A consortium of some 35 minority Icon Aircraft shareholders has filed suit to block what it says is illegal transfer of technology to China by majority shareholder Pudong Science and Technology Investment Inc. (PDSTI). The minority group includes former Icon board member and former Boeing CEO Phil Condit, as well as Kirk Hawkins, former Icon CEO whom PDSTI placed on sabbatical leave in 2018 and subsequently replaced. According to the suit, the move was designed to hamper Icon’s ability to generate fresh capital and force transfer of its proprietary technology to China. Icon builds and markets the two-seat A5 light sport amphibious airplane.
According to the wording in the lawsuit, which was filed in Delaware Chancery Court (Docket No. 2021-0475), “Since becoming the controlling stockholder of Icon in 2017, PDSTI has disregarded its duties to minority shareholders, seized control of the management of the company, operated Icon as its own property, and systematically dismantled the company, thereby destroying the value of Icon and its shares, all in support of its goal to expropriate Icon’s intellectual property to China.” Also named in the suit is PDSTI board chairman Xudong Zhu, a former holder of several high-level regional and local positions in the Chinese government.
Further, the suit alleges that PDSTI scuttled negotiations with Yamaha that would have given the Japanese company a controlling interest in Icon. The minority stockholders say the move was meant to ensure the manufacturer would not be financially successful.
In a written statement, former board member Condit said, “I believe strongly that good governance is at the very heart of a trustworthy economic system. The board has a fiduciary responsibility to all shareholders and without that trust, critical investments cannot be made. If Chinese investments are masquerading as venture capital to gain access to U.S. technology, it violates this trust …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.”
Icon management acknowledged the lawsuit, but declined to comment.