Austal to pay US24m penalty to resolve investigation, escapes charges

Shipbuilder Austal will pay a US24 million penalty but has escaped charges in a resolution of investigations by the US Department of Justice (DoJ) and the US Securities Exchange Commission (SEC) over the write back of work in progress (WIP) in July 2016.

Austal did not asdmit or deny the allegations as part of the resolution.

The investigations focused on the actions between 2013 and 2016 of former Austal USA employees to misstate Austal USA’s performance and financial condition in Austal USA’s financial statements that were consolidated into the financial reports of Austal Limited.

Three former Austal USA staff have been indicted for allegedly making or causing to be made false and misleading statements about the company’s performance and financial condition between 2012 and 2016.

Under the terms of the resolution, which are subject to US judicial approvals:

• Austal USA (AUSA) will pay a penalty of US$24 million to be distribute to shareholders who demonstrate that they suffered loss
• Austal Limited was not charged in this matter but, with AUSA, has agreed to compliance and compliance reporting obligations
• Austal and Austal USA have settled with the SEC by consenting to the entry of a final judgment that permanently restrains and enjoins them from violating certain provisions of the US federal securities laws
• And AUSA has agreed to engage an independent monitor for a period of three years to assess and monitor compliance with the DOJ plea agreement and confirm the effectiveness of its compliance programme and internal controls.

Austal is alsao in advanced discussions with the US Navy regarding the impact of these issues, and is seeking to enter into an associated Administrative Agreement with the US Navy.

Austal Non-Executive Director and immediate past Chairman John Rothwell said: “Settling this action is the best outcome for Austal.

“Upon learning of this issue, Austal conducted its own independent investigation.

“The responsible individuals are no longer with the company, and we have made numerous governance changes to prevent similar issues from occurring again.

“Austal is committed to maintaining strong financial systems and controls.”

Rothwell said the company needed to concentrate on the future and not the past.

“Our customers have been understanding that the actions of a few do not represent the values of Austal and the 5,000 people it employs.”

The U.S. global resolution, once approved, ends all investigations into the events leading up to the July 2016 write back.

In September 2022, Austal resolved an investigation by the Australian Securities and Investment Commission, agreeing to a civil contravention and a $650,000 penalty.

Further reading:
Three former Austal employees indicted in the US

Picture: Austal/Austal built USS Canberra visits Sydney