[Username Protected]

WSJ article today claiming that "the FBI and a U.S. investment-screening panel are investigating a Chinese investment in an aircraft startup following allegations of improper technology transfer to China."

https://www.wsj.com/articles/chinese...ws-11642507206

By 2017, PDSTI had amassed its dominant stake in Icon, according to the group of American shareholders. Then, they said in the memo and in court filings, the Chinese company began installing board members and executives, pressuring others and laying plans to transfer Icon’s technology to China.

The Americans filed suit against PDSTI in Delaware in June seeking to stop its alleged expropriation of Icon’s technology; PDSTI said the lawsuit’s claims are meritless. Two months later the American shareholders filed their memo to Cfius, urging the panel to unwind the deal.

...

In May 2020, then-senior Icon executive David Crook declined PDSTI’s offer to be the aircraft company’s president. He wrote, “It is obvious that PDSTI’s plan for ICON is to reduce its operations to a minimum and destroy any potential for the US business until they can move it to China to serve their own interest,” according to a filing by the plaintiffs in the Delaware suit. Mr. Crook, who isn’t part of the American shareholders group suing PDSTI, said he stands by that comment.

...

Icon’s lawyer said the company’s sole plane model, called the A5, is built from commercial, off-the-shelf products and is “wholly unsuited for any military applications.” The A5 “does not have any autonomous piloting, artificial intelligence or machine learning capabilities,” the lawyer said, adding that Icon doesn’t manufacture, design, develop, or test navigation technology or advanced materials.

[Username Protected]

From the AvWeb article: "ICON said in a statement last week that the claims are actually a bid by former CEO and company founder Kirk Hawkins to regain control of the company." (https://www.avweb.com/aviation-news/government-investigates-chinese-investment-in-icon/)

This seems like the most likely scenario to me. The idea that Icon's tech could pose a security threat while all the other Chinese-owned aircraft companies don't is laughable.

[Username Protected]

Most of the recent CFIUS reviews (Cirrus and One Aviation/Eclipse come to mind) were before a recent (Feb of 2020) regulation change to the way CFIUS operates and the authority it has, I guess we'll find out how much more tooth it has soon. https://home.treasury.gov/system/fil...FACT-SHEET.pdf

[Username Protected]

Here is a great article with much more information on the CFUIS claims, including a project to turn the A5 into a UAV.

https://www.flyingmag.com/icons-new-...estment-probe/

[Username Protected]

Well that escalated quickly...

[Username Protected]

"We look at the specifics on this light sport seaplane and its suitability for the proposed role."

https://www.flyingmag.com/an-icon-a5...tary-or-china/

[Username Protected]

U.S. Panel Finds No National-Security Concerns With Chinese Plane Deal

https://www.wsj.com/articles/u-s-pan...ts_pos3&page=1

A U.S. investment-screening panel has concluded its review of a Chinese firm’s nearly 47%
stake in a U.S. aircraft startup, determining there are “no unresolved national security
concerns” with the deal, according to a letter reviewed by The Wall Street Journal.

The decision by the Committee on Foreign Investment in the U.S., an interagency panel
that can recommend the president block or unwind deals on national-security grounds,
marks the end of one part of a bitter saga involving feuding American and Chinese
investors in Icon Aircraft Inc., a California-based maker of recreational amphibious
planes. The outcome is also notable given how carefully Cfius has been scrutinizing
Chinese investment in U.S. technology in recent years.

A group of American shareholders, including Icon co-founder
Kirk Hawkins,has accusedthe Chinese investor, Shanghai Pudong Science and Technology Investment Co., or PDSTI,
of hollowing out Icon and moving technology with possible military applications to China.
PDSTI, which is backed by the Chinese government, has said its investments, begun in
2015, saved Icon from collapse and that licensing Icon’s technology to a Chinese company
will bring in needed capital.

Icon, whose board is controlled by PDSTI, has said its aircraft don’t have military
applications, adding that they only have the capacity to carry a little over 400 pounds and
that they cannot safely operate in water with a wave height higher than 12 inches.

Cfius began its review of PDSTI’s investment in late November after the group of
American shareholders urged it to intervene, the Journal has reported.

“Based upon its review and investigation, and after full consideration of all relevant
national security factors…Cfius has determined that there are no unresolved national
security concerns,” the letter said, adding that action with respect to the deal “is
concluded.”

The letter, dated Monday, was sent by the Treasury Department, which leads the Cfius
panel, to a lawyer for the Chinese investors. A person close to the Chinese investors said
the panel didn’t require them to sign on to any mitigation agreement to resolve nationalsecurity
issues.

An Icon spokesman said: “We’re pleased to confirm that after a monthslong, thorough,
and comprehensive investigation, Cfius has cleared PDSTI’s investment in ICON Aircraft.
ICON will now be able to focus even more on doing what we do best—manufacturing and
selling the incredible ICON A5 amphibious Light Sport Aircraft.”

The Treasury Department declined to comment. Mr. Hawkins and a lawyer for the
American shareholders didn’t immediately respond to requests for comment on this
article.

“The most interesting thing to me is that, in this climate, getting anything through Cfius
with a China angle is a challenge. If there’s a meaningful element of sensitive technology
that is credible, then it’s very unlikely to get through Cfius without mitigation,” said
John Kabealo, founder of Washington, D.C., firm Kabealo Law, which wasn’t involved in the Icon
case.

“It sounds like the Americans overplayed their hand. This may be a signal from Cfius that they don’t want to do the dirty work for a disgruntled investor,” said Mr. Kabealo, whose firm specializes in Cfius work.

Icon earlier alleged that Mr. Hawkins has been motivated by self-interest, not national security. The company released to the Journal what it said was a strategy document emailed by Mr. Hawkins in March 2020 outlining a plan to threaten to take the case to Cfius if PDSTI didn’t buy him out of Icon.

Asked about that, Mr. Hawkins said PDSTI had offered him and other minority shareholders a buyout if they helped support a Cfius approval. They declined, he said, and decided to “contact Cfius to ask for help.”

A related lawsuit filed by the American shareholders against PDSTI seeking to stop its alleged expropriation of Icon’s technology is ongoing. PDSTI has said the claims in the lawsuit, filed in Delaware in June, are meritless.

[Username Protected]

Email from CEO this morning:

I wanted to let you know that earlier this week the Committee on Foreign Investment in the US (CFIUS) concluded its investigation and officially cleared the investment by ICON’s majority shareholder. This allows our shareholder to continue to fund our operations and support our business plans.

While we have always been steadfast in our belief that our shareholder’s investment did not present any national security concerns, we also had a mitigation plan in place during the investigation period. For the last several months, ICON has been in a “low spending” mode to conserve our funding and reduce our cash flow in the event there was a divestiture order. Now that we have been cleared, our operations and pace of activity will again increase.

However, there are short and potential long-term impacts that this investigation has caused our business. While we do not fault CFIUS in any way and appreciate the professionalism and expediency with which they conducted the investigation, due to the ill motivated and ultimately false allegations asserted by a small group, we nonetheless were forced to expend significant resources, both in terms of management attention and legal fees, to support this process.

The good news is that since the beginning of December, and while in the middle of this investigation, ICON has sold 10 airplanes and our delivery backlog now runs through September of 2022. This is a testament to the resiliency of our team.

Thank you for your continued support of ICON and I look forward to meeting you at one of our events or owner fly-ins soon.