A court fight within Israeli spytech firm NSO Group has shed new light on the crisis engulfing the company, including tensions over whether to keep selling malware to autocrats to stay afloat.
NSO was already mired in debt before an investigation revealed last year that its Pegasus phone hacking software had been used to spy on hundreds of journalists, dissidents and activists worldwide.
Now the surveillance tech giant is teetering, especially after being banned by the United States.
AFP has reviewed hundreds of pages of court documents from a dispute involving NSO, its creditors and the Berkeley Research Group (BRG), majority shareholders of NSO’s parent company.
The documents suggest creditors have sought to push NSO, based in the Tel Aviv suburb of Herzliya, to continue selling Pegasus to “elevated risk” countries with questionable human rights records, in order to maintain revenues.
But Berkeley Research has demanded a halt to suspect sales without more internal reviews, citing an “absolute need for [NSO] to address the underlying issues” that saw it blacklisted.
The tensions surfaced in a Tel Aviv court case where BRG is seeking to force the spinoff of three subsidiaries, including a maker of anti-drone equipment, arguing the smaller companies risk being brought down by the Pegasus scandal.
The legal battle lines unveil a broader fight over the company’s future, with implications for the global cyber-surveillance industry.
“NSO is a flagship company. They are sort of the case study right now,” Danna Ingleton, deputy director of Amnesty Tech, told AFP.
What happens to NSO, she said, could signal a “seismic shift in the regulation of this industry.”
Pegasus can remotely switch on a mobile phone’s camera and microphone and suck up data.
The company says the software has helped security forces in many countries thwart crime and stop attacks.
NSO has not identified its customers, but reporting has revealed Pegasus was used by several states with poor democratic credentials and histories of suppressing dissent.
In a letter released with court documents, lawyers for NSO’s creditors charge that BRG’s approach “foreclosed the Company from accepting any new customers.”
A source familiar with NSO said BRG wanted the company “to shut down, or to stop some of the activities that we have with customers.”
“We said we have legal obligations that we cannot do it unless they misuse the system,” the source told AFP, requesting anonymity.
BRG’s lawyers countered that “since the Pegasus Project disclosures the only new potential customer bookings” for Pegasus are from “elevated risk customers.”
A source from BRG’s legal team told AFP it opposed those sales.
“If they want to sell the system to democratic countries, I don’t think somebody will block them,” the source said, also requesting anonymity.