Householder Bribery Scandal Inspires Blueprint for Reform

Even by Statehouse standards, the scandal was audacious: A consulting firm owned by State Sen. Roy Ray received $161,000 from Ohio Edison. And public records showed that Ohio Edison – which eventually became part of FirstEnergy – helped write a Ray-sponsored bill that would have meant BILLIONS for Ohio Edison and other utilities.

Despite calls for reform, the only big change occurred the following year when legislators closed the records at the very state agency that showed Ohio Edison helped write the pro-utility bill.

Almost 20 years later, Ohio’s bill-writing records remain closed, and FirstEnergy stands accused of funneling millions of hidden money to a powerful lawmaker in its quest for favorable legislation.

In July, former Ohio House Speaker Larry Householder and four others were indicted in an on-going federal bribery investigation involving FirstEnergy. FirstEnergy has not been charged, but it fired its top executive, two lobbyists entered guilty pleas and Ohio’s top utility regulator just had his condo raided by federal agents.

‘’Ohio has had a long, troubled history of Statehouse scandals,’’ explained  Catherine Turcer, executive director of Common Cause Ohio. “But the good news is the public has the power to bring about meaningful change.’’

On Nov. 16, Turcer moderated the first of two panels of experts who studied the bribery scandal and recommend ways to bring about that change. Their recommendations include:

  • Shining light on dark money to make it easier for the public to know the true sources of money used to influence elections and legislation;
  • Streamlining Ohio’s process of citizen-initiated ballot issues such as referendums;
  • Reopening records at the bill-writing agency, the Legislative Service Commission, to allow the public to know who really writes the legislation;
  • Strengthening Ohio’s whistleblower law, viewed as one of the worst in America.

Dark money is at the heart of the scandal, and as panel member panelist Ciara Torres-Spelliscy, a professor at Stetson University and a fellow at the Brennan Center for Justice, noted, “Dark money can hide all sorts of things, including criminal behavior.’’

Federal authorities alleged that FirstEnergy and FirstEnergy Solutions funneled more than $60 million in bribes through dark money groups to position Householder to return as Speaker, pass a bill to bailout First Energy’s uncompetitive nuclear power and coal plants and finance a brutally successful effort to stop opponents from holding a statewide referendum.

Tracing the path of dark money is difficult because businesses can hide money in innocuous sounding nonprofits. When the nonprofit spends money, it only has to disclose expenditures, not the money’s original source.

With the help of subpoena power, the FBI secured guilty pleas from lobbyists Juan Cespedes and Jeff Longstreth.

In his plea agreement, Longstreth admitted to setting up the dark money account, Generation Now, knowing it would be used to receive the bribe money. He also admitted to conduct designed to hide that FirstEnergy provided its funding. In his plea agreement, Cespedes admitted that he orchestrated the payments to Generation Now and knew they were meant to help install Householder as Speaker.

Ohio is among 26 states that offer the power of the statewide initiative or veto referendum. Participating states set their own rules for qualifying for the ballot, and those rules often help determine the success or failure of voter-inspired change.

Soon after the bailout bill was passed, opponents began to collect the signatures needed to ask voters to overturn it. The signature gathering exposed weaknesses in Ohio’s direct democracy laws that include a high signature requirement, a narrow window to collect them and ballot language that can be easily manipulated to achieve a desired outcome. 

Panel member Elena Nunez, an expert in ballot initiatives, urged Ohio to re-examine its signature-gathering requirements to see if they are overburdensome and consider requiring Ohio Ballot Board members to meet standards that require them to use plain ballot language.

“You should not be able to tell the biases of Ballot Board members by reading the ballot language,’’ said Nunez, Director of State Operations & Ballot Measure Strategies for Common Cause.

She also said Ohio could boost accountability by doing what Colorado does: The secretary of state’s website lists the text of ballot measures and lists committees supporting and opposing them. And all political ads – TV, radio, print and digital – should include names of the top donors behind them, she said.

Better transparency also is needed at the state legislature, said panelist Aristotle Hutras, a long-time statehouse observer and former head of the Ohio Retirement Study Council.

One important change, he said, would be to re-open records at the Ohio Legislative Service Commission so utilities and other special interests can no longer write bills in secret. He called on lawmakers to name the bill in honor of Jim Siegel, a Columbus Dispatch statehouse reporter who died last year. Siegel was so respected that members of both political parties attended his memorial service.

Hutras recounted how lawmakers closed the records nearly 20 years ago when Ohio Edison got caught writing a pro-utility bill that was introduced by a legislator on its payroll.

“I’m not suggesting that people should be prohibited from helping to write legislation,’’ Hutras said. “All I’m saying is the public should be able to find out who is doing the helping.’’

The final panelist, Columbus lawyer Fred Gittes, said that holding employers accountable is undercut by Ohio’s whistleblower law which he called “the worst whistleblower law at the state level in America.’’

Ohio’s law is so weak because of things it does not cover and because in order to qualify for whistleblower protections complaints must be in writing and the employer must be given 24 hours to fix the problem, he said.

Among items not covered: Misdemeanors.

 “If you are working at a big corporate entity that you know is overcharging people but by an amount that doesn’t reach felony levels – maybe it is a few hundred dollars for each transaction – and you report them you can be fired,’’ he said. “If you pick up the phone and call a prosecutor because you believe there is a crime going on, then you report it verbally to your employer you are not protected. ‘’

 Ohio can improve its law by drafting it to include a reporting mechanism that encourages the belief that whistleblowers can keep their jobs or at least a sufficient remedy to help their family survive. The law should not require a written report or a 24-hour wait.

“if it’s a serious problem,’’ Gittes said, “it cannot be fixed in 24 hours.’’

Our next Blueprint Forum is on November 23rd at 7 pm. We will also be hosting a follow-up discussion on December 7th at 7 pm.