Credit Suisse promotes spyware sales at NSO despite US blacklisting

Credit Suisse pushes NSO Corporation to continue selling Pegasus spyware to new customers, just weeks after the United States blacklisted Israeli cyber-weapons maker saying authoritarian regimes have used the technology. their hack tool to silence dissent.

The claim was made in a letter in December by lawyers representing the Swiss bank and some of its fellow NSO creditors including the hedge fund Senator, as well as the US investment bank Jefferies with as loan custodian for NSO.

It comes after revelations about how Pegasus has been used to hack the phones of journalists, activists and even the estranged wife of Dubai’s billionaire ruler, has dropped. NSO plunged into financial turmoil.

The push sheds light on the approach taken by several major banks and Wall Street firms that financed a weapons manufacturer with a history of being involved in reported human rights abuses. The US NSO blacklisted NSO in November for abusing the powerful Pegasus cyberweapon by its customers.

By the time Credit Suisse and other creditors requested it, NSO had gone months without signing a new customer, and had borrow 10 million dollars to meet its October payrolls.

“Lenders understand and support the need to exercise caution in the face of global attention and focus on closer scrutiny of the company,” they said in a December 10, 2021 letter to Berkeley Research Group, a consulting firm that has been appointed to manage an acquisition fund owns 70 per cent of NSO.

But the creditors added that they were “troubled” by a statement from NSO that BRG was preventing it from “pursuing and acquiring new customers”.

They added that this “has deepened the company’s current liquidity crisis” and that the NSO “must be able to conduct normal operations, with proper oversight, during this critical period.” “.

The letter, part of a lawsuit in Israel – and seen by the FT – does not name creditors but two people with knowledge of the matter said Credit Suisse and Senator were among the lenders it was sent to on behalf of. face.

The letter comes from Willkie Farr & Gallagher, which says they represent lenders that account for more than 75% of NSO Group’s outstanding loans under a 2019 settlement. It said the attorneys also represent Jefferies in their capacity as attorneys. an administrative agent.

BRG responded to lenders, saying they were “deeply concerned” that they were driving sales of the Pegasus.

NSO management has “acknowledged” that since the announcement of Project Pegasus by a group of journalists in July “potential new bookings only for the Pegasus software system have been from existing customers.” high-risk products,” at least one of which is understood to have misused the hacking tool in the past, it said.

BRG said “under any circumstances” it was prepared to approve these sales. Instead, it said, the spyware maker should “address the fundamental problems” that prompted the US to blacklist it.

Credit Suisse, Jefferies, Senator and BRG declined to comment. Willkie Farr did not respond to a request for comment.

The NSO said the “legal business dispute is not related to NSO because the debt in question is not NSO’s” and it continues to “generate new business” after undertaking “a rigorous due diligence process”. strict and has terminated 10 clients in recent years based on credible allegations or verified abuse.” A person close to the company said BRG’s statement that NSO’s business prospects Relying on selling to high-risk customers is untrue.

It is one of a series of controversies involving Credit Suisse, a bank that has been rocked by scandals such as the collapse of Archegos and Greensill Capital and the “spygate” story regarding employee surveillance. of the company.

Pegasus works by mirroring the phone’s contents, including encrypted messages, and it can capture video and audio. Last month, the Spanish government said Pegasus had been hack phones of prime minister and defense minister.

The BRG has previously said NSOs are “worthless” to private equity backers, a sign that lenders could take control of the company if they wanted to.

Credit Suisse and Jefferies act as account miners to raise half a billion dollars in debt financing for the spyware corporation’s private equity purchase in 2019.

Blacklisting means that NSOs cannot purchase equipment or services from US companies without approval. The company is facing lawsuits from Apple, which is seeking an order to prevent NSO from using its products, and Meta says NSO exploited a vulnerability in WhatsApp to deliver its spyware. .

Last year, BRG was put in charge of managing a €1 billion private equity fund that owns shares of NSO after its previous managers, a trio of former TPG executives, who became founded Novalpina Capital, was overthrown by their own investors.

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