In 2017, the investment managers of the Oregon State Treasury unanimously committed $233 million to a new private equity fund called Novalpina Capital. That investment has created a hangover, and Treasury now wants questions answered.
After Oregon made the investment, Novalpina Capital acquired a majority share of NSO Group, an Israeli company that produces smartphone spyware. The spyware has been used by repressive regimes against dissidents, human rights workers and journalists. NSO Group has been hit by numerous lawsuits and last month was blacklisted by the U.S. government.
Earlier this year, London-based Novalpina Capital became so dysfunctional because of a bitter dispute between its partners that investors, including Oregon, stripped them of control of the fund and handed it to an outfit called Berkeley Research Group.
A logo adorns a wall on a branch of the Israeli NSO Group company, near the southern Israeli town of Sapir. The cellphones of six Palestinian human rights activists were infected with spyware from the notorious Israeli hacker-for-hire company as early as July 2020. It was the first time the military-grade Pegasus spyware was known to have been used against Palestinian civil society activists.
Sebastian Scheiner / AP
Oregon State Treasurer Tobias Read is looking for clarity in the murky situation, his spokeswoman, Amy Bates, said in a statement to The Associated Press.
This month, Read reached out to Oregon Attorney General Ellen Rosenblum "on various legal options,” Bates said. Rosenblum's office declined to comment, citing attorney-client privilege.
The Oregon Treasury has also been working with Berkeley Research Group “and counsel to obtain a full accounting of the prior fund manager’s investment activities over the past several years,” said Bates, who declined to elaborate.
As of two months ago, Berkeley Research Group had not been granted clearance by the Israeli government to receive any sensitive information about NSO Group, the Guardian newspaper reported. Berkeley Research Group did not immediately respond to questions on whether they have since gained access to the information.
On Wednesday, U.S. Sen. Ron Wyden, D-Oregon, said the state employee pension fund should drop its investment in NSO Group because its Pegasus spyware "enabled authoritarian regimes to target journalists and human rights advocates.”
On Nov. 3, the U.S. Department of Commerce put NSO Group and another Israeli company on its trade blacklist. Wyden and Rep. Adam Schiff, D-California, urged the Biden administration Wednesday to take a step further by applying the Global Magnitsky Act, which authorizes Washington, D.C., to freeze assets and ban individuals from entering the United States.
Bates said Thursday that Read “supports sanctioning global technology companies that facilitate human rights violations and the oppression of journalists by selling technology to authoritarian regimes.”
She pointed out that Oregon is a limited partner in private equity fund investments and consequently doesn't participate in how such a fund does its business once an investment is made, but is “deeply disturbed by reports about developments concerning NSO Group.”
For its part, NSO Group said in a statement Wednesday that it “has chosen ethics upon revenues, and we strongly believe that our contribution to the global security including US national interests should have the opportunity to be presented.”
“We only sell to governments authorized by the State of Israel, for the sole purpose of preventing terror and crime. Once the software is sold, the company does not operate the system,” the company added.
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AP reporter Josef Federman in Jerusalem contributed to this report.
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