Austal USA Settles Fraud Probe with $24 Million Payment

28 Aug, 2024

Austal USA Settles Fraud Probe with $24 Million Payment

Austal USA, an Alabama-based shipbuilder for the US Navy, has admitted to accounting fraud and agreed to pay a $24 million fine to settle an investigation by the US Department of Justice. The settlement resolves allegations that from 2013 to July 2016, Austal USA misled shareholders and investors about its financial health. The company has pleaded guilty to securities fraud and obstruction of a federal audit.

Austal USA was found to have inflated its profits by falsely reporting financial results related to its shipbuilding contracts. This included manipulating cost estimates to meet revenue targets, which misled investors and auditors about the company's actual profitability and financial condition. The settlement includes $24 million in criminal fines and an additional $24 million in restitution for shareholder losses.

As part of the settlement, Austal USA will implement a compliance and ethics program and retain an independent compliance monitor for three years. Three former executives of the company are facing trial on related accounting fraud charges. The Justice Department had initially proposed a $73 million penalty, but this was reduced due to the company’s financial constraints.