Italian Prime Minister Mario Draghi holds his end-of-year news conference in Rome, Italy, December 22, 2021.
Italian Prime Minister Mario Draghi holds his end-of-year news conference in Rome, Italy, December 22, 2021. Reuters / REMO CASILLI

Italy on Thursday annulled the sale of a military drones company to Chinese investors, three government officials told Reuters, the latest in a series of moves by Rome to curb Beijing's forays into the euro zone's third-largest economy.

The government opened an investigation last year into the 2018 sale to the Chinese players of a 75% stake in Alpi Aviation, based in northern Italy.

Rome decided to annul the deal after the probe concluded that those involved should have informed the government about the transaction under Italy's so-called "golden power" regulations aimed at shielding strategically important assets.

The decision was ratified at a cabinet meeting on Thursday, the sources said. Prime Minister Mario Draghi's office declined to comment.

The case showed how easy it is for changes in corporate ownership to slip under the radar at a time when pressure is rising in the United States and Europe to monitor potential risks to national security from Chinese investors.

The Chinese groups involved in the takeover are China Corporate United Investment Holding (CCUI) and CRRC Capital Holding, which are in turn controlled by the Management Committee of Wuxi Liyuan Economic Development Zone and SASAC.

A request for comment sent to these groups went unanswered outside of business hours. The Chinese embassy in Rome was not available to comment.

The operation was conducted through a chain of investment vehicles originating from a Hong-Kong based firm called Mars, which holds 75% of Alpi Aviation.

The case became public in September, when Italian tax police disclosed they were looking into a possible breach of rules regarding the sale of military materials, saying six people were under investigation.

Police at that time said the deal was "clearly" a predatory investment in technology.

Lawyers for Alpi Aviation have previously said the sale of the stake was transparent and in line with all regulations.

Italy's use of its golden power usually results in deals being approved with recommendations intended to preserve national interest.

Since the regulation was introduced in 2012, government authorities have actually blocked foreign forays into Italy just six times. Five of these headed off Chinese bids, and four have come since Draghi's took office 13 months ago.