Caterpillar hires former US Attorney General for help with probe
Caterpillar (NYSE:CAT), the world's No.1 heavy machinery maker, is bringing in former US attorney general William P. Barr to help it sort out tax issues surrounding its Swiss subsidiary, which sparked a federal raid on its Peoria headquarters earlier this month.
Barr, who served as US Attorney General under President George Bush from 1991 to 1993, will help the company review and address issues relating to the Swiss subsidiary, Caterpillar SARL, the equipment maker said in a statement.
Hel'll help CAT deal with a federal investigation related to profits earned by CSARL, its Swiss parts subsidiary.
A 2014 report by US Senate Democratic staff said that Caterpillar had avoided paying $2.4 billion in US taxes between 2000 and 2012 by shifting more than $8 billion in profits to the Geneva–based affiliate.
The document also said Caterpillar paid PricewaterhouseCoopers $55 million to develop the tax strategy under which it had transferred the rights to profits from its parts business to CSARL, even though no employees or business activities were actually moved to Switzerland.
In exchange, the subsidiary paid a small royalty, and the income was taxed at a special rate of 4% to 6% that the Peoria-based firm negotiated with the Swiss government, the report said.
Years of scrutiny ended on the March 2 search warrant that saw officials from three agencies, including the Internal Revenue Service, raiding the firm’s headquarters and two nearby facilities.
CEO Jim Umpleby told employees in a memo sent that day that he was not expecting federal agents at the company's doors. Caterpillar has "been so cooperative with the authorities in this investigation," he wrote according to Ciproud.com.