Shaken by past crises and short of customers and revenue, the notorious NSO Group is pleased about the expected imminent return of Benjamin Netanyahu as prime minister, believing he will loosen restrictions on Israeli spyware exports to countries with problematic human rights records, chief among them Saudi Arabia, a report said Tuesday.
The Financial Times cited multiple sources in its report, which said the Israeli company that developed the controversial Pegasus tracking software is in danger of failing, having been embroiled in rights scandals around the world, shunned by the United States and increasingly by Europe as well, and facing increased Israeli measures that hamper its ability to sell its products to non-democratic countries.
“Don’t worry, Netanyahu is coming back,” the beleaguered firm’s co-founder Shalev Hulio reportedly told guests at a dinner party in Tel Aviv, several months before the right-wing Likud party leader indeed triumphed in last month’s elections.
Netanyahu, who was prime minister in 1996-1999 and also from 2009 to 2021, is expected to swear in a new government in the coming weeks.
The British news outlet cited multiple unnamed knowledgeable sources saying that as prime minister, Netanyahu nurtured intelligence software exports by using them as carrots as he sought to improve Israel’s clandestine security ties with countries like Saudi Arabia, India, and nations in the Gulf region and in East Africa.
After securing normalization agreements with the United Arab Emirates, Bahrain, Morocco and Sudan — brokered by former US president Donald Trump — Netanyahu has been open about his desire to reach a similar deal with Saudi Arabia.
The kingdom became “one of NSO’s largest clients” in 2017, Financial Times reported, but the firm was forced to temporarily suspend its Saudi contract in late 2018, after Saudi dissident Jamal Khashoggi was murdered in Turkey and the journalist’s family claimed Riyadh had used Pegasus to track him.
The report said a new contract with Saudi Arabia was put in place in 2019 “with the direct knowledge of Netanyahu,” citing two people familiar with the transaction.
The contract was used to track 36 journalists at the Al Jazeera news outlet, based in regional rival Qatar.
It was reportedly unknown whether the contract is still in effect.
But the report said that “in an attempt to rein in international criticism, the Israeli government put in stringent approvals processes for any new sales for the entire spyware industry… designed to make sales to countries with problematic human rights records extremely difficult” unless with the express approval of the Defense Ministry.
This, coupled with a November 2021 decision by the US Department of Commerce to impose a blanket blacklist on NSO, left only Europe as a potential market for the company, and even there, the past scandals left many nations wary of doing business with it.
“Nobody wanted to touch any Israel interception software at all,” said an unnamed arms dealer who failed to close sales who was quoted by Financial Times.
“These events left NSO suspended in a peculiar purgatory within Israel’s security infrastructure, described by one recently departed insider as ‘too secret for a sale and too crucial to fail,'” the report said.
It said that NSO, which has cut its staff and reduced its costs in recent years, is nevertheless battling more than $400 million in debt. It said Hulio has had to repeatedly borrow millions from creditors and from New York-based consultancy BRG, which manages its majority stake. The report said that at one point, NSO had “completely exhausted a $30 million credit line.”
Israeli human rights lawyer Eitay Mack, who has led a legal battle against the country’s arms exports to rights abusers, told Financial Times: “You can see why companies like NSO will be opening the champagne with Netanyahu’s return. It’s understandable that not just NSO, other companies also see a lot of opportunity, especially with huge arms deals with the Saudis.”
Netanyahu didn’t respond to the outlet’s requests for comment and hadn’t issued a public response as of Wednesday morning.
NSO commented on the report by alleging that “politically motivated sources based on hearsay” had provided false information on “alleged customers, conversations that never occurred, and the company’s financial condition.”