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- Australian shipbuilder Austal (ASB) is being investigated by regulatory authorities in Australia and the United States
- Authorities are investigating Austal’s public disclosures leading up to a major loss in 2016 related to the company’s Littoral Combat Ship program
- Following the investigations, the President of Austal’s U.S. arm, Craig Perciavalle, has resigned
- The company is continuing to cooperate with the authorities but cannot predict what consequences it may face in the future
- Austal has dropped 15.79 per cent and is trading at $2.08 per share
Australian shipbuilder Austal (ASB) is being investigated by regulatory authorities in Australia and the United States.
The ASX 200 company first announced in January 2019 that it was assisting the Australian Securities and Investments Commission with an investigation into Austal’s public disclosures surrounding its Littoral Combat Ship (LCS) program.
Notably, costs associated with the program caused Austral to post a major loss in 2016.
A few days later, Austal’s U.S. subsidiary, Austal USA, began assisting U.S. regulatory authorities with another open investigation. The regulatory authorities involved in the U.S. side of things included the Department of Justice and the Securities Exchange Commission.
The investigations by the U.S. authorities have primarily focused on Austal’s U.S. operations. These include the write-back of work in progress attributable to the LCS program in July 2016, procurement of ship components for use in U.S. Government contracts and the charging and allocation of labour hours.
Following the completion of that external investigation, Austal is satisfied that the majority of the WIP write-back appropriately adjusted the company’s revenue and profit, after the revised estimated cost for completing remaining vessels in the LCS program.
The Board of Austal USA has accepted the resignation of its President, Craig Perciavalle, following completion of the investigation. In the meantime, the subsidiary has appointed its Chief Financial Officer, Rusty Murdaugh, as the interim President of Austal USA.
While the company is continuing to cooperate with the authorities, it cannot predict what consequences it may face in the future.
In an announcement to the market, the Board of Austal reiterated that its relationship with the U.S. Department of Defense remains strong.
“The commissioning of the externally-facilitated investigation and changes already implemented, including the expansion of internal compliance and governance functions in the USA, demonstrate the seriousness with which Austal is taking this issue and its determination to meet and exceed its global risk and compliance responsibilities,” the statement read.
Austal has dropped 15.79 per cent and is trading at $2.08 per share, at 10:44 AEDT.
