SHANGHAI, Jan. 21 (UPI) -- Caterpillar Inc. said a Chinese mining equipment company it bought in 2012 had been grossly misrepresented by its accounting figures.
In June, Caterpillar paid about $700 million to buy ERA Mining Machinery Ltd., which makes hydraulic shaft lifts used in coal mines to reduce the chances of a collapse, The Wall Street Journal reported Monday.
Caterpillar said it would write off about $580 million of the cost of buying the company. It said "accounting misconduct" at ERA included overstating its profits before Caterpillar bought it.
Caterpillar said the accounting problems were "perpetrated without the knowledge of any Caterpillar employees who did not come over to Caterpillar as part of the acquisition," of ERA.
A source close to the situation said the accounting fraud was part of the reason a vice president in charge of mining products, Luis de Leon, had left the company.
De Leon left "to pursue other opportunities," the company said in a statement.