Stressed Israeli firm NSO mulling closure of controversial Pegasus unit: Report

The Israeli company, NSO Group, which was recently blacklisted by the US President Joe Biden’s administration for its controversial spyware technology, is contemplating shutting down its Pegasus unit or even selling off the entire company, said a report.

The company, which is most likely to default on its debts, is in talks with many investments funds to either go in for refinancing or for an outright sale. Quoting sources, a Bloomberg report said that two US-based funds are already in the reckoning and they are interested in closing down the notorious Pegasus unit, which has received flak around the world for violating human rights.

Closing down the Pegasus unit may impact the Israeli firm since it constitutes about half of NSO’s revenue. The report quoting sources said that if the investment houses opt for the refinancing option, they would pump in $200 million and convert the know-how of Pegasus software to perhaps develop NSO’s drone technology or to create defensive cyber security services.

Last year, the company had exhibited its new drone system called Eclipse that can take control of intruding drones and it had claimed that more than 10 countries had bought it for protecting its energy facilities.

Bloomberg reported that US sanctions put additional pressure on NSO, which needed to pay back about $450 million in debt, just two years after a management buyout that valued the company at about $1 billion. “Moody’s Investors Service said last month there’s an increasing risk the company will violate the terms of its loans,” said the report.

Also read: SC Pegasus probe: Questions over some experts’ refusal to join panel

NSO has been at the receiving end of lawsuits and investigations after it has been accused of allowing its powerful customers, which included governments, to spy on people. A consortium of 16 news organisations had investigated and published several articles detailing how NSO’s customers had misused Pegasus software which can track a user’s mobile phone usage, to snoop on journalists, activists, politicians and others. They also faced accusations about the abuse of human rights through the usage of Pegasus.

The allegations hurt the company’s efforts to project itself as a manufacturer of critical surveillance tools that law enforcements require to nab criminals. NSO Group has however defended itself on multiple occasions claiming that it sells its technology to governments and law enforcement agencies to prevent crime and terrorism. And that the company has ended contracts with clients that have abused its software.

Earlier this year, in India, a series of reports published by several news outlets alleged the Pegasus software had been used to snoop on journalists, activists, government officials, and even ministers, including India’s Minister for Electronics and Information Technology Ashwini Vaishnaw.

A three-member technical committee has been set up two months ago to investigate the issue on the order of a three-judge Supreme Court bench of Chief Justice of India N V Ramana, Justice Surya Kant and Justice Hima Kohli. It is being overseen by retired Supreme Court judge Justice R V Raveendran.

Meanwhile, in an attempt to stop the proliferation of using digital tools for repression, the United States in November added the Israeli spyware company NSO Group to its “entity list,” a federal blacklist prohibiting the company from receiving American technologies. This means that NSO will not be able to use top-of-the-line cloud-computing services made by tech giants such as Amazon and Microsoft. Neither can it use American researchers who study the kinds of software exploits and vulnerabilities that NSO depends on for infecting phones.

According to the Biden administration, which wants to be seen as a champion of human rights, the NSO group’s phone-hacking tools had been used by foreign governments to “maliciously target” government officials, activists, journalists, academics and embassy workers around the world, said international media reports. And, it had been unfairly used to target dissidents, journalists and activists to silence dissent in foreign countries and had to be banned.