Cyprus, Cyberspies and the Dark Side of Israeli Intel

An Israeli Military Intelligence veteran’s arrest in Cyprus is an object lesson in the hazards of commercializing defense technologies

Yossi Melman head
Yossi Melman
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A van confiscated in the city of Larnaca is seen parked in the Police Headquartes in Nicosia, Cyprus, November 17, 2019.
A van confiscated in the city of Larnaca is seen parked in the Police Headquartes in Nicosia, Cyprus, November 17, 2019.Credit: Yiannis Kourtoglou/Reuters
Yossi Melman head
Yossi Melman

One tactic that strategic consultants, crisis management experts and spin doctors would immediately suggest to help with Tal Dilian’s current plight would be to place a lengthy and flattering fluff piece about him in one of the major papers. But Dilian, a former senior Military Intelligence officer and CEO of spy-tech company WiSpear, probably has little appetite for more press right now. In August, he gave an interview to Forbes Magazine, with the aim of promoting his business. But that plan backfired in spectacular fashion last month.

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Dilian is now wanted for questioning after he showcased a van that he had outfitted with advanced surveillance equipment. He had proudly talked up this mobile intelligence vehicle, which was immediately confiscated by the police, after that rather unusual Forbes interview. The van, whose price ranges from $5 million to $9 million, has equipment and software that can pull information from cellular and WiFi networks such as WhatsApp chats, Facebook Messenger chats, contact lists, lists of recent calls and messages from any smartphone within a half-kilometer radius.

Dilian is of course furious at the Cypriot authorities, who suspect the equipment was meant to be used in the illegal surveillance of competitors. On Thursday, three employees of WiSpear, which is registered in Cyprus, were arrested as part of the investigation into Dilian. A Larnaca court ordered their release two days later, but The Guardian reports that they are expected to stand trial for violating privacy laws, fraudulently obtaining documents and violating communications laws.

Forbes on WiSpear

Cyprus has served for decades as a convenient base for espionage. Israelis, Brits, Turks, Greeks, Americans, Russians, Palestinians, Syrians, Saudis and others, spooks and “civilians” alike, all operate there, in part by registering companies in the country. In the past decade, they have been joined by a good number of former Israeli intelligence officers.

Cyprus offers tax benefits and shelters, as well as proximity to Arab states that facilitates the sale, brokerage and export of defense and cyber technologies to countries like Oman, Saudi Arabia and the United Arab Emirates.

Dilian is a prominent veteran of Israel’s intelligence community. In his final position (where he held the rank of colonel), he commanded MI’s technology unit, a top- secret unit whose activity, like the identity of its members, is closely guarded. It includes conscripts, career officers and civilian IDF employees. It could be described as the intelligence community’s “toy factory.” It’s where inventors develop and manufacture devices for intelligence missions and other special operations. In intelligence parlance, this combination of human intelligence gathering (HUMINT) and signals intelligence (SIGINT) is HUGINT.

Tal Dilian
Tal DilianCredit: Screencapture

One problem with the unit, and other special operations branches, is a mentality in which, due to a sense of sacred mission, the end is nearly always felt to justify the means. And for the sake of the mission, it is sometimes seen as acceptable to cut corners or take shortcuts for personal benefit.

Dilian, too, was suspected of irregularities; a reprimand was placed in his personnel file, and his promotion path was blocked. This led to his retirement from the military in 2002, whereupon he became a serial high-tech entrepreneur. His WiSpear company specializes in vehicle-based cyberwarfare. He also owns, Intellexa, whose specializations include hacking encrypted data traffic.

Just as the military uses technological tools to obtain information, disrupt computerized systems and strike at the infrastructure that operates them, in the civilian sphere the goal is to obtain information, disrupt a rival’s moves and gain advantage.

The only difference is that the intelligence agencies that are in the service of countries – at least the democratic ones – are supposed to use these capabilities to benefit national security, while in the business world intelligence operates for the benefit of individuals, companies and corporations (as well as governments) for financial gain. Ostensibly, the line that separates the two is sharp and clear. But in their eagerness to chase the big money, Israeli intelligence firms increasingly findthemselves in the twilight zone between the permissible and the prohibited.

Black Cube, co-founded by IDF special operations branch veteran Dan Zorella, was been exposed as having crossed this line. Its people, to their professional disgrace, were arrested for various espionage affairs in Romania, the Democratic Republic of Congo, Britain and the U.S.

Another example is NSO, whose founders include Shalev Hulio, that developed the Pegasus spyware. NSO has been linked to the murder of a journalist in Mexico, the hacking of the cellphones of human rights activists in the Persian Gulf and also the monitoring of Saudi journalist Jamal Khashoggi, who was murdered by Saudi agents in Istanbul in 2018. Dilian first intelligence company, Circles, merged with NSO in 2014.

It was revealed recently that a company with close ties to the UAE government that developed a powerful spy tool disguised as a messaging app, employed MI veterans at its Cyprus offices. A private investigator retained by NSO to investigate a wave of employee departures found that the programmers all went to Cyprus, lured by the astronomical salaries offered by DarkMatter.

Another Israeli company that found itself in the eye of a media storm this year is AnyVision, developer of an advanced facial ID system. One of the founders is Eylon Etshtein. NBC reported that the company’s product is used by the Israeli security establishment to track and identify Palestinians. Following this report, Microsoft decided last month to review its investment in the company.

Dilian, Hulio, Zorella, Etshtein and many others, who are more or less well-known, share numerous similarities. One, they always deny that they have broken the law. Two, when they or their company are challenged by controversy, they find shelter in patriotism. They quickly mobilize the media to portray them as the “salt of the earth” and extravagantly praise their products. Three, they always claim their sole objective is to save humanity and catch “the bad guys”: terrorists and criminals. Four, numerous employees of Israeli spy firms are veterans of the defense establishment, including MI, who continue to do for pay what they once did in uniform. Five, all are developing, making and selling products suited to both military and civilian purposes. Six, some do “reserve duty” by supplying services to the Israeli intelligence community.

This crossing of boundaries isn’t just a problem of private intelligence firms or their leaders. It also derives from the culture inculcated by SIBAT, the Defense Ministry’s International Defense Cooperation Directorate.

When the prevailing attitude is to avoid obstructing possible deals and the ultimate goal is to sell more arms and defense equipment to practically any customer, “the more the better,” it’s no wonder the Defense Ministry, the Knesset Foreign Affairs and Defense Committee, the state prosecution, the military censor and the courts close ranks in the name of information security.

Israel exports $6 billion worth of arms and defense equipment annually and is one of the world’s 10 biggest exporters. Only rarely, in cases of blatant corruption or serious security offenses, are investigations opened, and as long as this situation continues, our arms dealers and peddlers of advanced spy technology will continue to thrive. And, too often, they’ll also give us a bad name.

In a written response, WiSpear said it only sells its products to governments and is cooperating fully with Cypriot law enforcement. “We intend to refute claims raised by the local media and initiated against us by the communist party. Spins or lies will not change the fact that our van is openly displayed for demonstration purposes in international exhibitions to help governments combat terror and crime.”

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