The United States Department of Justice (DOJ) has indicted three former employees of shipbuilder Austal USA for allegedly making or causing to be made false and misleading statements about the company’s performance and financial condition between 2012 and 2016.
The DOJ at the same time has filed civil charges against the same three individuals.
The SEC and the DOJ allege the three artificially reduced and suppressed an accounting metric known as ‘estimate at completion’ (EAC), and in so doing caused Austal Limited to incorrectly overstate its reported earnings in its public financial statements.
The allegations have been the subject to investigation since 2019.
According to a statement from Austal in Australia, the revisions to the EAC and market disclosures were the subject of a large profit writeback in 2016, and consequently an Australian Securities and Investment Commission investigation.
This investigation was settled in September, with the payment of a $650,000 penalty.
Former Austal USA President Craig Perciavalle also tendered his resignation.
Austal said the company had been fully cooperating with the DOJ and SEC and other agencies in their investigations.
CEO Paddy Gregg said Austal has invested significant time and resources to strengthen its compliance, and was committed to maintaining strong internal controls.
Gregg said: “Importantly, despite the matters relating to the individuals charged and indited, 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…and a significant investment into the construction of Austal’s new steel shipbuilding facilities.”
Austal has numerous contracts with the US Navy and security authorities.
Picture: Austal Paddy Gregg