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More details on Caterpillar (CAT): The company says the long-running accounting scheme was run...

More details on Caterpillar (CAT): The company says the long-running accounting scheme was run by several senior managers, and was deliberate and well coordinated. It involved inflating profits at a unit of ERA Mining Machinery Ltd., a mining equipment company in China that it purchased last year. CAT paid ERA as much as $734M last June. It's removed those involved and installed a new leadership team there. Responsibilities for Siwei's manufacturing operations have been moved to CAT's China operations division, while its sales and support team will report to its global mining general manager for China and Korea.
Comments (32)
  • Accounting fraud in China.
    Shocking, simply shocking.................
    And HP's due diligence was lacking?
    18 Jan 2013, 08:24 PM Reply Like
  • Justice: "We'll get to the Chinese after we deal with Jon Corzine...."
    20 Jan 2013, 09:58 AM Reply Like
  • CAT was Cramer's favorsite, i swear he harps on it every show, he is true fool
    22 Jan 2013, 08:05 AM Reply Like
  • Doesn't say much for 'due diligence' even for investment of 3/4 billion $. Somebody that was responsible at HQ also should be fired.
    18 Jan 2013, 08:43 PM Reply Like
  • I was thinking the same thing. Where was the due diligence? Sure, now they can point fingers and say they got taken. But, if the target was cooking the books, where were CAT's auditors, both internal and external? Did they rush the deal because it was "too good to be true" & wanted to close it before somebody else got in and started a bidding war? Shame on CAT management. Shareholders count on good managment doing the right thing. They got blindsided by this one.
    19 Jan 2013, 01:40 AM Reply Like
  • This presents a pretty interesting trading opportunity in my opinion. Obviously CAT will get hammered on Tuesday when the market opens, and rightfully so. They made a huge mistake. However, like JP Morgan last summer, CAT will most likely come out of this on their feet. Despite what @ThomsViewPoint irrationally states below, CAT is a good company in the forefront of an expanding business cycle in China. If you buy CAT now at the lows, I'm pretty certain you'll be happy in 8-12 months.


    CAT could be in a real nice sweet spot here. In my opinion, they are a very nice long-term hold and after the shoe drops they will be an attractive short term trade too. I think stock investors should take advantage.


    Just my .02


    By the way @ThomsViewPoint, you actually have a degree in finance and spew comments out like "shut CAT down"? Really? Geeez, glad you aren't running the economy, we'd all be out of work.
    19 Jan 2013, 11:04 AM Reply Like
  • Guy.... CAT popped 2% on Friday and was down less than it went up in aftermarket. Hard to say.
    20 Jan 2013, 06:13 AM Reply Like
  • Chinese crooks are a little easier to discern than Cambridge crooks.
    18 Jan 2013, 09:08 PM Reply Like
  • If CAT can't tell fraud in Chinese accounting, I don't see any reason to risk buying a Chinese stock. And I say this after buying one and watching it lose 50% of its value, foolishly.
    18 Jan 2013, 10:12 PM Reply Like
  • GET OUT of CAT ASAP!!!!!!!!!!!!!!!!!!
    19 Jan 2013, 05:47 AM Reply Like
  • I assume CAT didn't make their decision based solely on "the books."
    i assume there were many reasons why they pursued this deal.
    In the end it could be a big benefit as it solidly establishes how they conduct themselves.
    19 Jan 2013, 12:36 AM Reply Like
  • Get rid of CAT. We cannot have bad banks or bad manufacturers.


    CLOSE 'EM DOWN!!!!
    19 Jan 2013, 01:07 AM Reply Like
  • It gives me no joy in saying this, but frankly... you are a complete idiot.


    Stuff happens. Like it or not, CAT makes the best heavy machinery in the world. You don't just ignore that fact because you get burned on a stock holding. Therefore, get over it and use it to your advantage to make a few bucks. Short term hurt will most likely equal some nice long term earnings if you buy on this dip.
    19 Jan 2013, 11:06 AM Reply Like
  • WisPokerGuy


    Shut up! You are ruining my fun.


    I am using the hyperventilation rhetoric used on the banking world on a manufacturer to show the hypocrisy and idiocy of most of the rhetoric.


    Having said that I would bet big dollars that CAT is bribing people because that is what it takes in Asia. And there is likely lawsuits coming out of this stupid move.


    On the other hand if the stock tanks it will likely be a good time to pick it up like I did to JPM after the Whale trade.


