FirstEnergy President & CEO Steve Strah Addresses Employees About Deferred Prosecution Agreement
The following is the transcript of a video message from FirstEnergy President & CEO Steve Strah to employees regarding the deferred prosecution agreement announced on July 22, 2021.
I’m pleased to share that we have reached an agreement with the U.S. Attorney’s Office for the Southern District of Ohio to resolve the Department of Justice investigation into FirstEnergy.
This deferred prosecution agreement has been filed in federal court.
As part of this agreement, the government has agreed to defer one charge against the company related to past conduct. In technical legal terms, the charge is conspiracy to commit honest services wire fraud. Deferring the charge means that if we meet the conditions of the agreement, the charge will be dismissed.
FirstEnergy will pay a penalty of $230 million, half of which will go to the United States Treasury and half of which will be directed for the benefit of utility customers through the Ohio Development Service Agency. The company will also provide regular reports to the government to self-monitor our compliance program, as well as our internal controls and policies, building on the comprehensive compliance initiatives we’ve rolled out this year.
This agreement is the result of our extensive cooperation with the investigation, as the U.S. Attorney’s Office noted in the agreement.
This is a humbling moment for our company. And we should take this moment to recognize that this type of conduct, at the highest levels in the company, was wrong and unacceptable. We have to ensure that something like this never happens again.
In the agreement, the U.S. Attorney’s Office recognized the substantial actions we’ve already taken to address this matter, including:
- Employment consequences for executives and employees who engaged in misconduct;
- Establishing an executive director position at the Board level as well as a compliance- focused Board subcommittee;
- Hiring a new chief legal officer and a new chief ethics and compliance officer;
- Working to establish a culture of ethics, integrity, and accountability at every level of the organization; and
- Reviewing and revising political activity and lobbying and consulting policies, which will include robust disclosures about our lobbying activities.
All of these efforts, along with today’s agreement, demonstrate that we are positioned to move forward as a stronger, integrity-bound organization. And while other proceedings related to Ohio House Bill 6 remain outstanding, resolving the DOJ investigation is an important step and we are making meaningful progress to hold ourselves accountable and navigate this uncertain period.
In the meantime, we continue to take important steps to improve our internal processes and build a culture of trust. This includes working to update our employee code of conduct, strengthening our internal audit function, and conducting regular trainings and employee engagement sessions regarding compliance.
We must all embrace our core values and live up to the standards of honesty and transparency that we know our stakeholders expect of us. As the leader of this organization, that is my personal promise to you, the FirstEnergy team: to act with integrity and embody our core values every day in everything that we do.
I’m so proud to be on the FirstEnergy team and I want you to feel just as proud as we continue to work together to make a positive impact in our communities.
As we look ahead as a forward-focused organization with an unwavering commitment to ethics and integrity, I cannot emphasize more strongly that we must all feel comfortable speaking up when we see something that doesn’t feel right. If you don’t feel comfortable talking to your supervisor, I encourage you to call our Employee Concerns Helpline.
I’m proud of the extensive work the Board, our management team, and the entire FirstEnergy organization has done to hold ourselves accountable, and to make the changes that we needed to make to move on from this.
I look forward to working with every one of you to create a better culture founded on trust – and to create a very bright future for all of our stakeholders.
Thank you for your continued dedication to FirstEnergy and to our customers.
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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