The European Investment Fund (EIF), provided venture capital for Israeli spyware firm Paragon Solutions, confirmed a spokesperson for the European Investment Bank Group, to which the EIF belongs.
In 2024 Paragon was acquired for $900 million by the American investment company AE Industrial Partners
“In January 2020, the EIF signed a commitment of €21.2 million with Aurora Europe SCSp, a fund-of-funds with a total size of €85 million and a focus on life sciences and technology”, says the spokesperson. “This fund went on to invest in 31 funds, which collectively went on to invest in over 900 companies.”
“One of these funds, Red Dot Capital Partners II LP, which specializes in cybersecurity, AI, and machine learning, invested in 10 companies, including in Paragon Solutions in October 2020. Red Dot divested from Paragon Solutions in December 2024.”
In December 2024, Paragon was acquired for $900 million by the American investment company AE Industrial Partners. Paragon Solutions has since become part of the American subsidiary RedLattice.
It is unclear how much Red Dot initially invested in Paragon Solutions, and how much it earned from the sale to AE Industrial Partners. The EIB spokesperson was unable to provide information on this matter. Apache asked Red Dot for clarification but has not received a response.
Horizon 2020
An EIF document designates Paragon Solutions as a final recipient that received support under the InnovFin Equity Facility for Early Stage (IFE). This financing instrument was launched as part of Horizon 2020, the EU's Framework Programme for Research and Innovation from 2014 to 2020. Israel participated in this program as an “associated country”, as well as in its successor, Horizon Europe.
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According to an EIB spokesperson, the EIF “has necessary safeguards and rules to ensure that EU funds do not support companies or projects that violate EU standards. The EIF requires its intermediaries to apply relevant eligibility criteria and other applicable obligations to the final beneficiaries. According to the information available to us, the investment met the applicable eligibility criteria at the time.”
MEP Saskia Bricmont: “This is yet another example of how EU tax payers are financing an industry that is spying on them with the support of EU institutions”
“This is yet another example of how EU tax payers are financing an industry that is spying on them with the support of EU institutions”, says MEP Saskia Bricmont, who sat on the PEGA committee that investigated the Pegasus case. “It is deeply troubling that the Union is directly or indirectly enabling tools that erode democracy, fundamental rights and the rule of law.”
“This raises serious questions about the governance, transparency and accountability of the Union’s funding mechanisms. I strongly call upon the European Commission and Member States to implement the recommendations of the European Parliament to strictly regulate the use of spyware and prohibit funding toward this industry."
“The criteria used by the EIB Group are too broadly defined, and monitoring is inadequate”, says Frank Vanaerschot, director of Counter Balance, an NGO that monitors the EIB, among others. “The EIB Group assumes that intermediaries comply with the rules, but does not check this itself. The use of different funds, with one private fund investing in another, also makes monitoring more difficult.”
Vanaerschot emphasises that, in the context of the Israeli war in Gaza, Counter Balance is calling on the EIB Group to conduct a serious review of all investments in Israeli companies.
Italian scandal
Paragon Solutions was co-founded in 2019 by former Israeli Prime Minister Ehud Barak and Ehud Schneorson, commander of Unit 8200, an Israeli military intelligence unit, between 2013 and 2017.
WhatsApp announced that the accounts of approximately ninety users, including journalists and civil society activists, had been targeted with spyware from Paragon Solutions
Paragon Solutions specializes in developing advanced spyware. Graphite, Paragon's software program, enables users to break into encrypted smartphones. The company sells its spyware to intelligence and security services worldwide. The US Immigration and Customs Enforcement (ICE) recently gained access to Paragon's software.
At the end of January, WhatsApp announced that the accounts of approximately ninety users, including journalists and civil society activists, had been targeted with spyware from Paragon Solutions.
In a report published on June 5 by the Italian parliamentary committee overseeing intelligence services, the Italian government acknowledged the use of Paragon's spyware against two activists. According to the report, it was unclear who had targeted Italian journalist Francesco Cancellato with Paragon's software.
According to Haaretz, Italy rejected Paragon's offer to further investigate the Cancellato case. The head of the Italian intelligence service DIS said the audit would pose a risk to national security.
According to The Guardian, Paragon terminated its contract with Italy after WhatsApp disclosed the hacking. The Italian press agency Ansa later reported that the contract was terminated “by mutual agreement.”
In June, Citizen Lab, an interdisciplinary laboratory based at the University of Toronto, found “forensic evidence confirming with high confidence that both a prominent European journalist (who requests anonymity), and Italian journalist Ciro Pellegrino, were targeted with Paragon’s Graphite mercenary spyware”.
