Public funds from Abu Dhabi were used to buy Israeli spyware group NSO

A state-owned Abu Dhabi investment firm has been investing in Israeli cyberweapons maker NSO Group since 2019, when NSO’s Pegasus spyware was traced to the phones of journalists, human rights activists man and ex-wife of the ruler of Dubai.

Mubadala Capital, a unit of the $243 billion fund chaired by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan, is one of the largest investors in the $1 billion private equity fund. who bought NSO three years ago, according to three people with knowledge of the matter.

Mubadala’s €50m commitment to private equity fund Novalpina Capital – agreed in 2017 before the fund acquired NSO – means Emirati government money was used to buy a major Israeli manufacturer of cyber weapons even before the two countries signed a peace agreement in August 2020.

The US Commerce Department blacklisted NSO last year, saying it provided software to foreign governments who used it to “maliciously target” government officials, journalists, businessmen business, activists, academics and embassy workers. NSO is facing legal action from Meta, which claims it exploited a vulnerability in WhatsApp to spread its spyware, and from Apple.

Half of the €50m Mubadala Capital committed to the Novalpina fund came from the sovereign wealth fund, which is led by Manchester City chairman Khaldoon al-Mubarak, and the other half from outside investors which Mubadala Capital managed money, said one of the people.

The investment was large enough to allow Mubadala Capital to sit on a committee of the largest investors in the Novalpina fund.

Mubadala Capital and NSO declined to comment. A person close to Mubadala said his “small role” in the fund was a passive one, meaning he was only notified after an investment had been made.

A British court found last year that the ruler of neighboring emirate Dubai allowed his agents to use Pegasus to target the phones of his estranged wife, Princess Haya, and her British divorce lawyer. , Baroness Fiona Shackleton.

Citizen Lab alleged that Ahmed Mansoor, an Emirati human rights activist, was targeted by NSO spyware in 2016.

The Israeli government has for years used NSO’s military-grade spyware as a diplomatic calling card to force relations with recalcitrant regimes, including Gulf countries such as the United Arab Emirates, Bahrain and Saudi Arabia.

In a sign of the UAE’s desire for unfettered access to spyware, the Abu Dhabi government has held internal discussions on the possibility of buying the company outright in the fall of 2021, according to a person familiar with discussions. These talks have not progressed beyond preliminary conversations. At that time, NSO said it had canceled his contract with the United Arab Emirates over the use of Pegasus to target the princess and her lawyer’s phone.

“We sold this technology to these countries so they could fight our common enemy Iran together,” a senior Israeli cabinet official said. Any misuse of the software to spy on dissidents, academics or journalists is the responsibility of the nation deploying the software, not Israel, they said. “There are no regrets.”

Mubadala Capital’s investment also dragged it into a thorny dispute over the Novalpina fund itself. Novalpina founders Stephen Peel, Stefan Kowski and Bastian Lueken were sacked last year and replaced by US consultancy Berkeley Research Group, after investors decided the trio had fought so hard that they could no longer work together.

BRG accused Kowski and Lueken of a “malicious” attempt to regain control of the fund, in a trial in London last month.

In response, Kowski said BRG was “mismanaging” the fund, and the pair said they tried to secure a smooth transfer to BRG. They said they “did not give instructions” for proceedings to be taken in a Luxembourg court to put the original manager of the fund, which they ran, back in charge.

Rating agency Moody’s downgraded NSO’s $500 million in debt to lower junk ratings in November. Credit Suisse, which was co-bookrunner alongside Jefferies when NSO took out the loans, leads a consortium of NSO Group creditors alongside hedge fund Senator, according to a person with knowledge of the matter. Banks and the senator declined to comment.

Amnesty International has previously accused groups such as Oregon’s Public Employees Retirement System and Alaska’s $81 billion Permanent Fund of being “directly linked” to “human rights abuses.” because of their investments in the Novalpina fund.

Additional reporting by Simeon Kerr in Dubai and Andrew England

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