Federal investigators have raided three Caterpillar offices as part of a probe into possible tax fraud.
Agents from the US Attorney’s Office in Illinois, the Federal Deposit Insurance Corporation office of inspector general, the Internal Revenue Service criminal investigation division and the Department of Commerce office of export enforcement, raided the headquarters of Caterpillar in Peoria, Illinois, as well as the firm’s corporate headquarters and a parts distribution centre.
It is understood that the information obtained could be used as evidence in a grand jury investigation into Caterpillar’s tax avoidance strategies.
News of the raid caused Caterpillar’s shares to fall by 4%, closing on March 2, at US$94.36.
Following the raid, the company issued a statement, in which it said, "On March 2, 2017, law enforcement authorities entered three Peoria-area Caterpillar Inc. facilities, including the corporate headquarters, to execute a search and seizure warrant. The warrant is focused on the collection of documents and electronic information. Caterpillar is cooperating with law enforcement."
The statement went on to say, "While the warrant is broadly drafted, we believe the execution of this search warrant is regarding, among other things, export filings that relate to the CSARL matter first disclosed in Caterpillar's Form 10-K filed on February 17, 2015, and updated in Caterpillar's most recent Form 10-K filed with the SEC on February 15, 2017."
The raids would appear to be related to an investigation launched two years ago, into Caterpillar’s movement of cash between its US and foreign subsidiary companies.
On February 15, Caterpillar issued a statement about this investigation, saying, "We currently believe that this matter will not have a material adverse effect on the Company’s consolidated results of operations, financial position or liquidity."