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FirstEnergy fires CEO Jones in wake of Ohio bribery scandal
[OHIO] FirstEnergy fired chief executive officer Charles Jones and two other senior executives after a board review set up in the wake of a federal corruption scandal found they violated the company's policies and its code of conduct.
The Akron, Ohio-based utility appointed President Steven Strah acting CEO, effective immediately, according to a statement late Thursday. FirstEnergy's senior vice president of product development, marketing, and branding and its senior vice president of external affairs were also fired.
The firings are the company's strongest move yet in response to an alleged conspiracy involving a former unit, Energy Harbor. In July, federal officials arrested the speaker of the Ohio House of Representatives and four political associates were indicted on federal racketeering charges involving almost US$61 million in bribes tied to a more than US$1 billion bailout of two nuclear plants owned by Energy Harbor. Two of the associates, including a lobbyist for a FirstEnergy subsidiary, pleaded guilty Thursday, according to the US attorney's office for the southern district of Ohio.
FirstEnergy no longer owns the reactors and wasn't named in the affidavit filed in July by federal authorities. In the charging document, prosecutors said an Ohio-based utility owner - identified only as "Company A" - steered almost $61 million over three years to the Ohio house speaker. The company was widely believed to be FirstEnergy.
"The guilty pleas and the executive turnover at FE certainly add credence to the allegations," Height Securities analyst Josh Price said in research note. They also increase "risk for companies and policymakers not explicitly mentioned in the affidavit," he said.
FirstEnergy had sought to distance itself from the scandal. Shortly after the speaker's arrest, Mr Jones told investors that the company had acted properly and that it didn't have control over the decisions made by its former subsidiary. Mr Jones said the company was in talks with US Justice Department lawyers after receiving subpoenas related to the probe.
The company identified the two other fired executives in a filing as Dennis Chack, senior vice president of product development, marketing and branding; and Michael Dowling, senior vice president of external affairs.
Last month, Ohio's attorney general filed a civil lawsuit against FirstEnergy and Energy Harbor, accusing them of "corrupt activity" in connection with a state law to aid struggling nuclear reactors. That complaint alleged that the companies formed an "unholy alliance" with lawmakers to pass a bailout in 2019 and moved money through nonprofit organisations to subvert Ohio's campaign finance laws.
FirstEnergy didn't give any more details in Thursday's statement on the policies that were violated, only saying that they were uncovered as part of an independent board review into the investigations.
"It's a disappointing development, and one that raises questions as to what exactly the conduct was that led to the board's decision," said Paul Patterson, a utility analyst at Glenrock Associates."Clearly there was enough of an issue to cause this change in leadership," Mr Patterson said in a phone interview. "The question is, what was it and are there any significant ramifications that may unfold as a result of it." FirstEnergy on Thursday also named board member Christopher Pappas executive director. In that role, he remains an independent board member and isn't part of the management team.