21/11/2020

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Power corrupts - Why power companies and state-level corruption go together in America

L ARRY HOUSEHOLDER sounds unrepentant. Until July the Republican was speaker of Ohio’s state assembly—a politician best known for his prodigious fundraising and helping his party colleagues raise cash. Then in July the feds came knocking. Along with his campaign strategist and three lobbyists, he was arrested and charged with racketeering. Federal investigators say the men took $60m from a power company, widely reported to be FirstEnergy. It was transferred via a charity set up as a front. In return they passed a bill by which the state was to dish out over $1bn for two failing nuclear plants. On his arrest Mr Householder lost the speakership but he fights on, denying any wrongdoing. He is said to have spent $1m already on lawyers. This month he was re-elected, getting more votes and a bigger majority than two years ago. Voters were unbothered by news, late in October, that two of his co-accused had already pleaded guilty (and both pointed fingers at the ex-speaker). Nor did voters fuss that he could face 20 years in prison if convicted. As for the wider political impact, Mark Weaver, a political operative in Ohio, calls it a murky tale but says Mr Householder’s relative lack of fame means the impact will be slight. That is not the case in a parallel case unfolding in Illinois. This week Democrats there—plotting by phone and Zoom, as the virus kept them from Springfield—looked ready to topple their own speaker. Mike Madigan is a wisp of a man compared with barrel-chested Mr Householder. But he is the more powerful, indeed legendary, character. Known as the Velvet Hammer, Mr Madigan is reckoned to be the state’s most powerful politician, one who has seen off many governors of both parties. First elected in 1970, when Nixon was president, he has been speaker since 1983 (apart from a brief interlude in the 1990s). A relic of the era of Democratic machine politics, he has frequently been accused of wrongdoing—over a scandal at a commuter rail system in Chicago, and a sexual-harassment case that took down his chief of staff—yet he always slipped away unscathed. This time could be different. As in Ohio, federal investigators appeared this summer. They pressed charges setting out how an energy company, Commonwealth Edison (ComEd), handed jobs, cash and contracts to pals of the politician. Their investigation spanned eight years to 2019. In a plea bargain ComEd has already admitted to paying $1.3m in return for two laws that weakened regulators’ checks on how it set rates. That earned the company, at customers’ expense, an estimated $150m. It has already agreed to pay a $200m fine and Fidel Marquez, who ran its government affairs office until last year, pleaded guilty to bribery in September. That leaves Mr Madigan vulnerable. He has not been arrested or charged and he denies any wrongdoing. But a 38-page deferred prosecution agreement between prosecutors and ComEd sets out in detail how federal investigators see the dubious role of “public official A” who is bluntly identified as the speaker. Voters, especially beyond Chicago, sound fed up with the whiffs of scandal around him. After they delivered a relatively poor result for Democrats in elections this month the governor, J.B. Pritzker, and both senators for the state, Dick Durbin and Tammy Duckworth, all Democrats, rounded on the speaker. Mr Durbin called the Democratic party in Illinois a “corrupt organisation” and said the speaker and his allies must go. Forcing him out, however, depends on swaying Democratic state legislators, many of whom dread any idea of crossing Mr Madigan. Rich Miller, a well-connected journalist in Springfield, is a veteran watcher of failed plots against Mr Madigan. This is “by far the closest it’s got for him, politically and legally”, he says, especially after investigators bugged phones of his close officials. As for politics, Anne Stava-Murray, a newish Democrat representative who led a lonely rebellion against Mr Madigan two years ago, says that she has rallied 13 colleagues, notably many women, to defy the speaker. If true, and they hold their nerve, that is enough to remove him. One puzzle is why energy companies are mired in dirt in both states—after all, machine politicians used to work through unions and local government departments. Today energy firms have costly old assets to maintain, such as nuclear plants, while demand for electricity is flat at best. Their fortunes thus depend on regulatory change and getting subsidies or tax breaks, in the gift of politicians. In return, they can offer jobs and favours for friends in office. Power may corrupt, but in the Midwest it is power firms that corrupt absolutely.■
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