WASHINGTON — Austal, the Australian parent company of US Navy shipbuilder Austal USA, will pay a $24 million fine as part of a settlement with the US Department of Justice and US Securities Exchange Commission following an investigation into allegations that former employees misstated the company’s performance in financial reports, according to a statement circulated Monday on the Australian Securities Exchange.
Austal USA entered a plea agreement with the DOJ and has also agreed to “certain compliance and compliance reporting obligations” as part of the agreement.
“Austal is 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,” according to the statement. “This administrative agreement would set out the remedial measures taken by the company to date, ongoing commitments to compliance and providing access to US Navy representatives to management, future reporting obligations, and the retention of an independent compliance monitor.”
A Navy spokesperson told Breaking Defense the plea agreement is “the result of years-long investigations conducted by multiple federal agencies, including the Navy, to hold Austal accountable.”
“The Navy was not directly harmed by Austal’s actions — neither monetarily nor by any failure to meet contractual obligations to the government. We are committed to being responsible stewards of taxpayer funds,” the spokesperson said.
Today’s announcement ties into the alleged actions of three former top Austal executives, whom the DOJ has accused of a multimillion dollar “accounting fraud scheme.”
The Department of Justice in April 2023 announced the indictment of former Austal USA CEO Craig Perciavalle; Joseph Runkel, a member of the company’s finance team; and William Adams, who worked on the Littoral Combat Ship program. A trial for those men has been scheduled to begin in January 2025, NBC15 News reported.
John Rothwell, Austal non-executive director and immediate past chairman, said in the statement that the employees responsible are no longer with the company and that Austal has “made numerous governance changes to prevent similar issues from occurring again.”
Austal previously settled an investigation by the Australian Security and Investment Commission back in September 2022 and paid a penalty of $650,000 Australian dollars.
DOJ on Tuesday also announced it had a settled a separate matter with Austal USA over allegations that the company installed valves on five Littoral Combat Ships that did not meet Navy testing specifications. The company agreed to pay $811,259 to settle that case.
“Austal USA agreed to settle a civil investigation by the DOJ into allegations that the company installed non-compliant parts on [Littoral Combat Ships], the last of which was delivered to the Navy over six years ago,” an Austal USA spokesperson told Breaking Defense. “While we did not admit liability in the case, we felt it was in the best interest of the company to settle the investigation and focus our full efforts on executing our programs for our customers.”
Updated 8/28/2024 at 11:13 am ET with comments from the Department of Justice and Austal USA.