AKRON, Ohio, July 22, 2021 /PRNewswire/ -- FirstEnergy
Corp. (NYSE: FE) today announced that it has entered into an
agreement with the U.S. Attorney's Office for the Southern District
of Ohio to resolve the previously
disclosed investigation. The deferred prosecution agreement has
been filed in federal court.
"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 U.S.
Attorney's Office that is investigating the matter," said
Donald T. Misheff, nonexecutive
chairman of FirstEnergy's board of directors. "This resolution and
the actions we have agreed to implement build on the substantial
steps we have taken over the past several months to strengthen our
leadership team, ensure we have a best-in-class compliance program,
and significantly modify our approach to political engagement as we
work to regain the trust of our stakeholders. We thank the office
of the United States Attorney for
the Southern District of Ohio for
its professionalism and engagement with FirstEnergy throughout this
process."
"FirstEnergy's core values and behaviors include integrity,
openness, and trust. As an organization, we are redoubling our
commitment to live up to these values and the standards that we
know our stakeholders expect of us," said Steven E. Strah, FirstEnergy president and chief
executive officer. "Moving forward, we are intently focused on
fostering a strong culture of compliance and ethics, starting at
the top, and ensuring we have robust processes in place to prevent
the type of misconduct that occurred in the past."
Under the three-year deferred prosecution agreement, FirstEnergy
has agreed to pay a penalty of $230
million, and has agreed to the government's filing of a
single charge of conspiracy to commit honest services wire fraud.
The charge will be dismissed, provided FirstEnergy abides by all
terms of the agreement. The payment of the $230 million fine will be split equally between
the U.S. Treasury and the Ohio Development Service Agency for the
benefit of Ohio utility customers.
The company expects to record a charge in this amount for the
second quarter this year. This fine will not be recovered in rates
or charged to customers.
From the onset of the investigation, as noted in the agreement
reached with the U.S. Attorney's Office, FirstEnergy provided
substantial cooperation with the investigation, including
conducting a thorough internal investigation; proactively
identifying issues and facts that would likely be of interest to
the government; sharing information that would not have been
otherwise available to the government; and making such material
available to the government on an expedited basis.
FirstEnergy has taken substantial remedial actions across four
broad categories, including employment consequences for executives
and employees who engaged in misconduct; enhancements to the
company's compliance program; improvements to the company's
policies and procedures; and monetary remediation to ratepayers.
Specific efforts, detailed by the government in the resolution
agreement as part of its decision to defer prosecution, include,
among others:
- Establishing an executive director role for the Board of
Directors, which supports the development of enhanced controls and
governance policies and procedures;
- Hiring a new chief legal officer, who oversees the company's
legal and internal audit departments;
- Separating the chief legal officer and chief ethics and
compliance officer (CECO) functions, and hiring a new CECO who
reports directly to the Audit Committee of the Board and
administratively to the chief legal officer;
- Working to establish a culture of ethics, integrity, and
accountability at every level of the organization;
- Creating a Compliance Oversight Subcommittee of the Audit
Committee to implement compliance recommendations received from
outside counsel; and
- Reviewing and revising political activity and
lobbying/consulting practices, including requiring robust
disclosures about lobbying activities.
The company will continue to build a best-in-class compliance
program and, in accordance with today's agreement, provide annual
reports to the United States
Attorney for the Southern District of Ohio. Moving forward, the company continues to
take important steps to ensure a strong culture of compliance.
FirstEnergy is dedicated to integrity, safety, reliability and
operational excellence. Its ten electric distribution companies
form one of the nation's largest investor-owned electric systems,
serving customers in Ohio,
Pennsylvania, New Jersey, West
Virginia, Maryland and
New York. The company's
transmission subsidiaries operate more than 24,000 miles of
transmission lines that connect the Midwest and Mid-Atlantic
regions. Follow FirstEnergy on Twitter @FirstEnergyCorp or online
at www.firstenergycorp.com.
Forward-Looking Statements: This press release
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 based on
information currently available to management. Such statements are
subject to certain risks and uncertainties and readers are
cautioned not to place undue reliance on these forward-looking
statements. These statements include declarations regarding
management's intents, beliefs and current expectations. These
statements typically contain, but are not limited to, the terms
"anticipate," "potential," "expect," "forecast," "target," "will,"
"intend," "believe," "project," "estimate," "plan" and similar
words. Forward-looking statements involve estimates, assumptions,
known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements, which may
include the following: potential liabilities, increased costs and
unanticipated developments resulting from governmental
investigations and agreements, including those associated with
compliance with or failure to comply with the DPA with the U.S.
