Company tried to buy spy software with US intelligence support

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A team of executives from a supplier to the US Armed Forces has been to Israel several times in recent months to try to put in place a bold but risky plan: acquire the NSO Group, a cyber-hacking company that is as notorious as it is technologically proficient.

Executives at L3Harris, which also has experience with spy technology, faced major obstacles. The first was the uncomfortable fact that just a few months earlier the US government had placed the NSO on a blacklist because spy software from the Israeli firm Pegasus had been used by other governments to hack into the phones of political leaders, humans and journalists.

Pegasus is a so-called “zero-click” hacking tool — capable of remotely extracting the entire contents of a target’s cell phone, including messages, contacts, photos and videos, without the user having to click on a link that allows the remote access. Pegasus can also convert the target’s cell phone into a tracking and recording device.

When it announced the Israeli firm’s inclusion on the undesirables list in November, banning American companies from doing business with it, the Biden administration said the NSO had acted “against the national security and foreign policy interests of the United States.”

But five people familiar with the talks said the L3Harris team brought Israel a surprising message that made the deal seem possible. They said US intelligence officials had quietly backed plans to buy NSO, whose technology has for years attracted interest from many intelligence and law enforcement agencies around the world, including the FBI and CIA.

The negotiations continued in secrecy until last month, when news of the potential sale of NSO leaked, much to the consternation of all involved. White House representatives were outraged to learn of the negotiations and said any attempt by US defense firms to buy a blacklisted company would face serious resistance.

Days later, L3Harris, which is heavily reliant on government contracts, notified the Biden administration that it had abandoned its plans to acquire NSO, according to three US government officials, although several people familiar with the discussions say efforts have been made to revive the negotiations.

Doubts remain in the US and Israel as to whether parts of the US government – ​​with or without the White House’s knowledge – have seized an opportunity to try to bring the powerful NSO spy software under US control, despite the public stance taken by the US administration against the Israeli firm.

Also up in the air was the fate of NSO, whose technology has been a tool of Israeli foreign policy, while the company has drawn intense criticism for the way its software is used by governments against their citizens.

The episode is the latest skirmish in an ongoing battle between countries to gain control of some of the world’s most powerful cyber weapons. And it reveals some of the difficulties faced by a coalition of countries – including the US under the Biden administration – as it tries to rein in a lucrative global market for sophisticated commercial espionage software.

Spokespersons for L3Harris and NSO declined to discuss the negotiations between the two companies. A spokesperson for Avril Haines, the director of national intelligence, declined to comment on whether some US intelligence officials had secretly endorsed the negotiations. A Department of Commerce representative declined to provide specific information about any discussions with L3Harris regarding the acquisition of NSO.

Spokespeople for the Israeli Defense Ministry and Prime Minister declined to comment on the matter.

A decision by L3Harris to cancel negotiations for the acquisition would leave NSO’s future in doubt. The company had seen its acquisition by the American defense firm as a potential salvation after being placed on the Commerce Department’s undesirables list, something that had seriously harmed it. US companies are barred, under penalty of sanctions, from doing business with firms that are on the banned list.

As a result, NSO can no longer afford to buy American technology to maintain its operations – whether it’s Dell servers or Amazon’s cloud storage space – and the Israeli firm hoped that being acquired by a US company could lead to suspension of sanctions.

For more than a decade, Israel has treated the NSO as an unofficial arm of the state, licensing Pegasus for use in a number of countries — including Saudi Arabia, Hungary and India — with which the Israeli government hoped to strengthen its security and diplomatic ties.

But Israel has also denied Pegasus to some countries for diplomatic reasons. Last year the country rejected a request by the Ukrainian government to acquire Pegasus for use against targets in Russia. Israel feared the sale could damage its relations with the Kremlin.

The Israeli government also makes extensive use of Pegasus and other domestically produced cyber tools for its own intelligence and law enforcement purposes, a fact that further encourages it to find a way for the NSO to survive US sanctions.

During discussions on the possible sale of NSO to L3Harris (discussions that included at least one meeting with Amir Eshel, the director general of the Israeli Ministry of Defence, who would have to approve any deal), L3Harris representatives said they had received permission from the government American to negotiate with NSO, despite the firm’s presence on the US blacklist.

L3Harris representatives told the Israelis that US intelligence agencies were in favor of the takeover as long as certain conditions were met, according to five people familiar with the negotiations.

One condition would have been that the NSO’s “zero-day” arsenal — the source code vulnerabilities that allow Pegasus to break into cell phones — could be sold to all US partners in the so-called Five Eyes intelligence-sharing relationship. The other partners are the UK, Canada, Australia and New Zealand. A senior British diplomat declined to answer questions about how knowledgeable British intelligence was about the negotiations between the two companies.

Such a plan, had it come to fruition, would have been highly unusual, as Five Eyes alliance countries generally only purchase intelligence products developed and manufactured in these countries.

During the discussions, several points emerged that would have required the approval of the American government. Representatives for L3Harris said they discussed the issues with US officials, who would have agreed in principle.

To help negotiate the sale of NSO, L3Harris hired an influential lawyer in Israel who has deep ties to the Israeli defense establishment. The lawyer, Daniel Reisner, is a former director of the International Law Department at the Israeli Military Prosecutor’s Office and served as special adviser to former Prime Minister Binyamin Netanyahu on the Middle East peace process.

When it leaked last month, news of L3Harris’ discussions to buy NSO appears to have taken White House officials by surprise. After Intelligence Online reported on the possible sale, a senior White House official said such a transaction would create “serious counterintelligence and security concerns for the US government” and that the administration would work to ensure the transaction did not go through.

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