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FirstEnergy to pay $230M in settlement in Ohio bribery case

Bribery Investigation Ohio
Posted at 10:07 AM, Jul 22, 2021
and last updated 2021-07-22 19:26:21-04

CINCINNATI — Federal authorities say Akron-based FirstEnergy Corp. has agreed to a settlement that calls for the company to fully cooperate and pay a $230 million fine in connection with a sweeping bribery investigation.

It came as federal prosecutors criminally charged FirstEngery with one count of conspiracy to commit honest services fraud Thursday.

"Let me give your some perspective," said Vipal Patel Acting US Attorney for the Southern District of Ohio, "that's the largest criminal penalty ever collected as far as anyone can remember in the history of this office."

FirstEnergy officials announced earlier this year it was in talks with the prosecutors on the agreement.

The company has been accused by authorities of secretly funding a $60 million bribery scheme to help win legislative passage of a $1 billion bailout for two nuclear power plants operated by a wholly-owned subsidiary when the bill was passed in July 2019.

As part of the deal, which will result in prosecutors dropping the criminal case if First Energy complies with its requirements, the company admitted 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 according to prosecutors.

FirstEnergy also admitted it paid $4.3 million dollars to a second uncharged public official to "further First Energy Corp.’s interests related to passage of nuclear legislation and other company priorities."

During a news conference Thursday, Patel said the goal of the settlement was to "sting, not annihilate" the company.

"It's meant to hurt," said Patel. "It's not meant to be a slap on the wrist. But also not enough it's going to drive them out of business and drive innocent employees, force them to start looking for new jobs."

Under the agreement, the company is not allowed to pass the cost of the penalties on to customers.

A FirstEnergy spokesperson said the money will come from corporate funds.

"This is a very significant penalty for FirstEnergy," said company spokesperson Jennifer Young. We take this matter seriously We're very humbled by this experience and we're going to learn from it and move forward with a culture of ethics, integrity and accountability."

The company may not have a choice. While much of FirstEngery's top leadership has been replaced since last fall, the deal with prosecutors also requires changes meant to improve corporate compliance.

While Young called the settlement a significant first step in moving the company past the HB6 scandal, Case Western Reserve University Law Professor Jonathan Entin said it's likely one step in long journey to repair the company's tarnished image.

"What's the old cliche, a journey of 1,000 miles starts with one step?" said Entin. "From the company's standpoint they were in a bad place. They're still really in a bad place but at least they're trying to go in a better direction. We'll see how this all plays out."

Under the deal, prosecutors said FirstEnergy also agrees to continue working with prosecutors and investigators probing the HB6.

Today Patel said that investigation is on-going.

RELATED: FirstEnergy customers greeted with hefty bills as utility reconciles meter readings

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