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Caterpillar Hires Former US Attorney General After Raid

The Associated Press (March 17) is reporting that Caterpillar Inc. announced late Thursday that it has hired former U.S. Attorney General William Barr to help assess matters related to government raids on its Peoria headquarters and other facilities earlier in March. Barr has agreed to serve as outside counsel to the major equipment manufacturer. In that role, the AP states, "he will help Caterpillar review and address issues relating to its use of a parts subsidiary based in Switzerland and tax-saving practices." Chief Executive Jim Umpleby assures that he remains committed to maintaining ethical standards in conducting business, and Barr's counsel will help the company do that.

CNBC News (March 17) notes that Barr served as attorney general under President George H.W. Bush. He presently works at the Chicago-based law firm of Kirkland & Ellis, but has also served for more than 14 years as executive vice president and general counsel of Verizon Communications. "Earlier this month," CNBC confirms, "U.S. law enforcement officials raided three of the heavy machinery manufacturer's Illinois facilities as part of an Internal Revenue Service (IRS) probe related to profits earned by the company's Swiss parts unit, Caterpillar SARL." The IRS has demanded that the company pay $2 billion in taxes and penalties for profits assigned to that unit.

According to the Wall Street Journal (March 16, Minaya, Tangel), the Swiss subsidiary has been the subject of government inquiries into Caterpillar's offshore tax strategy to reduce its U.S. tax bill for some time. The company insists that it has always paid wha