Mon, Jan 28, 2013 - Page 14 News List

Caterpillar’s China woes spooks foreign investors

BUYER BEWARE:Accounting misconduct at a firm bought by Caterpillar will cost it US$580 million. Analysts see links with accounting scandals that have burned shareholders

AFP, SHANGHAI

Caterpillar discovered the problems five months after completing the transaction, and said it believed its process for vetting mergers and acquisitions was “rigorous and robust,” according to a statement.

It said it was still investigating and would consider options, including litigation, to recover its losses, adding it was unaware of any criminal investigations by the Chinese or US governments so far.

The Wall Street Journal reported that two foreign investors controlled just under half of ERA’s shares before the Caterpillar deal: former head of the American Chamber of Commerce in China, Emory Williams, and James Thompson III, son of the founder of moving company Crown Worldwide Group.

A spokesman for Caterpillar, based in the US state of Illinois, declined to comment on Friday.

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