US gov't torpedoed Fifth Dimension sale to NSO

Benny Ganz

Fifth Dimension, whose chairman is former IDF chief of staff Benny Gantz, is closing down and laying off its 32 employees.

It was reported yesterday that Fifth Dimension Holdings, headed by chairperson Maj. Gen. (res.) Benny Gantz, former IDF Chief of Staff, had terminated operations and laid off its remaining 32 employees. Fifth Dimension is now trying to sell its technology to another company. At this stage, negotiations are taking place with a large civilian government agency in Israel and a private Israeli technology company. Investments in the company to date total $40 million. It is believed that the payment for the technology will not cover this investment, which will force Fifth Dimension's investors to write off a large proportion of their investments.

Fifth Dimension developed intelligence gathering and analysis technologies for civilian enforcement agencies. The company negotiated its acquisition with the NSO cyber attack company, but negotiations were dropped, leading to Fifth Dimension's collapse.

Sources inform "Globes" that the reason for the failure of the negotiations with NSO was a decision by the US administration to impose restrictions on deals with Russian oligarch Viktor Vekselberg, one of the main investors in Fifth Dimension. As a result, money from Vekselberg's investment did not reach Fifth Dimension. US law enforcement agencies that considered buying Fifth Dimension's services dropped the idea, and the Francisco Partners, fund, NSO's controlling shareholder, decided against the acquisition deal.

Vekselberg, an associate of Russian President Vladimir Putin, was questioned in May by US Special Prosecutor Robert Moeller, who is investigating Russian involvement in the US elections, about payments made to Adv. Michael Cohen for the purpose of giving hush money to pornography actress Stormy Daniels. According to reports in the US, the money was transferred through the Columbus Nova Fund in the US, which is controlled by Vekselberg and has also invested in Fifth Dimension.

Columbus Nova spokesperson Lexi georgiadis told "Globes" that the fund is owned only by americans  and that the claims that Vekselberg used the investment management company to transfer money to Adv. Michael Cohen are untrue. 

However, these claims have not impressed Special Prosecutor Moeller or the US media. "Bloomberg," for example, is not just another "client of the fund" but in certain circumstances the only client of it, such as for example the investment of Vekselberg's Renova Fund in Columbus Nova's last $300 million fund raising, which was probably the only investment in Columbus Nova. In amny event, there is no doubt that the US Administration imposed restrictions on the Columbus Nova Fund and that was the main reason for the collapse of Fifth Dimension.  

Fifth Dimension CEO Doron Cohen told "Globes" that his company would continue operating until the end of the year, but its 32 employees would stop working at the end of the month, and all of them would be hired by other companies. Fifth Dimension previously had as many as 100 employees, but laid off most of them in recent months. Gantz is still the company's chairperson. Another leading figure in the company is former Mossad Deputy Director Ram Ben-Barak, a consultant to Fifth Dimension's board of directors.

Fifth Dimension said, "Development of an investigative platform based on artificial intelligence was successfully completed. Because of investment difficulties beyond the company's control, following months of dealing with selling and merging processes, the company is terminating its activity. All of the company's employees are fully aware of what is happening. The company is acting responsibly, legally, and fairly in giving them their full rights. The company is engaged in follow-up negotiations to sell the technological product, which naturally cannot be described in detail."

Fifth Dimension was founded in 2014 by CEO Doron Cohen and Guy Caspi, who subsequently left the company's management and founded the Deep Instinct company. Investors in Fifth Dimension include CerraCap Ventures, Yaron Eitan's Columbus Nova, UST Global, and private investors. The company emerged from under the radar a few months ago and began marketing and sales. Its system reached the final stage in a large tender in an Asian tender that has not yet been decided.

The failure of the deal with Fifth Dimension is liable to worsen the situation of NSO itself. The negotiations with Fifth Dimension were designed to transfer the latter's civilian intelligence activity to NSO as a counterweight to the negative reputation acquired by NSO following the implanting of its Pegasus spyware on mobile devices of human rights activists and journalists. Two weeks ago, a Saudi Arabian human rights activist filed a lawsuit against NSO in a Tel Aviv court, alleging that the Saudi Arabian authorities had used NSO's technology to track murdered journalist Jamal Khashoggi.

US private equity fund Francisco Partners, the main shareholder in NSO, previously tried to sell it at a $1 billion company value, but was unsuccessful. The fund opposed the acquisition of Fifth Dimension because it feared that Vekselberg's involvement would make it difficult for it to sell NSO.

Published by Globes, Israel business news - en.globes.co.il - on December 16, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018