Federal Search Of Caterpillar Facilities May Relate To Tax Evasion Allegations

  • Federal Search Of Caterpillar Facilities May Relate To Tax Evasion Allegations

Federal Search Of Caterpillar Facilities May Relate To Tax Evasion Allegations

In a brief press release sent late Thursday afternoon by Caterpillar, the company confirmed the raid and said federal agencies had executed a search and seizure warrant, noting that the company "is cooperating with law enforcement".

Federal law enforcement agents have searched three facilities of the American heavy-equipment manufacturer Caterpillar Incorporated in the U.S. Midwest. No arrests were made, the spokeswoman said.

Bloomberg News obtained copies of three related search warrants, signed February 24, that authorized seizure of a broad range of documents and electronic files related to Caterpillar's Swiss affiliate, CSARL.

Seven people, all wearing dark colored jackets marked either "IRS special agent" or "Police federal agents", entered the Caterpillar headquarters, according to a video posted by the Peoria Journal Star.

"Caterpillar is cooperating", a spokeswoman told the newspaper in a brief email.

She says the "law enforcement activity is at Caterpillar facilities in Peoria, East Peoria and Morton".

The lawsuit by the former Caterpillar employee claimed that CSARL had become the global purchaser of replacement parts instead of the U.S. parent company, resulting in lowering the company's U.S. tax bill because the profits were attributed to Switzerland instead of the U.S. PricewaterhouseCoopers, Caterpillar's auditor, helped the company put the tax-lowering scheme together in return for a $55 million fee. "We now believe that this matter will not have a material adverse effect on the Company's consolidated results of operations, financial position or liquidity", Caterpillar stated according to Forbes.

At the time of publishing, Caterpillar's stock (CAT) had gone slightly back up to $93.94, but was still down 4.71 percent after opening Thursday at a price of $98.49.

According to the Commerce Department's website, the Export Enforcement office focuses on "sensitive exports to hostile entities" and "prohibited foreign boycotts", among other things.

In a complaint filed in Chicago federal court, Jacob Newman accused Caterpillar of defrauding him and other shareholders in regulatory filings by touting its commitment to good ethics, while concealing how it "unlawfully used foreign subsidiaries" to avoid paying billions of dollars of USA taxes. Caterpillar cut 12,300 jobs in 2016, including 7,700 in the United States.