US DOJ files charges against former Austal USA employees
April 3, 2023
Photo: Defence Connect
Three former Austal USA employees have been indicted by the United States Department of Justice for allegedly making or causing false and misleading statements about the company’s performance and financial situation.
The former employees allegedly made the statements about Austal USA’s performance and financial condition between 2012 and 2016, according to an Austal public statement made on 3 April.
The US Securities and Exchange Commission has announced that it has also filed civil charges against the three individuals regarding actions taken between 2013 and 2016.
The individuals allegedly artificially reduced and suppressed an accounting metric known as “estimate at completion” in relation to multiple LCS ships that Austal USA was building for the US Navy, and in doing so, caused Austal Limited to incorrectly overstate its reported earnings in its public financial statements.
The revisions and related market disclosures were also the subject of a large profit writeback on 4 July 2016 and, consequently, an Australian Securities and Investment Commission investigation, which Austal settled in September 2022 with the payment of a $650,000 penalty.
Austal chief executive officer Paddy Gregg said the company had invested significant resources to strengthen its compliance program and Austal USA is committed to maintaining strong internal controls, financial accounting, compliance, and corporate governance practices.
“Importantly, despite the matters relating to the individuals charged and indicted, our customers remain strong supporters of Austal USA, with several new contracts worth billions of dollars awarded to the company since the commencement of the investigation — including one of the largest contracts in the company’s history — and a significant investment into the construction of Austal’s new steel shipbuilding facilities,” he said.
“We are committed to serving the needs of those and all our other customers and conducting business with the highest level of ethics and integrity.
“We continue to fully cooperate with the government’s ongoing investigation and continue to focus on serving the needs of the US Navy, the US Coast Guard, and our other customers who protect and serve the USA, Australia, and our allies around the world.”
The company detailed the results of an internal investigation with shareholders on 23 February 2021, including the decision by then Austal USA president Craig Perciavalle to tender his resignation.
Austal is Australia’s largest defence exporter and first ASX-listed shipbuilder. It has shipyards in Australia, the US, the Philippines, and Vietnam.