Attorney's Office for the S.D. Ohio; the results of the internal
investigation and evaluation of our controls framework and
remediation of our material weakness in internal control over
financial reporting; the risks and uncertainties associated with
government investigations regarding Ohio House Bill 6 and related
matters including potential adverse impacts on federal or state
regulatory matters including, but not limited to, matters relating
to rates; the potential of non-compliance with debt covenants in
our credit facilities due to matters associated with the government
investigations regarding Ohio House Bill 6 and related matters; the
risks and uncertainties associated with litigation, arbitration,
mediation and similar proceedings; legislative and regulatory
developments, including, but not limited to, matters related to
rates, compliance and enforcement activity; the ability to
accomplish or realize anticipated benefits from our FE Forward
initiative and our other strategic and financial goals, including,
but not limited to, maintaining financial flexibility, overcoming
current uncertainties and challenges associated with the ongoing
government investigations, executing our transmission and
distribution investment plans, greenhouse gas reduction goals,
controlling costs, improving our credit metrics, strengthening our
balance sheet and growing earnings; economic and weather conditions
affecting future operating results, such as a recession,
significant weather events and other natural disasters, and
associated regulatory events or actions in response to such
conditions; mitigating exposure for remedial activities associated
with retired and formerly owned electric generation assets; the
ability to access the public securities and other capital and
credit markets in accordance with our financial plans, the cost of
such capital and overall condition of the capital and credit
markets affecting us, including the increasing number of financial
institutions evaluating the impact of climate change on their
investment decisions; the extent and duration of COVID-19 and the
impacts to our business, operations and financial condition
resulting from the outbreak of COVID-19 including, but not limited
to, disruption of businesses in our territories and governmental
and regulatory responses to the pandemic; the effectiveness of our
pandemic and business continuity plans, the precautionary measures
we are taking on behalf of our customers, contractors and
employees, our customers' ability to make their utility payment and
the potential for supply-chain disruptions; actions that may be
taken by credit rating agencies that could negatively affect either
our access to or terms of financing or our financial condition and
liquidity; changes in assumptions regarding economic conditions
within our territories, the reliability of our transmission and
distribution system, or the availability of capital or other
resources supporting identified transmission and distribution
investment opportunities; changes in customers' demand for power,
including, but not limited to, the impact of climate change or
energy efficiency and peak demand reduction mandates; changes in
national and regional economic conditions affecting us and/or our
major industrial and commercial customers or others with which we
do business; the risks associated with cyber-attacks and other
disruptions to our information technology system, which may
compromise our operations, and data security breaches of sensitive
data, intellectual property and proprietary or personally
identifiable information; the ability to comply with applicable
reliability standards and energy efficiency and peak demand
reduction mandates; changes to environmental laws and regulations,
including, but not limited to, those related to climate change;
changing market conditions affecting the measurement of certain
liabilities and the value of assets held in our pension trusts and
other trust funds, or causing us to make contributions sooner, or
in amounts that are larger, than currently anticipated; labor
disruptions by our unionized workforce; changes to significant
accounting policies; any changes in tax laws or regulations, or
adverse tax audit results or rulings; and the risks and other
factors discussed from time to time in our SEC filings. These
forward-looking statements are also qualified by, and should be
read together with, the risk factors included in FirstEnergy
Corp.'s filings with the SEC, including but not limited to the most
recent Annual Report on Form 10-K, any subsequent Quarterly Reports
on Form 10-Q, and subsequent Current Reports on Form 8-K. The
foregoing review of factors also should not be construed as
exhaustive. New factors emerge from time to time, and it is not
possible for management to predict all such factors, nor assess the
impact of any such factor on FirstEnergy Corp.'s business or the
extent to which any factor, or combination of factors, may cause
results to differ materially from those contained in any
forward-looking statements. FirstEnergy Corp. expressly disclaims
any obligation to update or revise, except as required by law, any
forward-looking statements contained herein or in the information
incorporated by reference as a result of new information, future
events or otherwise.
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SOURCE FirstEnergy Corp.