Shipbuilder Austal Sinks on Former U.S. Executives' Indictment for Financial Fraud
Australian shipbuilder Austal Ltd sank as much as 8.4% to its lowest level in more than four years on Monday after the United States Department of Justice indicted three of its former U.S. employees on manipulating financial information.
Austal, which builds ships for the U.S. Navy and is working on parts of the Virginia class submarines, plunged to its lowest level since October 25, 2018, and marked its worst intraday drop since January 17.
The U.S. Department of Justice (DOJ) charged three former employees for "allegedly making or causing to be made false and misleading statements about Austal USA's performance and financial condition between 2012 and 2016", the company said. The U.S. Securities and Exchange Commission (SEC) has also filed civil charges against the three individuals, Austal said.
The SEC and DOJ alleged that the individuals artificially reduced and suppressed an accounting metric, called estimate at completion (EAC), in relation to multiple littoral combat ships that Austal was building for the U.S. Navy.
The company since then has announced a write-back to adjust its revenue and profit, settled an investigation by Australia's securities regulator, and conducted its own investigation into the matter, which resulted in the resignation of the president of Austal USA.
About 1.2 million shares changed hands, compared with the monthly average of around 791,900 shares. Austal is down 17% so far this year, as of last close, compared with a 2.1% increase in the ASX All Ordinaries index.
(Reuters - Reporting by Sameer Manekar in Bengaluru; Editing by Sonia Cheema)