Tag: public corruption

  • Both FirstEnergy and its shareholders seek secrecy around company’s bribes

    Both FirstEnergy and its shareholders seek secrecy around company’s bribes

    BY: JAKE ZUCKERMAN – Ohio Capital Journal

    Both FirstEnergy Corp. and its shareholders argued to a federal judge that they shouldn’t be forced to publicly disclose which executives ordered the payment of political bribes that the company admitted to in a related criminal case.

    The two parties are awaiting judicial approval of a proposed settlement from a derivative lawsuit filed by FirstEnergy’s shareholders. The settlement would call for FirstEnergy’s insurers to pay the company $180 million for damages incurred via the company’s role in what prosecutors have described as the largest public corruption manifestation in state history.

    In an agreement with prosecutors reached in July 2021, FirstEnergy as a company admitted to a $60 million bribery scheme anchored by the then-Speaker of the Ohio House, and another $4.3 million bribe to Ohio’s then top utility regulator.

    The statement of facts in that agreement, however, anonymizes the FirstEnergy officials involved in the scandal. The agreement also called for FirstEnergy to pay a $230 million penalty and cooperate with investigators to possibly avert a charge of wire fraud against the company.

    Delaying any possible approval in the shareholder’s derivative case, U.S. District Judge John A. Adams asked the shareholders’ attorneys last week to state who at FirstEnergy ordered the bribe payments,

    Jeroen van Kwawegen, an attorney representing the plaintiffs, demurred and didn’t answer the question, prompting Adams to cut short the hearing. Adams then issued an order calling for any “interested parties” to either provide an answer to his question or offer a good reason why they can’t divulge the information. He threatened the lawyers with contempt and possible expulsion from the case for failure to answer.

    The shareholders, in arguments submitted Wednesday, offered to privately tell the judge who at FirstEnergy ordered the bribes. They said they couldn’t do so publicly because doing so would breach confidentiality rules associated with discovery (the pre-trial evidence exchanging process) and mediation.

    The shareholders’ lawyers said their obligations are to their clients and to FirstEnergy itself — not the public.

    “Such public disclosure could also be harmful to FirstEnergy considering the myriad related criminal and civil proceedings, the ongoing regulatory investigations, and the securities class action pending in the Southern District of Ohio where FirstEnergy is a defendant,” they wrote.

    Kwawegen attached emails attached to the filing showing he asked lawyers FirstEnergy and its former executives if they’d agree to voluntarily disclose some of the information. He was rejected by the company, its former CEO Chuck Jones, Dennis Chack, and Mike Dowling (whose lawyer said they are not inclined to provide a “blanket waiver” but asked for specifics). Jones, Chack and Dowling were all fired in October 2020 amid an internal investigation.

    FirstEnergy made similar arguments. The lawsuit and settlement, its lawyers said, are aimed to recover for harm done to the company because of its actions. Any public accountability, they argued, “risks harm to the interests of FirstEnergy and its stockholders, which is exactly the opposite of what a derivative litigation is supposed to do.”

    Notably silent on the issue: federal prosecutors. They didn’t weigh in either way before the court. A spokeswoman for U.S. Attorney for the Southern District of Ohio Kenneth Parker didn’t respond to an inquiry.

    The derivative lawsuit traces back to the passage of House Bill 6 in 2019. The energy overhaul legislation, among other provisions, provided a massive bailout of two nuclear power plants owned at the time by a FirstEnergy subsidiary. Federal prosecutors said the legislation was worth $1.3 billion to the company.

    To ensure it passed and thwart a referendum attempt to repeal it, FirstEnergy admitted to providing $60 million to a nonprofit secretly controlled by then House Speaker Larry Householder, R-Glenford. Householder allegedly used the funds to elect a slate of candidates that would support his bid to become the House Speaker, engineer the bill’s passage, thwart a repeal effort, and enrich himself personally. He has pleaded not guilty and awaits trial, scheduled for January 2023.

    FirstEnergy also admitted to secretly paying $4.3 million to energy attorney Sam Randazzo just before Gov. Mike DeWine named him chairman of the Public Utilities Commission of Ohio. Randazzo has not been accused of a crime and has denied wrongdoing.

  • DeWine can’t run from energy bailout bribery scandal as dirty laundry keeps piling up

    DeWine can’t run from energy bailout bribery scandal as dirty laundry keeps piling up


    COMMENTARY

    by MARILOU JOHANEK – Ohio Capital Journal

    Follow the money. Its corrupting influence runs through all the great scandals piling up in Ohio under Republican rule. From the biggest online charter school rip-off of tax dollars to the largest public corruption indictment in state history, money has paved the way to epic wrongdoing under GOP management. Find out who in Columbus is greasing palms, funding campaigns and writing public policy for private interests, and you’ll also discover who is standing in line with their hand out willing to reciprocate with public favors.  

