A team of executives from a US military contractor has quietly visited Israel numerous times in recent months to try to execute a bold but risky plan: buying NSO Group, the cyber hacking firm that is as famous as it is technologically accomplished.
The obstacles were significant for the team at the US company L3Harris, which also had experience with spyware technology. They began with the embarrassing fact that the United States government had blacklisted NSO just months earlier because the Israeli firm’s spyware, called Pegasus, had been used by other governments to hack into the phones of political leaders, rights activists of the person and journalists.
Pegasus is a zero-click hacking tool that can remotely extract everything from a target’s mobile phone, including messages, contacts, photos and videos, without the user having to click on a phishing link to give them remote access. It can also turn a cell phone into a tracking and recording device.
NSO acted “contrary to the national security or foreign policy interests of the United States,” the Biden administration said in announcing the blacklist in November, barring American companies from doing any business with the Israeli firm.
But five people familiar with the negotiations said the L3Harris team brought with it a surprise announcement that made the deal seem possible. U.S. intelligence officials, they said, quietly supported their plans to buy NSO, whose technology over the years has been of strong interest to many intelligence and law enforcement agencies around the world, including the FBI and CIA
Talks continued in secret until last month, when information about a possible sale of NSO leaked and sent all parties into a tailspin. White House officials said they were outraged to learn of the talks and that any attempt by US defense firms to buy a blacklisted company would be met with stiff resistance.
Days later, L3Harris, which is heavily dependent on government contracts, notified the Biden administration that it had scuttled its plans to buy NSO, according to three United States government officials, although several people familiar with the negotiations said it was there have been attempts to revive the Negotiations.
Questions remain in Washington, other allied capitals and Jerusalem about whether parts of the US government – with or without the White House’s knowledge – seized the opportunity to try to place control of the NSO’s powerful spyware under US authority, despite many public position of the administration against the Israeli firm.
It also left unsettled the fate of NSO, whose technology is a tool of Israeli foreign policy, even as the firm has become the target of intense criticism for the ways its spyware is used by governments against their citizens.
The episode was the latest skirmish in an ongoing battle between nations to gain control of some of the world’s most powerful cyber weapons, and reveals some of the headwinds a coalition of nations — including the United States under the Biden administration — faces as it tries to capture a lucrative global market for advanced commercial spyware.
Spokesmen for L3Harris and NSO declined to comment on the negotiations between the companies. A spokeswoman for Avril Haynes, the director of national intelligence, declined to comment on whether any US intelligence officials had quietly blessed the discussions. A Commerce Department spokesman declined to elaborate on any discussions with L3 Harris about the NSO purchase.
A spokesman for Israel’s defense ministry declined to comment, as did a spokeswoman for the Israeli prime minister.
The Biden administration’s decision to blacklist NSO by the Commerce Department came after years of revelations about how governments used Pegasus, NSO’s primary hacking tool, as a domestic surveillance tool. But the United States itself also purchased, tested and deployed Pegasus.
In January, The New York Times revealed that the FBI purchased the Pegasus software in 2019 and that government lawyers at the FBI and Justice Department discussed whether to deploy the spyware for use in domestic law enforcement investigations. The Times also reported that in 2018 the CIA purchased a Pegasus for the government of Djibouti to conduct counter-terrorism operations, despite that country’s record of torturing political opposition figures and imprisoning journalists.
A decision by L3 to end acquisition talks would put NSO’s future in doubt. The company saw the deal with the US defense contractor as a potential lifeline after it was blacklisted by the Commerce Department, crippling its business. American companies are not allowed to do business with companies on the blacklist, under threat of sanctions.
As a result, NSO can’t buy any American technology to support its operations — whether it’s Dell servers or Amazon cloud storage — and the Israeli firm hopes that selling a company in the United States could lead to lifting sanctions.
For more than a decade, Israel has treated the NSO as a de facto arm of the state, granting Pegasus licenses to many countries — including Saudi Arabia, Hungary and India — with which the Israeli government hoped to maintain stronger security and diplomatic ties.
But Israel has also denied Pegasus to countries for diplomatic reasons. Last year, Israel rejected a request by Ukraine’s government to buy the Pegasus for use against targets in Russia, fearing the sale would damage Israel’s relationship with the Kremlin.
The Israeli government also makes extensive use of Pegasus and other domestic cyber tools for its own intelligence and law enforcement purposes, giving it added incentive to find a way for NSO to survive US sanctions.
During discussions about the possible sale of NSO to L3 Harris — which included at least one meeting with Amir Eshel, the director general of the Israeli Defense Ministry, who would have to approve any deal — L3Harris representatives said they received permission from the U.S. Government states will negotiate with NSO, despite the company’s presence on the US blacklist.
L3 Harris representatives told the Israelis that US intelligence agencies supported the acquisition as long as certain conditions were met, according to five people familiar with the discussions.
One of the conditions, these people said, is that the NSO’s arsenal of “zero days” — vulnerabilities in computer source code that allow Pegasus to hack cellphones — could be sold to all of the United States’ partners in the so-called . Five Eyes Intelligence Sharing Link. The other partners are Great Britain, Canada, Australia and New Zealand. A senior British diplomat declined to comment on questions about the extent of British intelligence knowledge of a possible deal between L3 and NSO.
Such a plan would be highly unusual if finalized, as the Five Eyes countries typically only buy intelligence products that are developed and manufactured in those countries.
Israeli Defense Ministry officials were open to this arrangement. But after heavy pressure from the Israeli intelligence community, it backed down on another demand: that the Israeli government allow the NSO to share the computer source code for Pegasus – which allows it to exploit vulnerabilities in the phones it targets – with the Five countries eyes. They also did not agree, at least not in the first phase, to allow L3’s cyber experts to come to Israel and join NSO’s development teams at the company’s headquarters north of Tel Aviv.
Defense Ministry officials also insisted that Israel retain its authority to grant export licenses for NSO products, but said they were willing to negotiate which countries received the spyware.
In the course of the discussions there were many matters which would require the approval of the United States Government. L3Harris officials said they discussed the issues with U.S. officials, who agreed in principle, according to people familiar with the discussions.
To help negotiate the sale of NSO, L3Harris hired an influential lawyer in Israel with deep ties to the Israeli Defense Institute. Attorney Daniel Reisner is the former head of the international law division of the Israeli military prosecutor’s office and acted as a special adviser on the Middle East peace process to former Prime Minister Benjamin Netanyahu.
In the months since the Biden administration announced the blacklist in November, and while the Israeli government has been pushing for a way to keep NSO from bankruptcy, the Commerce Department in Washington has sent a list of questions to NSO and another Israeli hacking firm that was blacklisted at the same time about how the spyware works, who it targets, and whether the company has any control over how its nation-state customers deploy the hacking tools.
The list, reviewed by The Times, asks whether NSO maintains “positive controls over its products” and whether Americans abroad are protected from having NSO products used against them.
Another asked if NSO would “shut down access to its products if the US government informs them that there is an unacceptable risk that the tool will be used to violate human rights by a particular customer?”
Separate from the proposed deal for NSO and L3 Harris, Israeli officials have been negotiating unsuccessfully with the Commerce Department to remove NSO from the US blacklist ahead of President Biden’s trip to Israel next week.
News last month of L3Harris’ talks to buy NSO appeared to blindside White House officials. After Intelligence Online reported a possible…
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