The Whistleblower Behind Caterpillar’s Massive Tax Headache Could Make $600 Million

The construction giant faces a $2 billion IRS bill and possible criminal charges, while the accountant who tipped off the feds stands to make a windfall.

In the the spring of 2008, finance executives from Caterpillar Inc. gathered for a few days of meetings in the Peoria Civic Center, a few blocks from company headquarters. Early in the proceedings, Eugene Fife, chairman of the audit committee, reminded the attendees that they cradled Caterpillar’s reputation in their hands.

It would take just one or two wayward stewards to wreak havoc, Fife said, even at a company as mighty as Caterpillar, the world’s largest maker of bulldozers and other construction equipment. Anyone aware of financial malfeasance or trickery was obliged to report it immediately. Later, then-Chief Executive Officer Jim Owens pressed the point, saying he slept well because he couldn’t imagine Caterpillar experiencing the sorts of ethical lapses that had doomed Enron Corp. and other companies.

Listening with dismay was Daniel Schlicksup, an accountant who’d been with Caterpillar for 16 years. He’d been telling his bosses that the company was engaged in an overseas tax arrangement that, by his reckoning, had helped it illegally avoid more than $1 billion in taxes. Now, as Owens spoke, Schlicksup concluded that no one had passed his warnings to the CEO. “I thought to myself, ‘Jim, it’s happening here,’  ” Schlicksup later said in sworn testimony. “ ‘You just don’t know it.’  ” read more »

Operation Car Wash: Is this the biggest corruption scandal in history?

What began as an investigation into money laundering quickly turned into something much greater, uncovering a vast and intricate web of political and corporate racketeering. On 14 January 2015, police agent Newton Ishii was waiting in Rio de Janeiro’s Galeão airport to meet the midnight flight from London. His mission was simple. A former executive of Brazil’s national oil company, Petrobras, was on the plane. Ishii was to arrest him as soon as he set foot in Brazil and take him for questioning by detectives.

No big deal, the veteran cop thought as he ticked off the hours in the shabby Terminal One lounge. This was just one of many anti-bribery operations he had worked on. Usually they made a few headlines, then faded away, leaving the perpetrators to carry on as if nothing had happened. There was a popular expression for this: acabou em pizza (to end up with pizza), which suggested that there was no political row that could not be settled over a meal and a few beers. read more »

The ultra-rich are hiding way more money overseas than anyone realized

It was the most consequential leak in the history of the offshore world, providing journalists and the public an unparalleled view into a notoriously shadowy industry that shuttles secret wealth around the globe.

In 2007, an engineer extracted detailed records on the hidden wealth of more than 30,000 clients of HSBC Private Bank, the Swiss subsidiary of the British multinational banking giant, and secreted them to the French government. The data, which eventually became known as the “Swiss leaks,” ended up in the hands of other authorities and of journalists.

Now, that data, along with the Panama Papers — the records of a Panamanian law firm dealing heavily in offshore finance that were leaked to journalists last year — is providing academic researchers with a valuable look inside the opaque world of tax evasion and offshore holdings.

In a newly released paper, researchers in Scandinavia and the United States use the Swiss and Panamanian leaks to show that global tax evasion is likely much more prevalent than previously thought. Their estimates indicate that the top 0.01 percent of the wealth distribution own about half of all offshore assets and may be hiding roughly a quarter of their wealth offshore. read more »

Spain's anti-corruption chief, quits over offshore company

Manuel Moix’s resignation comes after claims he interfered in corruption investigations involving the ruling People’s party

The anti-corruption prosecutor in charge of investigating members of Spain's ruling party has resigned after it emerged he holds a 25% stake in an offshore company. read more »

Och-Ziff Judge Wants Everybody in Bribery to Be Accountable

An exasperated federal judge who sentenced an Och-Ziff Capital Management Group LLC consultant to prison posed a question that prosecutors have yet to satisfactorily answer: Why has no one else been charged in a sprawling bribery case?

U.S. District Court Judge Nicholas Garaufis on Wednesday sentenced Samuel Mebiame, the 43-year-old son of the former prime minister of Gabon, to two years behind bars for paying bribes and acting as a "fixer" to help Och-Ziff with lucrative mining deals in Africa.

But Mebiame’s sentencing was almost a sideshow. In a case that has brought dozens of lawyers to the federal courtroom in Brooklyn, New York, Garaufis demanded to know Wednesday why the hedge fund got a deferred-prosecution deal last year that will result in the dismissal of criminal charges if it stays out of trouble for the next three years. read more »