Precision Castparts wins $700 million arbitration ruling in fraud case

Precision Castparts won a $696 million ruling this month after persuading arbitrators that a German company had cooked its books to inflate its value.

Portland-based Precision Castparts paid $870 million in 2017 for Schulz Holding. After closing the deal, Precision Castparts said it discovered that Schultz had grossly inflated its value through various fraudulent accounting maneuvers.

The arbitrators ruled in Precision Castparts’ favor, concluding the evidence against Schultz was overwhelming.

“To be clear, this is not a close case,” the arbitrators wrote in their April 9 ruling. “The evidence strongly points to fraud, and there is little in the record to suggest otherwise. But if further confirmation were needed, (Schulz’s) actions after the sale provide it.”

The arbitrators ruled that Schulz personnel covered their tracks by using proceeds from the sale to pay down fake receivables associated with “fictional transactions.”

“We are pleased with the outcome of the arbitration, and we are grateful to our trial team at Stoel Rives for their excellent work on the case,” Precision Castparts said in a statement Friday.

Precision Castparts sold to Berkshire Hathaway, Warren Buffett’s investment firm, for $37 billion in 2016. It was the largest deal in Oregon history and remains Berkshire Hathaway’s biggest acquisition ever.