US review finds deliberate tax fraud at Caterpillar

[NEW YORK] A US government-commissioned review concluded Caterpillar intentionally committed tax and financial reporting fraud, The New York Times reported Wednesday.

Federal agents last week raided the Illinois headquarters of the US industrial giant, which failed to account for US$7.9 billion in overseas income for tax purposes, according to a report by Leslie Robinson, an accounting professor at Dartmouth College.

Ms Robinson said Caterpillar's actions were "deliberate" and "fraudulent rather than negligent", according to the newspaper.

Ms Robinson was hired by an unspecified US agency to review Caterpillar's finances, which have been probed by US tax authorities and Congress over the accounting of a Swiss subsidiary.

The Times story said it was unclear if government agencies agreed with Ms Robinson's conclusions.

Federal investigators descended on three Caterpillar facilities in Illinois on March 2, including its Peoria headquarters. Caterpillar said the search warrant was "broadly drafted", but it believed the investigation was over its Swiss affiliate, CSARL.

CSARL was the subject of an April 2014 US Senate investigation indicating the unit's purpose was tax avoidance and found Caterpillar avoided paying US$2.4 billion in US taxes.

The Internal Revenue Service in November notified Caterpillar that it owed about US$2 billion in adjustments and penalties connected to returns from 2010 to 2012, Caterpillar said in a US securities filing last month.

Caterpillar said it is "vigorously contesting" the IRS stance and "we believe that the relevant transactions complied with applicable tax laws and did not violate judicial doctrines", it said in the filing.

Caterpillar declined to comment on The New York Times story, and a spokeswoman told AFP the company has not seen Ms Robinson's report.

Shares of Caterpillar fell 2.2 per cent to US$93.86 in pre-market trading.

AFP