US Department of Justice investigating consulting firm Booz Allen Hamilton
16 Jun 2017
The US Department of Justice is investigating some of the ways Booz Allen Hamilton Holding Corp, one of the largest consulting firms in the world, charged the government for services and accounted for costs, the company said in a filing on Thursday that sent its shares plunging 12 per cent after the bell.
Booz Allen said in the brief regulatory filing that the justice department, informed a Booz Allen unit of the investigation earlier this month. It added that it was cooperating with the government.
According to the firm, its audit processes had not identified any material weaknesses or "significant erroneous cost charging.''
Booz Allen is headquartered in McLean, Virginia near the Central Intelligence Agency and the US capital. Booz Allen generated almost all its revenue from government work and as per its latest annual report, the company received nearly half of its revenues, $2.7 billion, from defence contracts, and nearly a quarter, $1.3 billion, from intelligence offices such as the National Security Agency (NSA).
It also brought in around $1.6 billion from contracts with Homeland Security, Health and Human Services, Veteran Affairs, Treasury and Justice and other domestic departments.
Booz Allen came into the public eye for its NSA work. Edward Snowden, it employee, exposed the agency's vast domestic and international surveillance operations by leaking a trove of secret files to news organisations in 2013.
According to the website of the consulting company, the justice department had informed it on 7 June that investigators were reviewing ''certain elements of the company's cost accounting and indirect cost charging practices with the US government.'' Booz Allen, considered the most profitable spy organisation in the world, had lucrative contracts with the federal government that accounted for 97 per cent of the company's business.
Following the announcement, the company's stock price dropped over 13 per cent in after-hours trading.