By Steven Scheer and Dan Williams
JERUSALEM (Reuters) - The executive due to take over as CEO of Israeli spyware company NSO Group has quit after the business was blacklisted by the U.S. Commerce Department, the company said on Thursday.
Isaac Benbenisti, who joined the company in August, was named on Oct. 31 as the future replacement for CEO Shalev Hulio, an NSO co-founder who was due to take on new roles as vice chairman and global president. Hulio will stay on as CEO for the time being, and Benbenisti will leave the company.
In a resignation letter, excerpts of which were provided by a spokesperson, Benbenisti wrote to NSO's chairman Asher Levy that "in light of the special circumstances that have arisen" following the U.S. decision, and not being able to carry out his vision for NSO, he "would not be able to assume the position of CEO with the company".
Staffed by veterans of top Israeli military intelligence units, NSO has been trying to defend its reputation after an investigation by 17 media organisations published in July said its Pegasus software had targeted smartphones of journalists, rights activists and government officials in several countries.
Last week the U.S. Commerce Department added NSO to its trade blacklist, saying it sold spyware to foreign governments that used the equipment to target government officials, journalists and others.
Being blacklisted by Washington means that exports to NSO from U.S. counterparts are restricted, making it harder for U.S. security researchers to sell them information about computer vulnerabilities.
After he was named as future CEO, Benbenisti, who previously served 6 1/2 years as CEO of telecoms group Partner Communications, had he was "impressed with the high moral standards, ethical framework and compliance policies that streamlines throughout everything NSO Group does."
NSO, which said it was "dismayed" by the U.S. blacklist decision, reiterated that it has ended contracts with government agencies that misused products it promotes as legitimate tools to help crime-fighting authorities battle terrorism.
The company sends its products abroad under licences from Israel's Defence Ministry, which launched an investigation of the company's practices after the alleged software misuse emerged. No results have been announced.
An NSO source said the company was contesting the U.S. decision and had been in touch with clients in Europe.
"We have their support. There have been no changes to the company nor cancellations of contracts at this time," the source said.
In 2020, NSO reported revenue of $243 million and a company source confirmed a Moody's report of adjusted EBITDA of 99 million euros ($113.5 million).
Lev Topor, from the Center for Cyber Law and Policy at the University of Haifa in northern Israel, said NSO's future could depend on whether other countries follow the U.S. lead.
"It might be they might be blocked in the U.S. but not elsewhere, and the U.S. can of course still hire their services via third parties by proxy," said Topor. "If governments worldwide and particularly the Israeli government would make it hard for them to do business, they will struggle."
($1 = 0.8724 euros)
(Reporting by Steven Scheer and Dan Williams; Additional reporting by Maayan Lubell)