Mexico alleges NSO kickback scheme in $300 million spyware deals

Top anti-money laundering investigator finds bills for Pegasus and other software from Israeli firm included excess charges which may have been funneled back into lawmakers pockets

Mexico's then-president Enrique Pena Nieto takes notes as an unidentified Mexican diplomat takes pictures with her mobile phone during the plenary session at the Americas Summit in Lima, Peru, Saturday, April 14, 2018. (AP/Karel Navarro)
Mexico's then-president Enrique Pena Nieto takes notes as an unidentified Mexican diplomat takes pictures with her mobile phone during the plenary session at the Americas Summit in Lima, Peru, Saturday, April 14, 2018. (AP/Karel Navarro)

MEXICO CITY, Mexico — Mexico’s top anti-money laundering investigator said Wednesday that officials from previous administrations from 2012 to 2018 spent about $300 million in government money to purchase spyware from the Israeli spyware firm NSO Group.

The bills for programs like the Pegasus spyware appear to have included excess payments that may have been channeled back to former government officials as kickbacks.

Santiago Nieto, the head of Mexico’s Financial Intelligence Unit, said the information is being given to prosecutors in Mexico.

Nieto said the amounts paid, and the way they were paid, suggested government corruption in an already questionable telephone tapping program that targeted journalists, activists and opposition figures, who at the time included President Andrés Manuel López Obrador and his inner circle.

“This implies or at least presumes the existence of acts of corruption, by selling (the spyware) at inflated prices to the government between the years 2012 and 2018,” Nieto said.

NSO’s flagship program Pegasus can hack into mobile phones without users knowing, enabling clients to read every message, track a user’s location and tap into the phone’s camera and microphone. A report in November 2018 alleged that Pegasus was used to target journalists in the country.

In this file photo taken on August 28, 2016, a woman walks outside the building housing the Israeli NSO group, in Herzliya. (JACK GUEZ / AFP)

López Obrador took office on December 1, 2018 and vowed never to use spyware. Nieto said no transactions had been detected in the current administration.

Mexico had the largest list — about 700 phone numbers — among the thousands allegedly selected by NSO clients for potential surveillance.

Mexico President Andrés Manuel López Obrador says Mexico will not respond to US President Donald Trump’s threat of coercive tariffs with desperation, but instead push for dialogue, during his daily press conference at the National Palace, in Mexico City, Mexico, May 31, 2019. (AP Photo/Ginnette Riquelme)

Some purchases apparently occurred under former security secretary Genaro García Luna, who is being held on drug trafficking charges in the United States. Others occurred during the administration of former president Enrique Peña Nieto; one of his top security officials, Tomas Zerón, later fled to Israel.

Despite reports that Israel had expressed disinterest in extraditing Zerón to face charges in another case in Mexico, Israel’s Ambassador to Mexico, Zvi Tal, wrote Tuesday that the process was moving forward.

“Israel does not take political considerations into account in extradition proceedings,” Tal wrote. “The goal of the dialogue between the respective Israeli and Mexican authorities is to ensure that the extradition request is properly submitted and considered. There has been no delay on the part of Israel.”

Then-director of the Criminal Investigation Agency of Mexico Tomas Zeron listens during a press conference at the Attorney General building in Mexico City, on October 27, 2014. (Alfredo Estrella/AFP)

NSO on Wednesday pushed back against allegations that it sold its Pegasus spyware software to human rights abusers who targeted dissidents, politicians, journalists and more, saying “an orchestrated campaign is being carried out against us.”

“False allegations have been published against us that ignore the facts,” the company said in a statement announcing that it would not be responding to further requests to comment on the claims. “We will not play the game of insinuations and slander.”

CEO Shalev Hulio, 39, denied in an interview with Israel’s 103FM radio on Tuesday that his company had done anything wrong.

He said NSO had “no connection” to the list of thousands of phone numbers.

On Tuesday, Defense Minister Benny Gantz said Israel approves export of technology only to governments “exclusively for the purposes of preventing and investigating crime and terrorism.”

He said Israel is “studying” recent publications on the subject.

The Defense Ministry has vowed that “appropriate action” would be taken if it found NSO Group violated its export license terms.

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