MOBILE, Ala. (AP) — Austal USA, a shipbuilder based in Alabama that constructs vessels for the U.S. Navy, has acknowledged its misconduct and agreed to pay a $24 million penalty to resolve an accounting fraud investigation, as announced by the U.S. Department of Justice.
Between 2013 and July 2016, Austal USA was involved in misleading shareholders and investors regarding the company’s financial status, according to the department. The company pleaded guilty to one count of securities fraud and one count of obstructing a federal audit.
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,” stated Nicole M. Argentieri, principal deputy assistant attorney general and head of the Justice Department’s Criminal Division.
Austal USA LLC is a subsidiary of Australia-based Austal Limited and specializes in constructing littoral combat ships for the Navy, designed for operations in shallow coastal waters.
The Justice Department indicated that Austal manipulated cost estimates, despite increasing shipbuilding expenses, to align with its revenue targets and projections. This led to a false representation of Austal USA’s profitability on the ships and Austal Limited’s earnings as reported in its public financial statements.
Court documents reveal that the company has agreed to settle claims from the Securities and Exchange Commission and the Justice Department. A sentencing hearing is set for Nov. 25.
The Justice Department noted that the appropriate criminal penalty would have been $73 million, but this was reduced due to Austal USA’s financial difficulties. Alongside the $24 million criminal fine, the company is also responsible for $24 million in restitution for shareholder losses.
Austal USA has committed to retaining an independent compliance monitor for three years and establishing a compliance and ethics program.
Three former executives from Austal USA were indicted last year on accounting fraud charges and are currently awaiting trial.
An email sent to a media representative for Austal Limited was not immediately returned.
Source: mrt.com
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