Ohio’s $61 million bribery scandal proves it’s easier to prosecute politicians than corporations

Former Ohio House speaker and former GOP chairman faces 20 years in prison after being convicted in $61 million bribery scheme involving FirstEnergy
Company. But the utility got a slap on the wrist. What gives?

In public opinion, people are held to a higher standard than corporations — especially for politicians who are accountable to the people. But profit-seeking companies can get away with more. Individuals are more tangible than anonymous and faceless businesses, which, if punished too harshly, can harm their employees and the communities in which they operate.

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

At issue is an Ohio law that calls for a $1.3 billion bailout package to tax every electricity consumer and funnel the money into bailing out FirstEnergy’s former nuclear operations. The bribes helped get this law passed and a voter initiative defeated.

Former House Speaker Larry Householder and former Ohio Republican Party Chairman Matthew Borges were sentenced last Thursday. The FBI testified that Householder took home about $514,000 while Borges took home $366,000. They have pledged, saying they will appeal their cases.

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

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

However, Ohio 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 financed the corrupt Household Enterprise — cannot be allowed to get away without killing,” Yost said in a statement.

“Larry Householder illegally sold out the state and ultimately betrayed the great Ohioans he was elected to serve,” U.S. Attorney Kenneth L. Parker added in a statement. “Matt Borges was a willing conspirator, bribing money for insider information to help the Head of the Family. With today’s verdict, the court confirmed that the unlawful acts committed by both men will not be tolerated and that they must be held accountable.”

How ethical lapses erode business and government

The events surrounding FirstEnergy’s bribery are similar to those surrounding Volkswagen and Wells Fargo
. In the case of the former, prosecutors accused the automaker of cheating on emissions standards — an allegation that sent former Volkswagen Group executive Oliver Schmidt to prison. As for the bank, it opened 3.5 million accounts without its customers understanding the real purpose – to collect additional fees for the company. It paid $3.7 billion to settle these and other illegal practices.

Professor Cohen says that in such cases, everyone starts pointing fingers at others, thereby diffusing the issue. Or, companies may fire a small subset of those involved, claiming they are eliminating the source of the problem. “But eliminating specific individuals doesn’t solve the problem if it’s more endemic.”

This, of course, happened in the case of Enron. Energy traders were encouraged to maximize profits under a regulatory system drafted by energy lobbyists. Enron took advantage of the system by keeping power plants offline when electricity demand was highest. Prices thus shot through the roof, making the company rich and breaking the backs of the working class.

The dead company had a mission statement. But he didn’t live with 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 finances and lied to investors. Now, “Crooked E” is the symbol of corporate evil and unchecked power.

“The idea that an ethical transgression is okay if it creates a greater good is the beginning 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. “This really hurts the higher purpose and dissolves who we are and what we stand for. As humans, we are very good at rationalizing wrong behavior and then convincing ourselves that it was for the greater good. But this mentality is eroding the basic foundations of business and government.”

Holding an individual accountable is simpler than prosecuting a company, especially if they are a staple of the community and provide an essential service. But minimizing the issue creates a bigger problem by implying that some entities are above the law and potentially encouraging others to do the same. Ultimately, customers, communities and shareholders reward businesses for doing the right thing – a concept known as the ‘triple bottom line’, which takes care of people, planet and prosperity.

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