US, Israeli officials deny approving sale of Israeli spyware firm to US investors

By Raphael Satter and AJ Vicens

WASHINGTON (Reuters) - Officials in the United States and Israel have denied reports their countries had signed off on the sale of Israeli spyware maker Paragon to Florida-based AE Industrial Partners.

Over the past week, Israeli news outlets reported that Paragon, which was founded by former Israeli intelligence officers and backed by ex-Israeli Prime Minister Ehud Barak, had been bought by AE, an investment group focused on national security-related businesses. On Monday, a person familiar with the deal confirmed its broad outlines to Reuters.

Israeli media outlets, without citing sources, said the deal had secured the approval of American and Israeli officials.

But on Friday, a senior White House official said that was not true.

"The U.S. government never 'approved' this sale. This is a private transaction," the official said. "There wasn't some sort of green light given for this sale."

The Israeli military also denied the reports, according to local media, which quoted the Defense Ministry saying that while Paragon had been in touch about the purchase, "the Ministry of Defense did not approve the sale" and officials were still studying the transaction.

Emails seeking comment from AE and Paragon were not immediately returned. The Israeli military has not responded to several requests for comment.

Paragon has already tried to make inroads in the U.S. surveillance market, although not without meeting roadblocks. In September, U.S. Immigration and Customs Enforcement signed a one-year contract worth $2 million with Paragon's U.S. subsidiary, according to a report in Wired. But the White House official confirmed the contract had subsequently been paused and put under review.

ICE did not immediately return a message seeking comment.

(Reporting by Raphael Satter in Washington and AJ Vicens in Detroit; Editing by Rod Nickel)