Caterpillar Responds to Fed Raid of HQ
Following a dramatic March 2 raid that saw the company’s Peoria, Ill., headquarters and two other nearby facilities searched by federal officials, Caterpillar offered few new insights into the long-running tax investigation that likely prompted the action.
The raid appears to stem from a U.S. Internal Revenue Service investigation that was spurred by a 2009 lawsuit by a former Cat executive, who alleged that the equipment manufacturer was moving profits through its Switzerland-based subsidiary Caterpillar SARL in a tax dodge that would have allowed the company to avoid paying more than $2 billion in U.S. taxes.
Caterpillar has denied this and has said it is cooperating with federal investigators.
But the presence of Dept. of Commerce officials during the execution of the search warrant may hint at broader issues than the existing tax investigation. “The search warrant was broader than the matters related to the IRS issue, and it included export filings on other things,” Amy Campbell, Cat director of investor relations, said at the Bank of America Merrill Lynch Global Industrials and EU Autos 2017 Conference on March 22. “We continue to review information as it becomes available to us,” she added.
Cat on March 16 announced it was hiring former U.S. Attorney General William P. Barr of law firm Kirkland & Ellis as an outside counsel to aid the company in complying with the ongoing federal investigation. Newly minted Cat CEO Jim Umpleby said he was bringing in Barr “to take a fresh look at Caterpillar’s disputes with the government, get all the facts and then help us bring these matters to proper resolution based on the merits.” Caterpillar officials have declined to comment further on the ongoing investigation.
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