Catepillar, a well-known manufacturer of construction equipment and construction equipment, suffered a loss of $580 million due to fraudulent accounting reports of its Chinese division Zhengzhou Siwei Mechanical & Electrical Manufacturing Co. (Siwei).
Inspections showed that Siwei employees regularly misrepresented accounting reports for several years. And it is not known how long they would have continued to do this if their company had not been absorbed by Catepillar.
The deal took place last year. Then Catepillar took over the company ERA Mining Machinery Ltd., which owned Siwei, for $800 million. This was done in order to gain access to Chinese factories for the production of coal mining equipment.
The fact of many financial frauds was shown by an audit with the involvement of independent accountants, as well as legal and financial advisers. All Siwei employees involved in accounting fraud have already been fired.