Ohio-based public utility holding company FirstEnergy will pay a $230 million fine for its connection to a bribery scheme to entice lawmakers to pass a $1 billion bailout for two of its nuclear power plants.
The U.S. Justice Dept. charged the company with conspiring to commit honest services wire fraud, though FirstEnergy signed a deferred prosecution agreement that could potentially result in dismissal of the charge, according to the DoJ.
Within the deferred prosecution agreement, the company admitted to paying millions of dollars to an elected state public official and several associates in return for the official pursuing nuclear legislation for the company’s benefit.
What’s in the Agreement?
According to the deferred prosecution agreement, the company must continue to cooperate fully with the United States in all matters related to the company’s conduct described in the agreement and other conduct under investigation by the government. It must also publicly disclose on its website any FirstEnergy Corp. contributions to 501(c)(4) entities and entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly, and make various provisions to improve corporate compliance moving forward.
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.
The company says it will continue to build a “best-in-class” compliance program and, in accordance with the agreement, provide annual reports to the U.S. Attorney for the Southern District of Ohio on its progress.
Bought and Paid for
Last year, the then-Ohio House Speaker Larry Householder was arrested in connection with the scheme, which totaled over $60 million in bribes made to his nonprofit organization Generation Now. FirstEnergy paid millions to both elect Householder to his post and to pass the favorable Ohio Clean Air Program legislation into law, according to the Associated Press.
FirstEnergy acknowledged that in funneling the money through different nonprofit organizations, including one of its own, the company was able to conceal from the public the nature and source of the payments it was making.
The company must continue to cooperate with officials as a result of the deferred prosecution agreement, including publicly disclosing any future payments to nonprofit organizations. The company will pay $115 million to the federal government and $115 million to an Ohio state program that provides assistance to Ohioans in paying their regulated utility bills. 
Danny Flynn is assistant editor at Compliance Chief 360°.