Austal USA, an Alabama-based shipbuilder that manufactures vessels for the US Navy, has agreed to pay a $24 million fine to settle an accounting fraud investigation, the Department of Justice announced on Tuesday. Between 2013 and 2016, the company admitted to engaging in a scheme that misled shareholders and investors about its financial health.
Austal USA, a subsidiary of Australian company Austal Limited, pleaded guilty to one count of securities fraud and one count of obstructing federal audits. The Justice Department revealed that Austal USA inflated its profits on Navy ships by artificially lowering cost estimates, despite rising shipbuilding costs. This manipulation enabled the company to overstate its profitability, influencing the earnings reported by its parent company, Austal Limited, in public financial statements.
Principal Deputy Assistant Attorney General Nicole M. Argentieri stated, “Austal USA engaged in a years-long scheme to illegally inflate its profits on ships the company was building for the U.S. Navy, reporting false financial results to investors, lenders, and its auditors.”
As part of the settlement, Austal USA will pay a $24 million criminal fine and an additional $24 million in restitution to shareholders. The company has also agreed to retain an independent compliance monitor for three years and implement a compliance and ethics program.
Three former Austal USA executives were indicted in 2023 on related accounting fraud charges and are awaiting trial. A sentencing hearing for Austal USA is scheduled for November 25, 2024.
The investigation was carried out by the Naval Criminal Investigative Service (NCIS) and the Defense Criminal Investigative Service (DCIS), with support from international authorities and the Defense Contract Audit Agency’s Office of Investigative Support.
With input from the Associated Press, gCaptain, MSN.
