Adrian Johnson
TLDR:
US Navy shipbuilder Austal USA has agreed to pay a $24 million fine to settle an accounting fraud investigation. The company admitted to misleading shareholders and investors about its financial condition from 2013 to 2016. Austal artificially lowered cost estimates to meet revenue projections, resulting in overestimated profitability. The company also agreed to retain an independent compliance monitor for three years and implement a compliance and ethics program.
Full Article:
Austal USA, an Alabama-based shipbuilder that makes vessels for the U.S. Navy, has agreed to pay a $24 million fine to settle an accounting fraud investigation by the U.S. Department of Justice. The investigation revealed that from 2013 to July 2016, Austal USA engaged in a conspiracy to mislead shareholders and investors about the company’s financial condition. The company pleaded guilty to one count of securities fraud and one count of obstruction of a federal audit.
The Justice Department stated that Austal USA artificially lowered cost estimates, despite rising shipbuilding costs, to meet its revenue budget and projections, resulting in falsely overstated profitability on the ships built for the U.S. Navy. The company also faced complaints by the Securities and Exchange Commission, leading to a settlement with a sentencing hearing scheduled for Nov. 25.
In addition to the $24 million criminal fine, Austal USA has agreed to pay $24 million in restitution for shareholder losses. The company will also retain an independent compliance monitor for three years and implement a compliance and ethics program to prevent similar incidents in the future. Three former executives of Austal USA were indicted on accounting fraud charges and are awaiting trial.
This settlement marks a significant outcome in the investigation into Austal USA’s fraudulent practices and underscores the importance of transparency and accountability in financial reporting, particularly in government contract work.
