Caterpillar Inc. CAT reportedly managed to navigate through a potentially crippling federal investigation with a combination of legal prowess and strategic connections.
The case, which began with allegations of tax evasion through profit shifting to a Swiss subsidiary, took a sudden and unexpected turn in December 2018 when the Justice Department abruptly halted a key witness interview in Amsterdam just as former President Donald Trump was about to nominate William P. Barr as attorney general, reported The New York Times.
Barr, a former attorney general under George H.W. Bush and a key figure in Caterpillar's defense, along with other well-connected lawyers, had met with senior federal officials, criticizing the investigation's basis and conduct.
The investigation, which could have cost Caterpillar billions in back taxes, ended with the IRS settling for less than a quarter of the initially claimed amount without imposing any penalties.
This outcome raises questions about the influence of high-profile legal representation and its impact on the justice system.
“It appears that Caterpillar was given special political treatment that the average U.S. citizen cannot obtain,” Jason LeBeau, one of the agents who worked on the investigation, wrote to the Justice Department’s inspector general in late 2023.
In response to a request for comment from the New York Times, Joan Cetera, a spokeswoman for the company, said, “Caterpillar cooperated with the government in its review of the issues, and we were pleased to have reached the resolution with the I.R.S.”
Still, the sequence of events, from the halting of the investigation to the eventual settlement, apparently sparked concerns among federal officials and calls for an internal investigation into potential political interference, according to The New York Times.
The case highlights the challenges and complexities of prosecuting corporate tax evasion, especially when powerful legal figures are involved.
Based on internal Justice Department emails, interviews, and regulatory filings, this account sheds light on the opaque mechanisms of legal and political influence that can alter the course of federal investigations.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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