FirstEnergy facing federal charges in bribery scheme, fined $230 million

Energy company fined $230 million in political corruption case
Published: Jul. 22, 2021 at 10:23 AM EDT
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CINCINNATI (WXIX) - Akron-based utility company FirstEnergy Corp. has been charged in a bribery scheme to protect a $1 billion nuclear plant bailout.

The company has admitted to and agreed to pay a $230 million fine for ‘conspiring to commit honest services wire fraud.’ They also signed a deferred prosecution agreement that US Attorney Vipal J. Patel says may result in the dismissal of the charge.

In a press conference Thursday, Patel says the charges against FirstEnergy will be dismissed if it follows through with the fines and provisions being ordered by the court. According to Patel, this fine is the largest criminal penalty collected by the Ohio Attorney General’s office.

“Today is a historic day. It’s time for corporate accountability,” said FBI special agent Chris Hoffman.

In court Thursday, FirstEnergy Corp. acknowledged it paid millions of dollars to an elected state public official through the official’s alleged 501(c)(4) in return for the official pursuing nuclear legislation for FirstEnergy Corp.’s benefit.

Former Ohio Speaker of the House Larry Householder and four others were arrested as part of a bribery scheme involving FirstEnergy in July 2020.

Prosecutors say the political group, Generation Now, received tens of millions of dollars that Householder and others used to pay bribes, fund his own political activities and run a public campaign supporting the nuclear bailout.

Generation Now was set up as a social welfare entity, which allowed it to avoid disclosing donors. Federal authorities have said Generation Now’s real purpose was to protect the nuclear plant bailout and enrich Householder and others.

Householder oversaw the controversial bailout of the two northern Ohio nuclear plants known as House Bill 6. FirstEnergy owned both plants.

It is alleged that FirstEnergy funneled $60 million in bribes to Householder through Generation Now to pass the bill. The bill was passed in July of 2020.

As part of the agreement, Patel says FirstEnergy must continue to cooperate with the federal investigation, “To date, FirstEnergy has provided substantial cooperation.”

Within 60 days of Thursday’s filing, FirstEnergy is ordered to pay $115 million to the United States and $115 million to a program that assists Ohioans in paying their regulated utility bills.

FirstEnergy said in a statement to the press that it has taken substantial remedial actions across four broad categories, including employment consequences for executives and employees who engaged in misconduct; enhancements to the company’s compliance program; improvements to the company’s policies and procedures; and monetary remediation to ratepayers. Specific efforts, detailed by the government in the resolution agreement as part of its decision to defer prosecution, include, among others:

  • Establishing an executive director role for the Board of Directors, which supports the development of enhanced controls and governance policies and procedures;
  • Hiring a new chief legal officer, who oversees the company’s legal and internal audit departments;
  • Separating the chief legal officer and chief ethics and compliance officer (CECO) functions, and hiring a new CECO who reports directly to the Audit Committee of the Board and administratively to the chief legal officer;
  • Working to establish a culture of ethics, integrity, and accountability at every level of the organization;
  • Creating a Compliance Oversight Subcommittee of the Audit Committee to implement compliance recommendations received from outside counsel; and
  • Reviewing and revising political activity and lobbying/consulting practices, including requiring robust disclosures about lobbying activities.

“FirstEnergy’s Board of Directors moved swiftly and decisively to investigate this matter and, along with the management team, has cooperated and will continue to fully cooperate with the U.S. Attorney’s Office that is investigating the matter. This resolution and the actions we have agreed to implement build on the substantial steps we have taken over the past several months to strengthen our leadership team, ensure we have a best-in-class compliance program, and significantly modify our approach to political engagement as we work to regain the trust of our stakeholders. We thank the office of the United States Attorney for the Southern District of Ohio for its professionalism and engagement with FirstEnergy throughout this process,” said Donald T. Misheff, nonexecutive chairman of FirstEnergy’s board of directors.

FirstEnergy’s entire statement can be found here.

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