    But when people in high places slip on hubris and expose brazen graft at public expense — and they always do — the swarm of politicians who were only too happy to pocket donor checks and look the other way scatter like insects under a rock that’s been lifted. Republican Gov. Mike DeWine is one of those spooked bugs racing away from his political entanglement in the blockbuster bribery and money-laundering case that goes to trial this year. Three of the four indicted individuals who will be in court on federal racketeering charges — in connection with a billion-dollar ratepayer bailout of two nuclear power plants to benefit FirstEnergy and its affiliates — donated thousands to DeWine’s gubernatorial campaign. 

    So did the Akron-based energy giant at the heart of the bailout scheme. FirstEnergy has legendary pull with pliable politicians. 

    The state’s largest electric utility pumped $1 million into groups backing DeWine in 2018, according to a Dayton Daily News investigation following the money. The company also pumped big bucks into groups helping his daughter’s failed campaign for county prosecutor. DeWine hired multiple administration staffers and advisors with close ties to FirstEnergy, including a former top aide linked to one of the dark money groups implicated in passage of the bailout legislation (House Bill 6) written for and by the utility. 

    The governor also appointed and steadfastly supported Ohio’s former top utility regulator, now accused of profiting in association with the FirstEnergy scandal. DeWine knew of Sam Randazzo’s deep business relationship with the utility when he chose him at the urging of company executives. In a seemingly flagrant quid pro quo, the governor’s pick for the powerful chair of the state utilities commission pocketed a massive sum of money from FirstEnergy just weeks before his appointment. 

    But even damning disclosures of Randazzo’s $4.3 million utility bribe and his blatant efforts on behalf of FirstEnergy — constructing House Bill 6, delaying a company rate case, lobbying for legislation to save the utility millions — didn’t dissuade DeWine from expressing “great confidence” in his regulator. Even after the FBI raided Randazzo’s home as part of the FirstEnergy bribery probe and he resigned under a cloud of suspicion, DeWine praised him for doing “very, very good work as chair.” 

    Perhaps anticipating incredulity with that assessment, the Republican later suggested he was “open” to reforming the process for choosing state utility regulators. Eighteen months on, the DeWine-appointed nominating council that recommends PUCO candidates to the governor includes members tied to passage of the notorious bailout bill. 

    Even after the FBI arrested former House Speaker Larry Householder, who engineered approval of House Bill 6 and was subsequently charged with taking money to pass it, DeWine rejected an effort to repeal the corruption-ridden legislation. 

    “We need balance in our energy,” was all he could say about a bill passed with more than $60 million in bribe money. DeWine reversed himself but reiterated his support for FirstEnergy’s ultimate bribery goal — giving $1.3 billion in public money to two unprofitable nuke plants with new surcharges paid by everyratepayer in the state. 

    He had put the full weight of the governor’s office behind the nuclear bailout bill and signed the corrupt measure into law the very day it passed. The “energy” legislation championed by DeWine also put ratepayers on the hook to bail out two money-losing, hyper-polluting coal plants (one in Indiana) partially owned by other utilities and two FirstEnergy subsidiaries. Plus, the bailout boondoggle the governor couldn’t sign fast enough thoroughly gutted renewable energy and energy efficiency standards and removed all incentive to build more renewable energy projects in the state. 

    Those utility-written provisions have still not been repealed under a 2019 embarrassment that should have been scrapped outright. But the Republican-controlled legislature, complicit in the worst scandal “ever perpetrated against the people of the state of Ohio,” is content to become synonymous with corruption and fleece Ohioans on their monthly electric bills if that makes utility donors happy. The Ohio Manufacturers Association estimated electricity customers will pay a total of $1.8 billion in coal plant subsidies by 2030 — more than the cost of the nuke bailout — unless integrity intrudes on the General Assembly and House Bill 6 is fully repealed. 

    Don’t hold your breath. But remember, this outrage happened on DeWine’s watch and with his blessing. Ohioans didn’t know how crooked House Bill 6 was or how many politicians, including the governor, were willing to look away until federal prosecutors blew the lid off the alleged criminal enterprise to screw ratepayers in return for boosted political careers. DeWine is understandably trying to put as much distance as possible between his reelection campaign and the biggest open investigation of Statehouse corruption in the country. 

    But it’s hard to escape dirty laundry that keeps piling up when you can’t hide under a rock anymore.