Federal authorities are investigating Chinese investment in a California-based plane maker after shareholders alleged that the firm’s technology was being transferred to China, The Wall Street Journal reported.
The FBI and the Committee on Foreign Investment in the U.S. (CFIUS) have launched separate reviews of Chinese investment in small plane manufacturer Icon Aircraft Inc., according to the WSJ, which cited company documents and people familiar with the matter. The authorities are investigating allegations that technology from the company with military applications was transferred to China.
The investigation follows a lawsuit filed in June 2021 by a group of minority shareholders, including former Boeing CEO and chairman Phil Condit, who alleged that Pudong Science and Technology Investment Co. (PDSTI), a Chinese firm which owns 47% of Icon’s shares, was exploiting the company for its technology’s military applications to the detriment of the firm’s bottom line.
A crest of the Federal Bureau of Investigation is seen 03 August 2007 inside the J. Edgar Hoover FBI Building in Washington, DC. AFP PHOTO/Mandel NGAN (Photo credit should read MANDEL NGAN/AFP via Getty Images)
“If Chinese investments are masquerading as venture capital in order to gain access to U.S. technology, it violates this trust,” Condit said in a statement at the time, according to the Aircraft Owners and Pilots Association. “As the lawsuit explains, the investments by PDSTI in ICON were never intended to make the company successful. Rather they were part of a plan to gain technology and defraud minority shareholders.”
In March 2021, PDSTI transferred an Icon plane to China, and in April 2021, it initiated plans to license Icon’s intellectual property, the WSJ reported. (RELATED: US Will Put 8 Chinese Companies On Investment Blacklist For Alleged Uyghur Surveillance)
The group of minority shareholders sent a memo to CFIUS in August 2021 asking the authority to take action and warning of national security risks posed by the arrangement, according to the WSJ.
“ICON’s aircraft technology and advanced materials and aerospace manufacturing capabilities should not be allowed to fall into the hands” of China, the memo read, the WSJ reported. “Without expeditious CFIUS intervention, this may occur within months.”
A lawyer for Icon told the WSJ that its technology did not have military applications and that the Chinese investors’ actions did not constitute a military threat. Icon did not immediately respond to the Daily Caller News Foundation’s request for further comment.
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