In 2016, Pacific Gas & Electric Company (PG&E) was convicted of several felonies for obstructing an agency investigation and failing to comply with federal pipeline safety regulations. As part of its sentence, PG&E was fined and placed on probation. (Only the company was charged, so no individual faced prison.) As is common, one of the conditions of the probation was ongoing court supervision of PG&E’s safety activities.
Ordered to Respond to Wall Street Journal Article
On July 10, 2019, the judge supervising PG&E’s probation issued an unusual order, requiring PG&E to file a “public statement with the Court” responding to a Wall Street Journal article titled “PG&E Knew for years Its Lines Could Spark Wildfires, and Didn’t Fix Them.” Although PG&E’s convictions were not for causing wildfires, the judge ordered the response to be “on a paragraph-by-paragraph basis stating the extent to which each paragraph is accurate.”
The judge further told PG&E it could not simply refer to the thousands of documents on file in the case but must provide “a fresh, forthright statement owning up to the true extent of the Wall Street Journal report.”
Campaign Contributions and Dividends
The judge learned through other sources PG&E made campaign contributions after its conviction and issued dividends to shareholders.
PG&E was ordered to “set forth the full amount of campaign contributions and to whom such contributions were made” and “explain why those campaign contributions were more important than replacing or repairing the aging transmission lines described by the Wall Street Journal.” The judge further ordered PG&E to explain why it paid “almost five billion dollars in dividends” when “PG&E was aware of the problems named in the Wall Street Journal.”
Consequences of a Corporation’s Criminal Conviction
Corporations on federal probation will have a federal judge scrutinizing management’s decisions, an important but often overlooked consequence of illegal corporate activity.
PG&E’s response is due July 31, 2019.