Austal USA to Pay $24 Million to Settle Accounting Fraud Case

Austal USA, the Alabama-based shipbuilder responsible for constructing vessels for the U.S. Navy, has agreed to a $24 million settlement to resolve an accounting fraud probe, the U.S. Department of Justice announced on Tuesday.

The company, a subsidiary of Australia’s Austal Limited, admitted to securities fraud and obstructing a federal audit. From 2013 to July 2016, Austal USA engaged in a scheme to deceive shareholders and investors by inflating its profits. The company falsely reported its financial performance related to shipbuilding contracts with the Navy, according to the Justice Department.

Nicole M. Argentieri, principal deputy assistant attorney general, stated, “Austal USA engaged in a years-long scheme to illegally inflate its profits on ships, misleading investors, lenders, and auditors about its financial health.”

As part of the settlement, Austal USA will pay a $24 million criminal fine and an additional $24 million in restitution to cover shareholder losses. Although the Justice Department had proposed a $73 million penalty, this was reduced due to Austal USA’s financial limitations. The company must also implement a comprehensive compliance and ethics program and retain an independent compliance monitor for three years.

Three former executives of Austal USA face indictment on related fraud charges and are awaiting trial.

The settlement reflects ongoing efforts to address financial misconduct in the defense sector and underscores the importance of transparency in corporate reporting.