The Italian government is investigating the acquisition of a military drone company in the country by Chinese investors, three sources said. The acquisition was not subject to official review before the deal, but the Italian government believes they have the right to approve the case. Without a satisfactory explanation, the government will file a complaint that could ultimately overturn the deal. The Wall Street Journal reported that in 2018, a Chinese government-controlled company bought Alpi Aviation, an Italian military drone maker, and then moved sensitive technology to China without the knowledge of Italian and EU authorities. The Italian military has used Alpi's technology in Afghanistan. “This is a textbook case,” said Jaap van Etten, chief executive of Dutch economic intelligence firm Datena. “It’s a national strategy driven by the Chinese government.” Milan's Corriere della Sera reported in September that Mars, a Hong Kong-based company, bought a 75 percent stake in Alpi Aviation in 2018 for 90 times its stock price at the time.
Italian police said the Hong Kong buyer concealed the true identity of the new owner of Alpi Aviation through a complex and opaque network of company holdings, which was linked to two Chinese state-owned enterprises, the state-owned railway giant CRRC. Railway Rolling Stock Corp.), and an investment group controlled by the Wuxi municipal government in Jiangsu province. The Wall Street Journal reported that Italian police believe Mars is a shell company that number list was set up specifically to give the Chinese government a controlling stake in Alpi. In a statement, Alpi Aviation denied that it had violated laws related to the transfer of strategic information and technology out of Italy. The company said the deal to sell the stake was transparent and sold at actual value. The company declined to comment further. In addition, the two Chinese companies did not respond to Reuters' requests for comment. Rome strengthens prevention of Chinese takeovers.
The Wall Street Journal reported that the deal shed light on how China bypassed weak investment scrutiny in Europe to gain access to sensitive technology. Reuters, citing sources, said the Italian authorities were paying "maximum attention" to the matter and were preparing to issue a formal notice to all parties involved in the deal asking for clarification. Corriere della Sera reported that Italian police pointed out that the acquisition was not only suspected of violating Italy's "Arms Circulation Law", but may also violate Italy's "Golden Power" (Golden Power) regulations - which prohibit or Restrict Italian companies from selling strategic assets, including defense and infrastructure, to foreign investors. In the worst cases, Roman authorities could impose penalties that would ultimately invalidate the deal. Since 2012, Italy has so far used its "golden power" four times to prevent foreign interests in Italy, three of which have blocked Chinese bids. In addition, two of them were implemented after the government of Prime Minister Mario Draghi took office in February 2021. Last month, Draghi rejected a deal to sell a vegetable seed maker to Syngenta, a Swiss pesticide maker owned by ChemChina .