Regulators block deposition of FirstEnergy’s former ethics chief

A state regulator granted a request from FirstEnergy Corp., purportedly made at the behest of federal prosecutors investigating the company’s lobbying practices, to cut off a state watchdog agency’s deposition of the company’s former top ethics officer last week.

The Akron-based utility company last summer admitted to bribing two state officials with about $64 million in exchange for favorable legislative and regulatory treatment. FirstEnergy is now cooperating with the U.S. Department of Justice’s criminal investigation into former GOP House Speaker Larry Householder and alleged conspirators.

Householder has pleaded not guilty and awaits trial early next year.

State and federal regulators, meanwhile, have waged parallel investigations of their own. An administrative judge with the Public Utilities Commission of Ohio, whose former chairman has been accused by FirstEnergy of taking its $4.3 million bribe, granted the company’s request to cut off the interview July 21.

At the deposition, the Ohio Consumers’ Counsel — a state agency that represents ratepayers’ interests in electric cases — asked questions to FirstEnergy’s former Chief Ethics Officer Ebony Yeboah-Amankwah. The questions involved actions of former PUCO chairman Sam Randazzo, an entity he allegedly used to receive FirstEnergy’s bribe, the legislation at the root of the prosecution, and the firing of the company’s former CEO.

In fallout from the scandal, Yeboah-Amankwah and two other executives were “separated from FirstEnergy due to inaction and conduct that the Board determined was influenced by the improper tone at the top,” the company said in October 2020. Documents filed in a related case show invoices addressed to Yeboah-Amankwah from Randazzo’s business.

According to a FirstEnergy lawyer’s statements to a PUCO judge, the OCC’s questions were at “the heart of the ongoing U.S. attorney office prosecution and investigations.” After pausing the deposition, he said he called Emily Glatfelter, an assistant U.S. attorney leading the prosecution, who purportedly objected to the line of questioning.

“I would just say nobody is trying to prevent consumers from getting access to this information and to these witnesses,” said Adam Hollingsworth, an attorney representing FirstEnergy, according to a transcript of the hearing.

“It’s just a matter of timing, and the U.S. Attorney’s office has represented to us that the timing of these questions would materially impact their investigation.”

Other parties involved in the deposition took issue with FirstEnergy’s effort on several points. For one, they argued their lines of questioning were aligned with investigating alleged corporate separation violations from FirstEnergy. For two, they questioned why the PUCO should take FirstEnergy’s word about a purported conversation with a prosecutor to which no one else was party.

“I also think it was improper for FirstEnergy Corporation’s counsel to call the DOJ’s office without all of us on the phone,” said Kim Bojko, an attorney representing the Ohio Manufacturers Association, a party to the deposition. “We think it was highly inappropriate to hear one side of the story, and him characterizing questions the way he did.”

Bojko said the payments to Randazzo could directly apply to the corporate separation issues at hand.

The PUCO judge ruled that the OCC and others cannot ask further questions about non-public information that relates to the deferred prosecution agreement FirstEnergy entered into with the U.S. Department of Justice. However, as something of a compromise, she agreed to make the hearing transcript public.

A spokesman for the PUCO declined to answer when asked if the agency contacted prosecutors to verify FirstEnergy’s claim.

Jennifer Thornton, a spokeswoman for the U.S. Attorney for the Southern District of Ohio, declined to answer as well. She said that FirstEnergy is obligated to cooperate fully with the office.

“We want to make clear that it is always our goal to not only protect the public but also keep the public informed,” she said. “After all, FirstEnergy’s alleged illegal conduct was uncovered by us and then the details made public through the Statement of Facts in our [deferred prosecution agreement]. It is our understanding that PUCO’s orders set forth a policy of non-interference for matters that overlap with our criminal investigation and prosecution. Accordingly, we believe information will become public in due course.”

Months after Householder’s 2020 arrest, the PUCO opted against one centralized investigation of FirstEnergy’s conduct. Instead, it took a more byzantine approach of four interrelated investigations. That decision was made when the PUCO was under control of Randazzo.

FirstEnergy admitted in the deferred prosecution agreement that it paid Randazzo a $4.3 million bribe. He resigned after FBI agents raided his home. He has however maintained his innocence and has not been charged with a crime.

The probe in question focuses on whether FirstEnergy violated Ohio’s corporate separation laws, which require companies to distinguish and separately account for their regulated utility businesses with various unregulated affiliate businesses.

A PUCO-commissioned audit released last year identified several deficiencies in FirstEnergy’s corporate separation practices. However, that audit was limited by the fact that investigators “could not get access to records of the compliance officer in place during the audit period (2016 through 2020) since that person had been separated from the company prior to the start of the audit.”

This prompted the OCC to request that the PUCO subpoena Yeboah-Amankwah. Both Yeboah-Amankwah herself and FirstEnergy unsuccessfully sought to quash the subpoena.

An attorney for Yeboah-Amankwah did not respond to inquiries.

On Tuesday, the OCC filed an appeal with the PUCO, warning that its order from last week, if not clarified, could essentially “shut down” the deposition.

“Ohio consumers should not be sacrificed because FirstEnergy Corp. has been accused of a crime,” OCC lawyers wrote. “The PUCO has a legal duty to protect Ohio consumers from unlawful and unreasonable electric rates. The PUCO’s response to FirstEnergy Corp.’s interference with and attempt to thwart the deposition should be ‘no.’”

An OCC spokeswoman did not respond when asked if the agency had reached out to the U.S. Attorney’s office on the matter.

The PUCO has not yet ruled on the OCC’s appeal.