Caterpillar Taps Former U.S. Attorney General to Help Deal With Probe -- 2nd Update
March 16 2017 - 5:51PM
Dow Jones News
By Ezequiel Minaya and Andrew Tangel
Officials at Caterpillar Inc., which has faced scrutiny from
federal investigators, said Thursday it has hired former U.S.
Attorney General William Barr to help assess matters related to
government raids on its facilities earlier this month.
Mr. Barr, who served under former President George H.W. Bush
between 1991 and 1993, will also assist the embattled
heavy-machinery giant in addressing the intensifying federal
probe.
Earlier this month, federal agents raided the company's Peoria,
Ill., headquarters and two nearby locations amid questions linked
to a Swiss subsidiary and whether Caterpillar has been following
U.S. export norms.
Criminal charges haven't been levied against the iconic company,
whose black and yellow heavy equipment is ubiquitous at mines and
construction sites around the world.
For recently installed Chief Executive Jim Umpleby, the latest
investigation risks upending efforts by the company to regain its
footing amid soft commodity and construction markets that have
pressured the sector. The company recently reported its
fourth-straight year of declining revenue.
A call seeking comment from the U. S.attorney's office for the
Central District of Illinois, which led the recent raids, wasn't
immediately returned. Agents with the Internal Revenue Service, the
Federal Deposit Insurance Corp.'s inspector general and the U.S.
Department of Commerce took part. No arrests were made.
Caterpillar said Mr. Barr's experience in the public and private
sector would help the company assess issues raised by the
investigation and determine the best resolution. The company said
Mr. Barr wasn't being hired to conduct an internal audit or
review.
Caterpillar has said it was surprised by the raids given its
cooperation with government agencies investigating it. The company
said it hasn't been confronted with criminal charges or an
opportunity to resolve any case.
Mr. Umpleby said he has asked Mr. 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 a proper resolution."
The Swiss subsidiary has been the subject of government
inquiries into Caterpillar's offshore tax strategy to reduce its
U.S. tax bill. The company has said it pays what it owes in
taxes.
Since the raids, company executives have said Caterpillar was
surprised by the raids because it was cooperating with authorities.
They have defended the company as honorable and ethical.
A Dartmouth College professor's report commissioned by the
FDIC's inspector general accused Caterpillar of tax and accounting
fraud, a person familiar with the matter has said. The professor's
report, which hasn't been publicly released, examined wire
transfers as well as Caterpillar financial reports. Caterpillar
hasn't commented on the report's findings but the company has said
it received the report last week.
Previously, Caterpillar has separately faced several
investigations in recent years into whether it is paying enough
U.S. taxes. It has been contesting an approximately $2 billion bill
from the Internal Revenue Service.
Shares of the company have fallen 5.5% in the past month
following news of the investigation, but they are still up 25% over
the past year. The stock declined 0.1% to $92.72 in after-hours
trading.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com and Andrew
Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
March 16, 2017 17:36 ET (21:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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