Bankruptcy court overseeing Energy Harbor case didn't pre-approve $500K political donation
Laura A. Bischoff
Bankrupt and struggling for survival, FirstEnergy Solutions donated $500,000 to the Republican Governors Association in October 2018 as part of political strategy recommended by Akin Gump Strauss Hauer & Feld, a powerful law firm with offices around the world.
But the contribution – designed to help Republican Mike DeWine – didn't get prior approval from the federal bankruptcy court.
"Was there some thought at some point that hey, maybe, political contributions over a certain amount are extraordinary enough that they may be outside the ordinary course and should be approved by the bankruptcy court before being undertaken?" said U.S. Bankruptcy Court Judge Alan Koschik in a hearing on Tuesday. "Ordinary course" expenses such as rent and wages don’t have to receive pre-approval from a bankruptcy court and can be disclosed after the fact.
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Akin Gump partner Abid Qureshi told Koschik that the firm told creditors and other interested parties about the political contributions. "None of those creditor constituencies ultimately asked us to seek authorization from the court as a non-ordinary course expenditure."
At the time of the $500,000 donation to the RGA, the race between DeWine and Democrat Richard Cordray appeared to be tight. Both men had visited the FirstEnergy Solutions nuclear power plants and expressed support for nuclear energy.
Akin Gump senior advisor Geoff Verhoff told Koschik that a goal of the political donations was to distinguish FirstEnergy Solutions as a separate entity from its former parent company, FirstEnergy.
The "intended recipients" of FES political contributions included Generation Now, a dark money group linked to former Ohio House Speaker Larry Householder, the RGA, Democratic Governors Association and other dark money groups affiliated with certain gubernatorial candidates, Verhoff said. He said giving was "predicated on who was likely to be in positions of influence in the next legislative session – none of which was known to any of us at the time."
In addition to the FES $500,000 contribution to the RGA, which ran ads supporting DeWine, FirstEnergy donated $250,000 to A Stronger Ohio, a super PAC that ran ads supporting Cordray. Still, FirstEnergy and FirstEnergy Solutions, which is now called Energy Harbor, have not provided a full disclosure of how much money it pumped into Ohio politics via dark money groups.
DeWine beat Cordray in November 2018. Householder won the speaker's post in January 2019. DeWine picked attorney Sam Randazzo, who was paid $22 million by FirstEnergy between 2010 and January 2019, to lead the Public Utilities Commission of Ohio in February 2019. Householder introduced House Bill 6 in April 2019 and DeWine signed it into law in July 2019.
Akin Gump Strauss Hauer & Feld represented FirstEnergy Solutions during its bankruptcy and lobbied to pass House Bill 6, which included the nuclear bailout. It billed $67.9 million for the work, including about $2.8 million for Ohio lobbying efforts.
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Koschik put final approval of the Akin Gump fees on hold in July 2020 when news broke that FBI agents had arrested five men, including then Ohio House speaker Larry Householder, on racketeering charges related to House Bill 6. Juan Cespedes, a lobbyist hired by Akin Gump, pleaded guilty in the case.
Koschik wanted answers.
“It’s a little irksome to me that while I’m supervising this case that happened. What do I do with that? Why should I conclude that well, all the fees for the lobbying effort, $2.8 million or something in that neighborhood, should be allowed or allowed in full when what has happened happened," he said.
Akin Gump defended itself, saying it vetted and hired Cespedes and his firm, The Oxley Group, but that Akin Gump's role in the lobbying effort for House Bill 6 diminished overtime. Akin Gump attorneys and lobbyists said they had no knowledge of the alleged illegal activities.
Koschik said he'll decide by Nov. 16 whether to give final approval for Akin Gump's fees.
Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.