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5. Caterpillar's Imprudence
The Chinese were the first people to spin silk from a caterpillar. In the city of Suzhou, for example, artisans have been producing silk the same way for over 4,000 years.
Well, judging by the ability of a wormy little Chinese machinery company to spin
Caterpillar(CAT - Get Report) in circles, they are clearly upgrading the ancient trade to suit a modern world.
Shares of Caterpillar fell a week ago, after it revealed itself to be the victim of an accounting fraud at the Siwei subsidiary of ERA Mining Machinery, a Chinese company it acquired last summer for $653 million. The tractor maker announced it would take a noncash charge of $580 million, or 87 cents a share, in its fourth quarter as result of its hoodwinking.
"It came as a complete surprise to us," a former board member anonymously told
Reuters. "It was presented to us as a pretty straightforward transaction. It's a shame. It should have been investigated further."
Really? You think so? We thought a supposedly smart outfit like Caterpillar would have dug a little deeper into a company that got itself listed on the Hong Kong exchange via reverse merger -- the shadiest invention since the beach umbrella -- but apparently we were wrong. Ironically, the world's largest maker of excavation equipment didn't dig at all in this case!
And if we think these guys were idiots, heck, we can only imagine what Carson Block must think of them. If anybody knows how dirty some of these Chinese scams can be, it's definitely the man behind research firm Muddy Waters.
In a statement, Caterpillar said an investigation into the deal "determined several Siwei senior managers engaged in deliberate misconduct beginning several years prior to Caterpillar's acquisition of Siwei."
Oh, brother. Forget silk, folks. These morons had the wool pulled over their eyes for the entire world to see.