Cat bought ERA Mining Machinery Ltd. and its subsidiary Siwei—China’s fourth-largest hydraulic roof support equipment manufacturer—for $700 million in June. ERA had been publicly traded in Hong Kong, while doing business via Siwei. Based in Zhengzhou with 4,000 employees and 23 facilities across the mainland, Siwei competes head-to-head with China’s market leader Zhengzhou Coal Mining Machinery.
The Siwei deal represented part of Cat’s greater China ambitions, especially for the underground coal mining sector. Cat revealed the accounting errors on January 18, 2013. That same day, the company announced that Luis de Leon, vice president with responsibility for the Mining Products Division, would be leaving the company “to pursue other opportunities.” The company did not blame the accounting misconduct on de Leon, who joined Cat in June 2011 when the company acquired Bucyrus, where he was COO for four years.