via a “backdoor” – to intelligence unearthed via such surveillance tools.

John Scott-Railton, a senior researcher at the Citizen Lab at the University of Toronto, said he believed it would be “irresponsible” for a state to allow the large-scale distribution of a powerful surveillance tool such as Pegasus without being able to keep an eye on what was being done with it.

He said court records had revealed that NSO used servers that were not always located on the premises of the client. “What that means is there’s the potential for visibility. And it would be crazy for them [the Israelis] not to have visibility,” he said.

NSO strongly denied that Israel had any access to its customers’ systems.

“NSO Group is a private company. It is not a ‘tool of Israeli diplomacy’; it is not a backdoor for Israeli intelligence; and it does not take direction from any government leader,” NSO’s lawyer said.

In a statement, the Israeli Ministry of Defense said Israel marketed and exported cyber products in accordance with its 2007 Defense Export Control Act and that policy decisions take “national security and strategic considerations” into account, which include adherence to international arrangements.

“As a matter of policy, the state of Israel approves the export of cyber products exclusively to governmental entities, for lawful use, and only for the purpose of preventing and investigating crime and counter-terrorism, under end-use/end-user certificates provided by the acquiring government,” the ministry said.

It said “appropriate measures” were taken in cases where exported items are used in violation of export licences.

The ministry added: “Israel does not have access to the information gathered by NSO’s clients.”

For Israel, few clients whom it has approved to use Pegasus have been as problematic as Saudi. Weeks ago, NSO cut the kingdom off once more, following allegations that Saudi had used Pegasus to hack dozens of Al Jazeera journalists.

Saudi Arabia declined to comment.

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