Chinese offshore company tries to buy an Italian defense business

ROME, ($1=0.84 Euros) – Manufacturer of ultralight [motorized] type aircraft and mini-drones intended for special forces, the Italian company Alpi Aviation is currently at the center of a controversy after the Financial Guard [Guardia di Finanza – police financial and customs in Italy] announced that it had opened an investigation into the sale of 75% of its capital to Chinese investors, learned, citing opex360.

However, Italian law requires that the authorities be notified before any transaction involving companies in a strategic sector. What was not done in the case of Alpi Aviation?

Indeed, the “Regulation on special powers over corporate structures in the defense and national security sectors, as well as for activities of strategic importance” is supposed to allow the Italian government to block any offers made by certain investors in areas such as defense, energy, and telecommunications.

According to the investigation by the Guardia di Finanza, it thus appeared that an offshore company in Hong Kong, in relation with two “important Chinese public companies” [China Corporate United Investment Holding and CRRC Capital Holding, note], had taken a 75% stake in the capital of Alpi Aviation in 2018, at a “considerably inflated” price [90 times greater than the par value of the shares].

And to specify that this operation had no other goal than “to acquire technological know-how” to then transfer it to China, via a “relocation of the production structure of the company to the technological hub of Wuxi, an artificial intelligence laboratory city located less than 150 kilometers from Shanghai ”. For the moment, six people are in the crosshairs of justice, including three Italians and three Chinese.

In addition, Alpi Aviation is also accused of having violated the law on exports of military equipment by failing to inform the Italian authorities of the dispatch of one of its drones to the Shanghai trade fair in 2019. The machine was declared as being a “model of the radio-controlled airplane”, which allowed it to circumvent the legislation.

However, Alpi Aviation’s lawyers disputed the Guardia di Finanza’s accusations, claiming that company executives had not broken any rules and that the change in ownership had been “transparent”.

In the past, Alpi Aviation has notably supplied Italian special forces with Strix drones. With a mass of 10 kg and a wingspan of 3 meters, this device, launched using a catapult, is used for intelligence missions, thanks to its video and infrared sensors. In addition, the manufacturer is researching cooperation with Leonardo.

This case recalls, by its purpose, the misadventure that has just been experienced by ARM, the British specialist in semiconductor architecture [and therefore, as such, strategic]. Indeed, this company has just lost control of its Chinese subsidiary [ARM China], several of whose shareholders are linked to entities supported by the Chinese government. And that, after having got hold of the technologies that had been transferred to it by its parent company. Observers do not hesitate to speak of the “heist of the century”.


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