Ohio’s $61 Million Bribery Scandal Proves It’s Easier To Prosecute Politicians Than Companies

Ohio’s former House Speaker and former Republican Party Chair are facing 20 years in prison after being convicted in a $61 million bribery scheme involving FirstEnergyFE
Corporation. But the utility got a wrist-slap. What gives?

In public opinion, humans must live up to higher standards than corporations — especially true of politicians who are accountable to the people. But companies pursuing profits can get away with more. Individuals are more tangible than nameless and faceless enterprises, which, if penalized too harshly, can hurt their employees and the communities where they operate.

“We have different expectations for people than we do corporations,” says Taya Cohen, associate professor for business ethics at Carnegie Mellon University in Pittsburgh, in an interview with this writer. Consider an unfulfilled contract: “With an individual, it is a broken promise. With a company, we feel it is in their interest, and we don’t moralize it in the same way. Society may not see it as a huge moral transgression.”

At issue is an Ohio law calling for a $1.3 billion rescue package to tax every electricity consumer and direct the money to bail out FirstEnergy’s former nuclear operations. The bribes helped pass that law and defeat a voter initiative.

Former House Speaker Larry Householder and former Ohio Republican Party Chair Mathew Borges got convicted last Thursday. The FBI testified that Householder took home about $514,000 while Borges got $366,000. They are out on bond, saying they will appeal their cases.

In a 2021 deferred prosecution agreement between FirstEnergy and federal prosecutors, the utility admitted that it conspired with and later bribed public officials. The company was penalized $230 million — to be split equally between the federal and state governments. In Ohio, the utility will use it to help low-income citizens pay their utility bills. It is the largest fine ever imposed by the U.S. Attorney’s Office for the Southern District of Ohio.

Prosecutors said they wanted the penalty to “sting” but did not want to disrupt the company’s business. They filed one charge: conspiracy to commit honest services and wire fraud, which they will dismiss if FirstEnergy cooperates.

Still, Ohio’s Attorney General, Dave Yost, is pursuing a civil racketeering charge against the utility. “Other wrongdoers in this scandal – especially and including the First Energy executives who funded the corrupt Householder Enterprise – cannot be permitted to escape scot-free,” Yost said in a statement.

“Larry Householder illegally sold the statehouse, and thus he ultimately betrayed the great people of Ohio he was elected to serve,” added U.S. Attorney Kenneth L. Parker in a statement. “Matt Borges was a willing co-conspirator, who paid bribe money for insider information to assist Householder. Through its verdict today, the jury reaffirmed that the illegal acts committed by both men will not be tolerated and that they should be held accountable.”

How Ethical Transgressions Erode Business and Government

The events surrounding FirstEnergy’s bribe are similar to those that shrouded Volkswagen and Wells FargoWFC
. In the case of the former, prosecutors accused the automotive company of cheating on its emissions standards — a claim that sent former Volkswagen Group executive Oliver Schmidt to prison. As for the bank, it opened 3.5 million accounts without its customers’ understanding of the true purpose — to rack up additional fees for the company. It paid out $3.7 billion to settle those and other illegal practices.

Professor Cohen says that in such cases, everyone starts pointing fingers at everyone else, thus diffusing the matter. Or, the companies may fire a small subset of those involved, claiming to eradicate the source of the problem. “But eliminating specific individuals does not solve the problem if it is more endemic.”

That, of course, was the case with Enron. Energy traders were encouraged to maximize profits within a regulatory scheme written by energy lobbyists. Enron exploited the system by keeping power plants offline when electricity demand was highest. Prices thus shot through the roof, making the company rich while breaking the backs of the working class.

The dead corporation had a mission statement. But it didn’t live by it. Once someone crosses the line, it becomes easier to do it again — until it all comes crashing down. As for Enron, it also manipulated financials and lied to investors. Now, the “Crooked E” is the symbol of corporate malfeasance and unchecked power.

“The idea that an ethical transgression is alright if it creates a larger good is the start of something very problematic,” says Todd Haugh, professor of business ethics at Indiana University’s Kelley School of Business, in an earlier conversation with this reporter. “That actually hurts the higher purpose and rips apart who we are and what we stand for. As humans, we are very good at rationalizing wrong behaviors and then convincing ourselves it was for the greater good. But this mindset erodes the basic foundations of business and government.”

Holding an individual to account is more straightforward than prosecuting a company, especially if it is a community staple and provides an essential service. But minimizing the issue creates a bigger problem, implying that certain entities are above the law and potentially encouraging others to do the same. Ultimately, customers, communities, and shareholders reward enterprises for doing the right thing — a concept known as the ‘triple bottom line,’ which looks after people, the planet, and prosperity.