Politicial Bribes

FirstEnergy CEO and SVP ordered $64 million bribery scheme, shareholders say

The CEO and senior vice president of FirstEnergy “engineered and orchestrated” a $64 million bribery scheme to pay a top legislative official and utility regulator in return for official action, according to an affidavit on Wednesday from the attorneys for the shareholders suing the company.

While CEO Charles “Chuck” Jones and Senior Vice President of External Affairs Michael Dowling were both alleged central figures in the operation – both were fired after the initial FBI arrests in the case and matched the identifying details in court documents – Wednesday’s filing marks the first time the two have been personally identified.

The company’s shareholders filed a derivative lawsuit, alleging that the bribery operation and the resulting legal and political fallout damaged FirstEnergy and violated company policy. Attorneys for the shareholders said the pretrial evidence exchange would have shown Jones and Dowling as the drivers of the payouts.

FirstEnergy, as a company, entered into a Deferred Prosecution Agreement with the US Department of Justice last summer. In it, the company admitted to paying $60 million to a nonprofit organization secretly run by former GOP Chairman Larry Householder and another $4.3 million payment to the top services regulator. State Public, Sam Randazzo. However, the company did not specify which executives ultimately controlled the payouts.

The householder has pleaded not guilty to a racketeering charge and is awaiting trial scheduled for January. Two of his alleged accomplices have pleaded guilty and are awaiting sentencing. Randazzo has not been charged with a crime.

The shareholder statement specifies Jones as “executive 1” and Dowling as “executive 2” in the deferred prosecution agreement. The settlement calls for FirstEnergy to cooperate with prosecutors, admit a statement of facts of approximately 40 pages and pay a fine of $230 million to potentially avoid a criminal charge of wire fraud.

Lawyers representing Jones and Dowling did not respond to emails Wednesday.

“While we cannot comment on the court filing today, FirstEnergy continues to take steps to rebuild trust with stakeholders and position the company for the future,” the company spokeswoman said. , Jennifer Young. “This includes, among other proactive measures, strengthening the management team, enhancing its compliance program, implementing stronger oversight of engagement in government affairs, and resolving multiple regulatory procedures.”

FirstEnergy said it paid the bribes to help pass House Bill 6 in 2019, a sweeping energy policy overhaul worth an estimated $1.3 billion to the company. The legislation bailed out nuclear power plants then owned by a company subsidiary, effectively guaranteed company revenues at a high level via a “decoupling” provision, removed power generation requirements renewable, etc.

The disclosure adds new heat to Gov. Mike DeWine, who nominated Sam Randazzo to PUCO and signed HB 6 hours after lawmakers passed it.

For example, Jones and Dowling met with Randazzo on Dec. 18, 2019, to discuss his payments and his candidacy for a seat on the Ohio State Utilities Commission, according to FirstEnergy. That same day, DeWine and Lieutenant Governor Jon Husted dined together at a restaurant in Columbus.

The shareholder disclosure materialized after an unusual set of circumstances. In February, as depositions from former company officials like Jones and Dowling were set to begin in the shareholders’ lawsuit, the two sides announced a proposed settlement. Pending a judicial review, he would ask FirstEnergy’s insurers to pay the company $180 million for damages suffered in the scandal. The proposed settlement would also exclude six board members when their terms expire and require corporate reforms related to “political and lobbying activities”.

However, U.S. District Judge John R. Adams refused to sign anything until he got an answer to his question of who in the company ordered the kickbacks. He abruptly cut short a hearing earlier this month as the shareholders’ lawyer avoided answering him, citing confidentiality agreements associated with pre-trial proceedings and settlement talks. He ended up demanding answers in an order, threatening to scorn the lawyers or kick them off the case. This prompted Wednesday’s hearing.

“It’s not just FirstEnergy’s trust that needs to be rebuilt,” Adams wrote. “This system of corruption has undoubtedly undermined the confidence Ohioans had in the political process used by their elected officials. The public has a right to know why the political process has been so easily corrupted.”

The proposed settlement, meanwhile, has yet to be approved by any judge.

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