I’ve been getting a flurry of hits on old posts about Caterpillar and I’m not certain why. It’s possible that it’s about this:
A lawsuit filed by a manager at Caterpillar Inc. says the heavy-equipment maker avoided paying more than $2 billion in federal income taxes from 2000 to 2009 by accounting fraudulently for billions of profits.
Daniel Schlicksup, who was a global tax strategy manager for the company from 2005 to 2008, alleges that the company wrongly attributed at least $5.6 billion in profits from sales through an Illinois-based warehouse to its unit in Switzerland in order to lessen its tax burden and increase earnings.
This story brings up a point I’ve made from time to time here: international companies’ overseas subsidiaries make it practically impossible to calculate GDP correctly. What is an import or export in such an environment? Back when I was working for a German company it was routine for finished goods to be imported from Germany as parts. At the time parts were accounted for as an intracompany transfer while finished goods weren’t.
It’s also possible that they’re checking up on Caterpillar’s acquisition of Chinese mining equipment manufacturer Bucyrus. Caterpillar has received final approval of the acquisition from the Chinese government and will continue operations in China under the Caterpillar name.
As I understand the lawsuit, employer retaliation under Sarbanes-Oxley, we may never know if CAT did anything illegal. The plaintiff appears to be arguing that he was transferred to a different job in retaliation for his work seeking to comply with Sarbanes-Oxley. CAT may not have cheated, but it could have retaliated.
On a somewhat related story, I was listening to a seminar last month on regulatory compliance issues at the international level. Multinationals are investigating their own employeees (or independent contractors) to determine if they are actually working/residing in the country they are supposed to be working from. They are checking phone calls, bank statements, social networking sites. They do this in part because they could often hire someone cheaper in country, but also because they cannot hope to comply with local regulation otherwise.
So CAT might have difficulty moving parts from country to country through the use of corporate subsidies, but it’s going to be more difficult to identify location for intangible services.
Caterpillar violates their code of ocnduct all the time… I once heard a professor explaining business ethics. “In business, there are not ethics.”
Because of my managers actions, and his having been supported by other people Namely HR and High level managers and directors, whose ethics I question, I have begun a website dedicated to Caterpillar’s lack of ethics. catscat.net
Read about it and other questionable actions.