In another case of a major corporation duped by an overseas acquisition target, Caterpillar Inc. is taking a $580 million impairment charge for the fourth quarter of 2012 and leveling allegations of accounting fraud at its recently acquired, China-based subsidiary, Zhengzhou Siwei Mechanical & Electrical Manufacturing Co.

The company says it has opened an internal investigation into what it believes is a deliberate, multi-year, coordinated accounting fraud involving several senior managers at the Siwei unit beginning long before Caterpillar completed the acquisition in June 2012. The company says it has removed several senior managers it believes were involved in the coverup and has put a new leadership team in place.

Caterpillar Chairman and CEO Doug Oberhelman said in a prepared statement the company moved “quickly and decisively” when its investigation confirmed misconduct. The company notified the Securities and Exchange Commission and the Hong Kong Securities and Futures Commission.

The company first suspected problems in November 2012 when its own physical inventory didn't square up with Siwei's accounting records. Caterpillar says it launched a comprehensive review and investigation into the discrepancy and uncovered “inappropriate accounting practices involving improper cost allocation,” which overstated profits. The review also uncovered accelerated and “at times unsupported” revenue recognition.

Caterpillar said it believes its due diligence in connection with the Siei acquistion was “rigorous and robust,” including company personnel as well as outside accounting, legal, and financial advisers. “It is important to understand that Siwei was a publicly traded company with audited financial statements,” Caterpillar said in a published Q&A accompanying its announcement. “What we discovered at Siwei following the acquisition was deliberate, multi-year, coordinated accounting misconduct that was concealed by the persons responsible.” The company is considering its options for legal remedies to recover its losses.

In another recent impairment announcement, Hewlett-Packard took an $8 billion impairment charge while accusing its recently acquired, U.K.-based Autonomy business of accounting fraud. Founder Michael Lynch has adamantly denied the allegations. The company says U.K. and U.S. authorities have launched investigations based on its own internal findings.

Caterpillar acquired Siwei to expand its reach into the coal mining equipment market in China. The company says the business fundamentals are still strong in China and it remains committed to operating in the market, the largest-coal producing and consuming country in the world.