Caterpillar Taking Charge for China Mismanagement
January 18, 2013 (Associated Press) PEORIA, Illinois - Caterpillar Inc. says it has found evidence of deliberate "accounting misconduct" at a recently acquired company in China.
Caterpillar removed several managers at a subsidiary of the Chinese company and will take a non-cash $580 million charge in the fourth quarter.
Caterpillar said Friday that it uncovered the issues during an internal investigation of coal mining company ERA Mining Machinery Ltd. and its subsidiary Zhengzhou Siwei Mechanical & Electrical Manufacturing Co. Ltd., which Caterpillar bought last year. Siwei makes roof-support equipment for mining customers in China.
Caterpillar determined that several Siwei senior managers were involved in the accounting misconduct for several years before the acquisition. It has put a new leadership team in place and moved manufacturing to another division.