GAO to Investigate No-Bid Contracts To Monitor Firms
Ashcroft Firm's Deal Drew Attention
Rep. John Conyers Jr. (D-Mich.), above, and Sen. Patrick J. Leahy (D-Vt.) ordered the Government Accountability Office investigation of corporate monitorships.
(Lawrence Jackson - AP)
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Thursday, January 17, 2008; Page D03
Leaders of the House and Senate judiciary committees yesterday directed investigators to examine the Justice Department's hiring of outside experts for lucrative contracts to oversee companies accused of fraud and other wrongdoing.
Sen. Patrick J. Leahy (D-Vt.) and Rep. John Conyers Jr. (D-Mich.) told the Government Accountability Office to scrutinize the deals, which are free from judicial review and can involve millions of dollars in payments to lawyers with government and political connections.
"The manner in which these contracts have been awarded and the lack of oversight in their implementation raises questions about the role of political or personal favoritism," Leahy and Conyers wrote.
The no-bid agreements, known as corporate monitorships, have ballooned in recent years as prosecutors shifted their strategy in punishing corrupt businesses. Rather than indicting companies, which can cost employees their jobs, the Justice Department agreed to settlements in which the businesses submitted to outside oversight at their expense.
Monitors have wide authority to approve personnel decisions and force companies to change their accounting practices and business operations. But the monitors' bills are subject to little independent analysis and few questions from the executives they watch.
The issue broke into public view after Zimmer, a maker of replacement knees and hips in Warsaw, Ind., disclosed that it agreed to pay a consulting firm led by former U.S. attorney general John D. Ashcroft $28 million to $52 million to resolve kickback allegations. As monitor, Ashcroft's firm is to make sure Zimmer stops making illicit payments to doctors who use its products. Ashcroft last week said that he had lengthy experience in overseeing errant businesses and that he had already made several visits to Indiana in an effort to understand Zimmer's troubles.
Several other former government officials with ties to the Bush administration have been awarded similar contracts since 2001. The Justice Department's criminal division since last year has been reviewing how monitors are selected with an eye toward preventing the appearance of impropriety. A department spokesman did not return calls yesterday.
