As Caterpillar Inc. keeps looking uglier, so might Peoria.
Remember the old saying: "As Cat goes, so does Peoria"? We'd thought that pertained to economics. Perhaps it also pertains to reputation.
Caterpillar isn't appearing elegant these days. Whereas the Fortune 100 company once turned heads, she's looking a wee ratty and bedraggled lately. If you think I'm a cad, then get a second opinion from Wall Street: Caterpillar shares were down early Tuesday, as investors are noticing how Cat is letting itself go.
The latest slippage involves a damning New York Times revelation of a report, commissioned by the federal government, that accuses the company of tax fraud. The most striking statement comes from the report's author, who spent 200 hours reviewing and analyzing Caterpillar records: “Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules. I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”
In other words, that assessment doesn't echo the deflective likes of Aaron Schock's post-raid playbook ("If there were mistakes, they were honest mistakes.") According to the report, Caterpillar — which pounds its Code of Conduct into employees' heads as much as it pounds rivets into tractors — willfully defrauded the U.S. government, along with taxpayers.
Mind you, there are no criminal charges yet. But the slide gets more hideous at every turn. The report follows last week's raid at the (temporary) corporate headquarters in Downtown Peoria. Which followed Senate hearings about Caterpillar's intriguing accounting practices. Which followed a civil suit by an employee whistle-blower.
Anything else? Oh, yeah, that's right. The sharp grumbling over the previous CEO's $17 million compensation. The devastating purging of 10,000 jobs to appease shareholders. The emotional and financial suffering of those facing cuts. The sudden reneging on plans to rebuild in Downtown Peoria. And the carefree fleeing of headquarters to Chicago.
Maybe — maybe — some of those latter decisions can be justified by Caterpillar apologists. However, their relative silence of late might indicate the species (after flourishing for decades with unabashed boot-licking) is becoming endangered. Regardless, in light of fraud allegations and investigation, those business moves make you wonder about the Caterpillar culture.
In Peoria, that's not Granddad's Cat.
But maybe it's Chicago's Cat. The Windy City soon might wake up one morning to a hot mess, yet still lie to her face and call her beautiful. In such relationships, money is a leading cause of poor vision and wanton hyperbole.
We easily glean that scenario from Wednesday's Chicago Tribune, which giddily gushed over Cat's philanthropy, $7 million in Illinois and $37 million worldwide. The Trib pooh-poohed the notion of the pesky raid or tax woes as grounds to give anyone pause. After all, it is Chicago, which rarely lets ethical concerns stop anyone from bellying up to the trough.
"Let the networking begin!" the story crowed.
With the scent of money in the air, Chicago charities are salivating over the chance to get a big taste of Cat as a cash cow. Right now, maybe there's just a hind teat or two waggling in the wind unattended, but Chicago charities surely will push to take more prime positions at feeding time. The company says it plans to stay engaged in Peoria. We shall see what we're left with.
As for now, though, all we see is Cat's once spotless image growing grotesque. Marketplace, the economics website and syndicated radio program, noted Wednesday the rarity of raids on a corporation the size of Caterpillar. It quotes a former federal prosecutor as saying that since Enron 15 years ago, there'd been nothing like the Cat raid. But the harshest words came in this comparison: “It’s not unusual to go in and do a search of, say, a crack house. But it is somewhat unusual to go to a ... Fortune 100 company and begin conducting a search to find evidence of a crime."
Roll that one over in your head. Ever imagine "Cat" and "crack house" appearing in the same news analysis?
Meanwhile Wednesday, Barron's pondered Cat's future and the possibility of further accounting woes. Its concern is summed up succinctly: "This is not a good look for Caterpillar."
No, it's not. And if the mudslinging intensifies, Peoria is bound to get splattered, too. It's starting to feel like the last time an Illinois governor was led away to the clink: They commit the crimes, but the state eventually looks like a laughingstock.
With Caterpillar, it makes you wonder when others — statewide, nationwide, worldwide — start laughing at Peoria. It's a bad joke, with Cat as the setup and Peoria as the punchline.
PHIL LUCIANO is a Journal Star columnist. He can be reached at firstname.lastname@example.org, facebook.com/philluciano and (309) 686-3155. Follow him on Twitter.com/LucianoPhil.