FirstEnergy rises on $230 million settlement in corruption case

Bloomberg

FirstEnergy Corp surged the most in more than five months after the Ohio utility reached an agreement with federal prosecutors over a corruption case involving a $1 billion state bailout for nuclear power plants.
Under a deferred-prosecution agreement, FirstEnergy admitted that it conspired with public officials and others to pay millions of dollars in bribes. The company agreed to pay $230 million, the largest criminal penalty ever imposed by the US Attorney’s Office for the Southern District of Ohio.
Investors, however, feared the penalties would be even worse, said Katie Bays,
an analyst at FiscalNote Markets. “The market had very bearish expectations for what a worst-case scenario looks like,” Bays said. “This is not a worst-case scenario.”
Under the three-year deferred prosecution agreement, authorities have filed a single charge of conspiracy to commit honest services wire fraud against the company. The charge will be dismissed if FirstEnergy abides by all terms of the agreement.
“FirstEnergy’s Board of Directors moved swiftly and decisively to investigate this matter and, along with the management team, has cooperated and will continue
to fully cooperate with the
US Attorney’s Office,” Donald T Misheff, nonexecutive chairman of FirstEnergy’s board of directors, said.
The case began in July 2020 after federal officials charged then-Ohio House Speaker Larry Householder and others in a racketeering conspiracy involving almost $61 million in bribes to secure a more than $1 billion bailout of two nuclear power plants owned by the subsidiary, now known as Energy Harbor Corp.
FirstEnergy later fired
its chief executive officer, Chuck Jones, and had its creditrating cut.
In November, FirstEnergy disclosed that former executives violated company policies, citing a payment of about $4 million to an entity associated with someone subsequently appointed to be a state regulator.

FirstEnergy said in April that it was in talks with the US Attorney’s Office on the bribery case.
A spokesman for Jones said in a statement that the ex-CEO didn’t engage in any unlawful activity or violate company policies. “Mr Jones is very disappointed that FirstEnergy would falsely implicate so many hard working and dedicated employees in wrongdoing,” the spokesman, Allan Ripp, said.
Ohio’s attorney general sued FirstEnergy and Energy Harbor in September, accusing them of “corrupt activity” in connection with the subsidies. FirstEnergy later gave up a $102 million annual subsidy as part of a deal to pause the lawsuit.