Bradken pays $A15 mln for US Navy scandal

Peter Mitchell, AAP US Correspondent
An employee at Bradken's US subsidiary was behind the supply of sub-par steel to the US Navy

Australian manufacturing company Bradken's US subsidiary has agreed to pay $US10.8 million ($A15.6 million) and a metallurgist has been charged with fraud for allegedly falsifying test results for steel hull components made for US Navy submarines.

The metallurgist, 66-year-old Elaine Thomas, was the lab director at Bradken's foundry in Tacoma, Washington, and her alleged scheme lasted more than three decades.

Thomas is accused of falsifying more than 200 test results to hide that the steel had failed strength and toughness tests, "potentially placing naval personnel and naval operations at risk".

Bradken was also accused of misleading the Navy.

"Bradken placed the Navy's sailors and its operations at risk," US Attorney for the Western District of Washington Brian Moran said.

"Further, after Bradken's management discovered the falsified data, they misled the Navy about the scope and nature of the fraud."

Prosecutors allege Thomas would alter note cards by changing failed tests to passing values.

"For example, if the test returned a value of 37 foot-pounds (a failing value), Thomas would alter the 3 so that it appeared to be a 5, creating the false appearance that the test result was 57 foot-pounds," prosecutors allege.

Bradken agreed to pay $US10.8 million ($A15.6 million) to settle False Claims Act allegations and entered into a deferred prosecution agreement.

Prosecutors said Bradken's 18-month delay in failing to discover or disclose many of Thomas's fraudulent certifications "seriously hindered the Navy's efforts to evaluate and remediate the potential safety and operational risks" and "could have resulted in serious incidents involving naval submarines".

The Department of Justice found there was no evidence any member of Bradken management knew of the fraud before May 22, 2017.

"While the company acknowledges that it failed to discover and disclose the full scope of the issue during the initial stages of the investigation, the (US) government has recognised Bradken's cooperation over the last 18 months to be exceptional," Bradken said in a statement.

"These efforts led a deferred prosecution agreement and settlement agreement with the government, addressing all potential criminal charges and civil claims against the company.

"This resolution will also allow Bradken to continue supplying high quality steel products to the US military."

Thomas, of Auburn, Washington, was charged with one count of major fraud against the US and will appear in a Tacoma court on June 30.

Bradken was also charged with major fraud against the US.

If Bradken complies with the deferred prosecution agreement, the government will dismiss the charge after three years.