Novalpina Capital has become the latest PRI signatory to become embroiled in an ESG scandal after being identified as the majority owner of a spyware company at the centre of a controversial surveillance operation.
The private equity investor signed up to the PRI – shorthand for the UN-backed Principles for Responsible Investment – in 2017. But now one of its holdings, Israel’s NSO Group, has been accused of being complicit in surveillance operations that may have targeted high-profile political figures including French President Emmanuel Macron and 13 other heads of states, in addition to numerous politicians, activists and journalists.
At least two journalists identified as potential targets for NSO surveillance – the Washington Post columnist Jamal Khashoggi and freelance reporter Cecilio Pineda Birto – have been murdered.
In addition, US intelligence officials have suggested that Israel's own intelligence agencies may have special privileges with NSO Group, allowing them access to surveillance material gathered for NSO clients.
Investors in the Partners I fund include Oregon Public Employees Retirement System, Alaska Permanent Fund Corp, South Yorkshire Pensions Authority and East Riding Pension Fund
The scandal comes less than two years after Novalpina unveiled a new governance framework for NSO Group based on UN Business and Human Rights guidelines, and promised that it would “do whatever necessary” to ensure that NSO spyware is only used to combat terrorism and serious crimes.
It is the latest in a series of controversies which has dogged NSO Group. In 2019, messaging service WhatsApp sued the company after accusing it of hacking WhatsApp servers to plant spyware on 1,400 user devices worldwide. In the same year, Amnesty International criticised NSO Group for targeting vulnerable political dissidents and activists, leading Novalpina co-founder Stephen Peel to step down from the board of international human rights group Global Witness.
Peel had his shareholder voting rights suspended earlier this year after his wife reportedly received hundreds of thousands of euros in legal and public relations fees from NSO Group.
London-based Novalpina has controlled two thirds of NSO Group’s shareholding since 2019, when it launched a leveraged buyout of the company through the Novalpina Capital Partners I fund, and has appointed the majority of NSO’s board.
Investors in the Partners I fund include a number of state and local pension providers from both sides of the Atlantic – such as the Oregon Public Employees Retirement System, Alaska Permanent Fund Corp, South Yorkshire Pensions Authority and East Riding Pension Fund.
Novalpina, the four pension funds and the PRI did not provide a response to the latest revelations when contacted by RI.
In February, RI revealed that EMR Capital, another PRI signatory, was behind a company driving the UK's controversial re-entry into deep coal mining. At the time, the PRI's CEO, Fiona Reynolds – who today announced that she will be joining Australian publisher Conexus Financial as its CEO – said: "It is not PRI’s role to determine the individual investments made by an organization".