Accounting News Roundup: Red Flags in CAT Fraud; Your New SEC Chair; We Aren't in Taxes Anymore, Kansas | 01.24.13

Red flags revealed in filings of firm linked to Caterpillar fraud [Reuters]
A Chinese mining equipment company at the centre of an alleged accounting fraud was also involved in a web of insider loans and asset transfers prior to its purchase by Caterpillar Inc., public filings show. The transactions, while not illegal, should have sounded warnings about the company's finances when the U.S. firm came calling last year, corporate governance experts said. The world's largest maker of tractors and excavators said last week it was writing off most of the $654 million value of its purchase of ERA Mining Machinery Ltd after uncovering "deliberate, multi-year, coordinated accounting misconduct" at its subsidiary Zhengzhou Siwei. Caterpillar said an internal investigation had uncovered improper accounting of inventories, revenue recognition and cost allocation at Siwei, designed to overstate the profitability of the business in the years before it bought it.

China Fraud Accusations: Wesley Clark's Ex-Firm Faces Questions [ABC]
Retired U.S. Army General and former presidential contender Wesley K. Clark was the chairman and public face of a Wall Street investment firm that rode a wave of interest in Chinese stock, and then plunged on reports that much of the profit was hype and many of the companies were outright frauds. Now the China deals Clark helped promote at lavish parties are among those facing scrutiny from the Securities and Exchange Commission as they try and account for the billions of dollars lost in dozens of suspicious stock offerings, which some officials believe represent collectively one of the largest financial scams since Bernie Madoff. Authorities told ABC News that firms serving as middle men who helped promote the Chinese companies are now in the crosshairs. "The auditors, the lawyers, the promoters, the brokers, those are all gatekeepers that we're very focused on," former SEC Chairman Mary Schapiro said in an interview in December, shortly before she stepped down. "We're investigating their conduct, absolutely."

Mary Jo White to Be Named New S.E.C. Boss [DealBook]
Ms. White, now a partner at Debevoise and Plimpton, spent nearly a decade the United States Attorney in New York, the first woman named to this post. Among her prominent cases, she oversaw the prosecution of John Gotti, the mafia boss, as well as the individuals responsible for the 1993 World Trade Center bombing.

Michael Dell Has Dreamliner on Order [WSJ]
The personal-computer tycoon has a deal to get a Dreamliner through the International Lease Finance Corp. unit of insurer American International Group Inc., according to two people familiar with the situation. One of the people said Mr. Dell, who serves as Dell Inc.'s chief executive, is scheduled to buy the plane from ILFC, the world's second-largest aircraft-leasing company by assets after the GE Capital Aviation Services unit of General Electric Co. and the largest buyer of 787s based on number of planes ordered. It couldn't be determined whether the buyer is Mr. Dell himself or MSD Capital LP, the firm set up to manage his family's multibillion-dollar fortune. It is possible MSD Capital could purchase the plane as an investment, rather than for Mr. Dell's private use.

Kansas’ Governor and G.O.P. Seek to End Income Tax [NYT]
On Wednesday, lawmakers received a bill to inch the state closer to eliminating income taxes, a centerpiece of a broad legislative vision that many in the Republican Party here hope will serve as a model of conservative governance for other states, if not the nation, to follow. While Republican principles of small government and low taxes have holds on large swaths of the country, Kansas provides perhaps the starkest view of the crimson ideology that could challenge Mr. Obama’s Inauguration Day rallying cry. This month, the largest tax cut in Kansas history took effect, and most of its Medicaid system was handed over to private insurers. The bill introduced this week would pare taxes further, with the goal of eventually eliminating the state’s individual income tax. Mr. Brownback has already slashed the state’s welfare roll and its work force. He has merged government agencies and is proposing further consolidation. He is pushing for pension changes, to change the way judges are selected and for altering education financing formulas.

Anna Soubry: lunch at your desk is bad for your health [Telegraph]
FYI.

Venice man Gregory Matthew Bruni arrested for naked rampage inside North Fort Myers home [WTSP]
The victims told the Lee County Sheriff's Office they were inside around 6:50 p.m. when they heard noises on the roof. They went outside and saw a naked man, later identified as Bruni, on the roof, according to a Lee County Sheriff's Office report. They said the man then jumped off the roof and onto one of the victims, knocking him down. The man then ran into their home and pulled a 72-inch television off a living room wall, breaking it. The victim told investigators he yelled for his wife to get a gun as Bruni continued to thrash around the house, knocking over a wet/dry vacuum and spilling its contents on the floor. The wife fired three shots from a .38 caliber revolver at Bruni, but missed and hit a wall. Bruni then fell to the ground and began masturbating in the living room before he ran into the victims' son's bedroom and began rubbing his face with clothing, according to the report. The male victim retrieved his shotgun from the master bedroom, but never fired at Bruni. Deputies arrived on the scene and tried to detain Bruni, who started flailing around on the ground and speaking, but not making sense. Deputies said Bruni sucked up the water that had spilled from the vacuum and spit it out. They said he tried to flee several times and had to be Tased as he was taken into custody. Deputies later discovered Bruni defecated near the front door and in a hallway inside the residence.

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