CI VIEW: China clips wings of Icon Aircraft amphibious plane

WASHINGTON, DC (BBN) –Even an apparently innocuous investment by China’s Pudong Science and Technology Investment Inc (PDSTI) into a US amphibious light sport aircraft manufacturer start-up, Vacaville, California-based Icon Aircraft, is now another casualty of the US-China trade war after US investors such Icon such as former The Boeing Company [NYSE:BA] CEO Phil Condit accused PTSDI of illegal technology transfers to China.

[CSNine founder and defense technologist Prof. Newton Howard speaks to Capitol Intelligence/CI GCA using CI Glass on California-based Icon Aircraft amphibous A5 aircraft with Washington, DC shadow Senator Paul Strauss at The Annual Palisades Community Association's Fourth of July Parade and his July 4th part at his Georgetown residence in Washington, DC on July 4, 2021]

The seemingly fun Icon A5 light sports plane -- which the company says you can qualify to fly with FAA license within a week or so -- is now at the center of bitter intellectual protection legal battle in the Delaware Chancery Court between Icon majority shareholder, Chinese state-owned enterprise PDSTI and Icon founding US shareholders’ Boeing’s Condit and Icon founder and former CEO Kirk Hawkins.

“Defendants (PDSTI) have illegally breached, and continue to breach, their fiduciary duties to ICON and plaintiffs in order to facilitate the expropriation of ICON’s intellectual property in aircraft design, aircraft manufacturing, and advanced carbon-fiber structures manufacturing to China,” according to the suit by the minority shareholders filed on June 1.

Condit and Hawkins claim that PDSTI purposely purposely scuttled the viability of Icon by withholding financial resources, removing minority US board members, and blocking takeover talks with Japanese conglomerate Yamaha.

“If Chinese investments are masquerading as venture capital in order to gain access to U.S. technology, it violates this trust. 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,” Condit said in a press release.

But the legal battle between PDSTI and Icon’s US investors only illustrates the almost complete deterioration of Chinese investment in US companies following the US-China trade war triggered by President Donald J. Trump and continued under the leadership of President Joe Biden under the “Build America Better Again” policy from the heyday of Chinese investment into the United States during the Obama-Biden administration.

Howard spent July 4th promoting the Icon A5 Amphibious by first having the plane act as a float for DC Shadow Senator Paul Strauss during the annual Palisades July 4th Parade and then as a demo model in front of his Georgetown home where he hosted a swanky Independence Day party with Congressional staffers and US Department of Defense officials.

The amphibious light sport aircraft built by Icon in Tijuana, Mexico is a $360,000 sports plane capable of land and sea landings and whose target market are owners of super cars like the $1.6m Porshe 918 Spyder E-Hybrid with waterside mega mansions in Florida and California.

The Icon A5 can travel at 110 mph (177kph) with a range of 400 miles (644km) powered by a four-cylinder Rotax 912 engine that can be piloted with a FAA sports pilot license, CSNine founder and Icon Aircraft supplier Newton Howard said.

The plane has fully retractable wings and can be easily transported on the back of a SUV or light truck.

Howard, a professor of math and neurology at Oxford University and Georgetown University, said he decided to include the plane as a parade float parade float because he wants to excite young children with applied science in the same way he chagrined his Georgetown neighbors by placing two near life-size replicas of the sci-fi film Transformers outside his four-floor Georgetown house.

The shareholder dispute will more than likely negatively impact Newton Howard’s efforts to sell the Icon A5 to the US military as a type of military reconnaissance vehicle through his Georgetown, DC-based CSNine defense technology consultancy group.

Howard said that Icon Aircraft is planning in coming week to land a military version of the A5 on the Potomac River in a demonstration to the Pentagon on the dual use capabilities of the sport light aircraft.

However, the seeming lack of “Chinese walls” between PDSTI and Icon Aircraft management makes any procurement by the US military difficult if not impossible for technology transfer concerns.

Cracking the US defense procurement bureaucracy is extraordinary difficult for any start-up or small business such as Howard’s CSNine or Ukrainian-American Igor Pasternak’s project to outfit companies like Amazon and the US military with giant Zeppelins built by his Montebello, California-based Aeros Craft concern.

[Aeroscraft CEO Igor Pasternak speaks to Capitol Intelligence/CI Ukraine using CI Glass at Ukraine Crisis Media Center ahead of UkroboronProm defense concern news conference Kiev, Ukraine on August 26, 2016]

In fact, Italy’s Leonardo and UK’s BAE Systems defense concerns from NATO member countries completely ring fence the management boards of their US operations so they can win US defense contracts.

While Howard was wine and dining the chief of staff of Congressman Rep. Brian Fitzpatrick (R-PA) who is on the House transport and select intelligence committees, Pasternak's campaign donations to US House Intelligence Committte Chair Adam Schiff (D-California) raised eyebrows both here and in the Ukraine.

Innovative tech start-ups -- especially those with dual use applications -- such as Icon Aircraft or Pasternak's Aeros Craft must rejigger the old motto into "seller beware" and conduct in depth due diligence on any prospective buyer be they from the Chinese mainland or not.

By PK Semler in Washington, DC. For information please call +1-202-549-3399 or email pks@capitolintelgroup.com