Sure, SEC, we'll investigate your foreign corruption allegations ourselves. Our lawyers will want to talk to you, then they will start piling up billable hours.
The Justice Dept. and SEC continue to rely heavily on companies to investigate themselves, and to root out potential fraud, reports The Washington Post.
The probes range wide and cost a lot. So Justice and the SEC often let the companies investigate themselves, reports the Post.
And it happens most commonly in cases of foreign corruption allegations.
So who benefits?
Corporate targets of federal investigation ordinarily hire teams of lawyers and accountants to interview employees, martial records and review documentation. Then the lawyers and accountants report their findings to the government.
Only then does the government decide whether to prosecute.
Diebold, the ATM manufacturer, paid out about $16 million for one of these self-investigations. Avon spent over $130 million. And Siemens, the German engineering multinational, spent $950 million on a global bribery probe, reports the Post.
"(Private counsel investigations) are a very important tool that we use to leverage the resources we have to be as efficient and as effective as we can," Lanny Breuer, head of the Justice Dept. Criminal Division, told the Post.
What stops the internal lawyer investigation from airbrushing the facts, or omitting evidence?
"You mean other than integrity? Very little," one former federal prosecutor, who now works on such investigations, told the Post on condition of anonymity.
Siemens, for example, hired New York firm Debevoise & Plimpton to investigate allegations Siemens had paid $805.5 million in bribes to foreign officials. Debevoise & Plimpton hired Deloitte & Touche to help. Since Siemens faced a $2.7 billion fine, the combined $1.75 billion for the investigation and fine saved a cool billion.
Sometimes the SEC does its own investigation, Robert Khuzami, SEC enforcement head, told the Post.
In house counsel looking for a way to document cost saving to the shareholders, take notice of those federal foreign corruption allegations.
- Justice Department, SEC cracking down on U.S. companies engaging in bribery abroad (The Washington Post)
- Foreign Corrupt Practices Act (U.S. Department of Justice)
- Crackdown Brings new Attention to the Federal Corrupt Practices Act (FindLaw)
- Why Anti-Corruption is Top 2011 Priority for General Counsels (FindLaw's In House)