Executives at Austal, the military shipbuilding company, expressed relief over settling an accounting fraud investigation by paying a $24 million penalty. The settlement involved Austal USA, a subsidiary of Austal Limited, pleading guilty to securities fraud and obstruction of a federal audit. The company stated that new controls have been implemented to prevent similar issues in the future.
Restitution will be paid to Austal shareholders from the penalty amount, resulting in a total payment of $24 million. John Rothwell, the former Austal Limited chairman and current non-executive director of the board, emphasized that resolving the matter was the best outcome for the company. He noted that those responsible have left the company, and governance changes have been made.
Austal specializes in building littoral combat ships for operations in shallow coastal waters. Rothwell highlighted the importance of focusing on the future rather than dwelling on past issues, pointing out that the investigations centered on conduct from over eight years ago.
According to the U.S. Justice Department, from 2013 to July 2016, Austal USA misled shareholders by artificially reducing cost estimates to meet revenue targets, leading to false reports of profitability. The department mentioned that the Securities and Exchange Commission will oversee the distribution of funds to affected investors.
As part of the settlement, Austal USA will have an independent compliance monitor for three years and establish a compliance and ethics program. Meanwhile, three former executives facing accounting fraud charges are awaiting trial.