Federal Search Of Caterpillar Facilities May Relate To Tax Evasion Allegations
Updated at 6:25 p.m. ET
Three of Caterpillar's facilities in Illinois — including its headquarters — were searched by federal agents on Thursday, and the company said it believes the inquiry is related to export filings updated in a recent report to the Securities and Exchange Commission.
Caterpillar said in a statement that a warrant allowed law enforcement officers to collect documents and electronic information.
Peoria Public Radio reported identical warrants had also been issued that allow agents "to seize a wide range of documents, hardware and software related to the movement of any products between the U.S. and Switzerland," in particular Caterpillar's Swiss subsidiary known as CSARL.
"In 2014, the U.S. Senate issued a report that may be related to today's ... search. The 99-page document was titled 'Caterpillar's Offshore Tax Strategy.' The report alleges Caterpillar used the subsidiary to avoid paying $2.4 billion in taxes over a period of 13 years," the member station reported.
Some Caterpillar employees were interviewed by authorities, according to Peoria Public Radio.
Caterpillar said it is cooperating with authorities.
Sharon Paul of the U.S. Attorney's Office would say only that multiple agencies — including the Internal Revenue Service's Criminal Investigation Division and the Commerce Department's Office of Export Enforcement, were at Caterpillar facilities in Peoria, East Peoria and Morton, Ill.
The Peoria Journal Star reported that the search "appears to stem from revelations about the company's tax strategy as outlined in a 2009 federal wrongful termination lawsuit brought by Daniel Schlicksup."
The newspaper adds that:
"The lawsuit alleged the company shifted profits overseas and to offshore shell companies to avoid paying more than $2 billion in U.S. taxes. Schlicksup settled the suit in 2012.
"Caterpillar, in its annual 10-K filing with the U.S. Securities and Exchange Commission last month, acknowledged a criminal investigation into the tax strategy."
Ranked 59th on the Fortune 500 list, Caterpillar is one of the world's largest manufacturers and sellers of construction equipment and machinery. Its shares had dropped about 4 percent by the closing bell Thursday.
Agents stepped out briefly to grab a costco-sized package of bottled water, which indicates they might be around for a while. pic.twitter.com/MIr3t5lmjE— Cass (@CassHerrington) March 2, 2017