    OK fun is over. I enjoyed my time hanging with the OWS crowd and being a nut case for a few comments.
    19 Jan 2013, 03:03 PM Reply Like
  • "Pull your head out." CAT did not use an Obama kickback bailout. They identified and fixed the problem internally, like a reponsible company would.
    19 Jan 2013, 02:22 AM Reply Like
  • Catman,


    Believe what your told? Watch what you believe!! CAT did it more than once, buying cooked books for position. Unscrupulous actions with publicly held companies can have unintended consequences for the stock holder!! Best consider alternatives to CAT?
    19 Jan 2013, 05:50 AM Reply Like
  • Anyone who relies on Chinese books, law, data should be fired.
    You should know better.
    It's the #1 lying-culture in the World
    19 Jan 2013, 04:52 AM Reply Like
  • I noticed in the article former-
    cn ambassador Huntsman was elected to the CAT Board in 2012.

    Caterpillar writes off most of China deal after fraud
    19 Jan 2013, 06:41 AM Reply Like
  • Sorry the words "probable" and "fraudsters" are not responsible responses to valid comments. CAT is and continues to be one of the most responsible companies US still has until present admisinstration and politicians irresponsible actions force them out as one of the biggest tax contributors to the US economy.
    19 Jan 2013, 06:57 AM Reply Like
  • CAT = Lance Armstrong!!!!


    Dirty under the table transactions. Big beneficiary of the stimulus package paid for by American taxpayer.
    19 Jan 2013, 09:40 AM Reply Like
  • Tomas,


    Chinese equities...urrh...I have not and I won't touched it with a 10-foot pole. For those who have, it is like moth flocking to fire. Good luck!
    19 Jan 2013, 02:25 PM Reply Like
  • Another assumption unfounded in fact or fiction only in this commentors mind.
    19 Jan 2013, 11:47 PM Reply Like
  • Well, since bribes are illegal.... there's always tit for tat 'buying' a worthless entity to get its 'contracts and market position'....


    For all we know this could be a good thing for CAT.... no position...
    19 Jan 2013, 09:11 AM Reply Like
  • One can only guess at the number of people who got axed over this fiasco.
    19 Jan 2013, 02:19 PM Reply Like
  • CAT's problems in China may not be its failed/fraudulent acquisitions alone, as companies like SANY are going to more than 'eat their lunch' in the years to come.


    Of course, in this instance, it should be no surprise to anyone that the investment banker (for CAT) was Citigroup, one of the "investment advisers" for Simei was Blackstone, all American companies.


    This disaster isn't the first, and sadly, won't be the last.
    19 Jan 2013, 02:21 PM Reply Like
  • alpine
    Citi and Blackstone; thanks for adding a comical note to this story.
    19 Jan 2013, 02:38 PM Reply Like
  • If Cat was actually defrauded they'll file suit v. Blackstone & Citi---tap some of their E&O policy.


    Otherwise this is a cover story for a company-wide failure
    that is WAAAAAY bigger than this "isolated incident."
    20 Jan 2013, 10:06 AM Reply Like
  • Once again assumptions by unknowing and uneducated people. Founded on no facts only the fiction in their minds. CAT has and will continue to lead the world market as they are opened minded and practice good business policies. Get over the short term issues and try to think ahead.The government is the problem trying to socialize a capital market at taxpayer expense. CAT received no bail out monies or gave Obama politics their proposed kickbacks.
    19 Jan 2013, 11:35 PM Reply Like
  • I have never seen a more uniformed and uneduated grp of commentors in my life. No point in continuing to monitor these sites as there are no valuable, rational contributions to be made. Must be nice to live in a fabricated unknowing world of self filling existence.
    19 Jan 2013, 11:38 PM Reply Like
  • Catman


    Take a stress tab and quit hyperventilating. People here know much more than you can grasp and at this point there is a bit of fun being had here at CAT's expense. Although CAT put themselves in this position so no sympathy from me.


    CAT did receive stimulus money indirectly so take off your rose colored glasses unless you work for CAT PR then you are doing your job.
    20 Jan 2013, 01:26 AM Reply Like
  • I would be interested to learn what accounting firm performed due dilligence in addition to Caterpillar staff and what their responsibility may be.
    20 Jan 2013, 01:27 AM Reply Like
  • Cramer loves CAT buy, buy, buy, he is part of system of corriupition
    22 Jan 2013, 08:06 AM Reply Like
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