black hawk mines internationalCHINESE COAL EQUIPMENT FRAUD BURNSALMOST 10% OFF CATERPILLARS 2012EARNINGS
Caterpillar Inc. (NYSE:CAT) announced late on Friday that it willtake a charge of $580 million relatedto accounting fraud at a recently acquired Chinese company.Caterpillar – the worlds largest heavy equipment manufacturer –said it was writing down 87 cents ashare in the fourth quarter – almost 10% of its expected 2012earnings of $9.10 a share.The company is also getting rid of the senior management ofSiwei, a division of ERA Mining Machinery,which Illinois-based Caterpillar acquired in June last year for$650 million.
Doug Oberhelman, Caterpillar chief executive, said ina statement that prior to the acquisition Siweimanagement deliberately inflated the coal miningequipment manufacturers profits:“The actions carried out by these individuals areoffensive and completely unacceptable. This conductdoes not represent, in any way, shape or form, theway Caterpillar does business or how we expect our employees to work”.
“Despite these actions we continue to believe that the Siwei acquisition is well alignedwith our strategyto expand our role as a leading equipment and solutions provider for the Chinese coalmining industry,”said Steve Wunning, Caterpillar group president with responsibility for ResourceIndustries.“We intend to utilize Siwei roof support products and manufacturing capabilities,combined with Caterpillar’sstrong commitment to technical innovation and safety, to help our mining customers inChina become moreefficient and safer within their mines,” Wunning added.Caterpillar on more than one occasion last year had to cut back earnings estimates dueto reduced ordersin the construction and mining sectors – particularly from companies doing businesswith China.