The Justice Department is investigating Standard Chartered over allegations that an Indonesian power company controlled by the London-based bank paid bribes to win contracts.

An internal audit at Maxpower Group, a power-plant builder in Southeast Asia, found evidence of possible bribery and other misconduct, findings that were echoed in a separate review by a law firm hired by Maxpower, according to copies of those reports reviewed by The Wall Street Journal. US prosecutors are looking into whether Standard Chartered is culpable for not stopping the alleged misconduct, people with knowledge of the investigation said.