Government to Shady Companies: Investigate Yourselves

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The Justice Department and the Securities and Exchange Commission (the government's Wall Street watchdog) have taken to farming out investigations of corporate wrongdoing – to the very companies under investigation. Designed as a cost-cutting scheme, the arrangement is fairly common for probes into overseas bribery, the Washington Post reports, but sometimes extends to domestic issues like health-care fraud and "creative" accounting.  The strategy suits the main players just fine: The government saves money; companies get credit (read: reduced charges or lighter penalties) for cooperating; and the guys who do the actual investigating – often lawyers already in the companies' employ – make a lot of money: Avon has confirmed spending more than $130 million, and Siemens about $950 million (almost triple the SEC’s enforcement budget). The feds say they don’t just take the companies' word, but one former federal prosecutor contacted by the Post, when asked what prevents the internal investigators from going easy on firms, replies, "You mean other than integrity? Very little."

Source

• Justice Department, SEC investigations often rely on companies’ internal probes [Washington Post]