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CEO calls FirstEnergy’s conduct ‘wrong and unacceptable’

July 23, 2021 GMT

CLEVELAND (AP) — FirstEnergy Corp.’s conduct in secretly funding a $60 million bribery scheme to win a $1 billion bailout for two nuclear power plants it once owned was “wrong and unacceptable,” company CEO and President Steven Strah said during an earnings call Friday.

His remarks come a day after Akron-based FirstEnergy and the U.S. Attorney’s Office in Cincinnati announced the company would pay a $230 million fine as part of a deferred prosecution agreement.

If the company abides by all the provisions in the agreement, a charge of conspiracy to commit honest services wire fraud will be dismissed in three years. The U.S. Attorney’s Office in the agreement said the elements of the charge involve bribery, lying or concealing facts, an intent to defraud, and using wire communications to further the scheme.

The company also is under investigation by the U.S. Securities and Exchange Commission and the Federal Energy Regulatory Commission.


Strah said FirstEnergy has made significant strides in reforming FirstEnergy’s ethics policies and code of conduct in the wake of the scandal brought to light last July when then-U.S. Attorney David DeVillers announced the arrest of Ohio House Speaker Larry Householder and four associates.

Householder has pleaded not guilty to a federal conspiracy charge and awaits trial. He was subsequently removed as speaker and expelled from the House.

Former FirstEnergy CEO Chuck Jones and two other top executives were fired in October for violating company policies and code of conduct.

A New York-based public relations firm on Friday issued a statement on behalf of Jones saying neither Jones nor any other FirstEnergy employee engaged in “unlawful activities in their dealings with government officials.”

The First Amendment and campaign finance laws allow the use of a certain kind of nonprofit entity for “appropriate political activity” and allows individuals and corporations to support political candidates and lobby on behalf of legislation and government policies, the statement said.

“Mr. Jones is very disappointed that FirstEnergy would falsely implicate so many hard working and dedicated employees in wrongdoing who were committed to implementing the Board’s stated goals,” the statement said.

The nonprofit entities referred to, which are also known as dark money groups, have been implicated as key conduits in funneling money for the bribery scheme.

Authorities have said the $60 million from FirstEnergy and its subsidiaries was used to get Householder supporters elected to the Legislature and to help him get appointed as speaker. It also was used to fund a campaign to get the nuclear bailout bill approved and signed by Republican Gov. Mike DeWine in July 2019, and to bankroll a dirty-tricks campaign to keep a repeal referendum from reaching the Ohio ballot.

A statement of facts issued Thursday by the U.S. Attorney and FirstEnergy lays out in detail how Jones, identified as “Executive 1,” allegedly participated in the bribery scheme and his dealings with Householder and others.

FirstEnergy continues to cooperate with federal prosecutors and investigators in the bribery probe and the other federal investigations, company officials have said.

The $230 million settlement, Strah said, will be funded with cash on hand and not customer money.

The settlement amount was discounted to reflect FirstEnergy’s cooperation in the Justice Department investigation, according to the agreement.

“This is truly a humbling moment for our company,” Strah said. “We’re humbled by it, but we do view it as a positive step for the company. We paid a significant penalty for accountability.”

Strah said FirstEnergy is making progress in settling other “Ohio issues,” which include two sets of federal shareholder lawsuits, audits by the Public Utilities Commission of Ohio and other regulatory matters.

“I would be very pleased to resolve the Ohio issues by year’s end,” he said.