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The Senate subcommittee had the following specific findings:
* In 1999, Caterpillar adopted a strategy to use a unit inSwitzerland as the place it recorded most of the profit from itslucrative business selling Caterpillar-branded replacement partsto non-U.S. customers.
* Caterpillar had earlier negotiated with Swiss authoritiesto pay an effective tax rate of only 4 percent to 6 percent onprofits earned in the country.
* Caterpillar had no parts warehouses in Switzerland, but 85percent or more of profits from Caterpillar's parts salesoutside the United States were recorded as coming from the Swissunit, Caterpillar SARL.
* By 2008, Caterpillar had shifted 45 percent of globalrevenues and 43 percent of its profits to the Swiss operation,which employed less than one-half of 1 percent of Caterpillar’s118,500 employees worldwide.
* Caterpillar built a new inventory control system that"served as a second set of inventory books" for Swiss-ownedparts held in the United States. But all the parts wereintermixed, none bore separate ownership labels, and Caterpillaremployees could not distinguish the Swiss-owned parts in anyway.
* PricewaterhouseCoopers was paid $55 million by Caterpillarfor devising the Swiss tax plan. The Senate committee saidPricewaterhouseCoopers "raised significant conflict of interestconcerns" by also serving as Caterpillar’s auditor during thetime in question.
* PricewaterhouseCoopers consultants told Caterpillar thenew system was designed to “migrate profits away from CAT Inc tolow-tax marketing companies. … We are effectively more thandoubling the profit on parts.” * As a result of the plan, Caterpillar experienced “a cashbuildup in Geneva,” a company report showed. By 2002,Caterpillar needed to move as much as $70 million a year back tothe United State's to meet the company's U.S. cash requirements.
* In 2008, Caterpillar’s global tax strategy manager raisedquestions about whether the Swiss unit did enough substantivebusiness in the country to qualify for taxation outside theUnited States. He called the situation “the pink elephant issueworth a billion dollars on the balance sheet.”
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