Two years ago, the U.S. Department of Justice was in the midst of an investigation into construction and mining equipment giant Caterpillar over allegations of tax fraud.
The Internal Revenue Service originally sought $1 billion from the company in 2015 over its shifting of some profits to a subsidiary in Switzerland, but that total more than doubled as the agency reviewed Caterpillar’s taxes from additional years. The tab climbed to $2.3 billion by 2017, when federal authorities raided the company’s Illinois headquarters and two other facilities.
Caterpillar has told investors that the case remains ongoing — and, technically, it is — but a new report says the investigation has been essentially “stalled” since late 2018.
In mid-December of that year, an email obtained by Reuters indicated that agents had been instructed by DOJ officials in Washington — including the department’s tax division and then-Deputy Attorney General Rod Rosenstein — to take “no further action” in the criminal probe of Caterpillar.
The reason remains a mystery, but Reuters noted that it came days after President Trump nominated William Barr to serve as U.S. attorney general. Barr, at the time, was serving as Caterpillar’s lead attorney — he was hired by CEO Jim Umpleby in the wake of the 2017 raids
The report noted that conflicts of interest can arise when attorneys move between private practice and government positions, but an expert told Reuters that halting a case involving a former client would be highly unusual.
The order, however, would not have come from Barr, who was not yet confirmed as attorney general. He said during his confirmation hearings that he could not discuss his work for Caterpillar, citing attorney-client privilege. The Justice Department told Reuters that Barr had recused himself from any discussions involving Caterpillar after his confirmation.
Caterpillar has long maintained that its tax strategy was legal and that it has done nothing wrong.