The Deadliest Corporate Crime in U.S. History

homes and businesses, and the entire town of Paradise. On the same day that CEO, Bill Johnson, repeated the guilty plead to involuntary manslaughter eighty four times before Judge Michael Deames, another judge, cleared the way for the company to exit bankruptcy, although the long term future of the utility Giant remains in question. Joining me as former prosecutor Peter Henning, a professor at Wayne State University Law School, how unusual is

it for a corporation to plead guilty two felonies. Well, Bill Johnson, the CEO of P G and E, stood up in the Bauque County the Superior Court and pleaded guilty eighty four times. This is unprecedented. We haven't seen a company stand up and say we're guilty of manslaughter eighty four different times. Ke g and E is still under probation for a conviction for a gas pipeline blast that killed eight people. So were they sort of backed into a corner here? They really were backed into a corner.

They had to negotiate some kind of a deal with the county prosecutor and they're going to end up paying three and a half million dollar fine, and then they're also going to pay five hundred thousand dollars to the Butte County Prosecutor's office to cover the cost of the investigation. So what had happened was that there was a hook that was on one of the power lines that came detached and that ended up starting the Paradise fire. And so you now have Bill Johnson standing up in court

saying we're sorry for what happened here. So, Peter, some people look at this and say, Okay, they're going to pay a lot of money, but no executives are being sent to jail when this is the company that has repeatedly done things that were illegal. Yes, and in fact, you know, with the various fires that have started in northern California, much of it is traceable to p genese failures and what you have happening here is no one is being held responsible except for Bill Johnson CEO, who

had to show up in court and plead guilty. But no one in the corporate Hiero or key is being held responsible for this beyond the three and a half million dollars that Penny has to pay. Plus they've entered into a settlement with the families of the people who died for thirteen and a half billion dollars and they're going to pay that in stock. So, you know, is a stock going to be worth anything? That's an interesting

question to ask because it may be worthless stock. There was a lot of talk about the governor threatening a state takeover of p g n e. In a situation like this, or a company has repeatedly failed to live up to standards and affects community after community, why not

have a public takeover of it. Well, I think that's an interesting question because Governor Gavin Newsome has said that he wants to see p g n e UM respond to it's many and various failures, the many fires that have broken out in northern California and killed any number of people. He wants to see them perhaps be taken over and run like a public utility that would allow for people to um pay their bills, but to still it would still be a public utility and it would

be regulated by the states. So the Public Service Commission is still going to be regulating p G and E, and I don't think they're going to allow p G and E to raise its rates very much. I do think that they are going to say, look, you're not going to cover the thirteen and a half billion dollars by raising your rates and forcing people to pay much

higher rates. Coming up next, Don Bloomberg Law victims will get a chance to speak their piece before the sentencing of p G n E. I've been talking to Professor Peter Henning of Wayne State University Law School about p G and E pleading guilty to involuntary manslaughter and admitting that it killed eighty four people after its equipment ignited

the deadliest fire in California state history. Explain what happened to Arthur Anderson and how that won't happen here because basically California residents can't say I'm not going to use p G n E anymore. Well, what it happened with Arthur Anderson was they were convicted of obstruction of justice. It turned out three years later the Supreme Court reverse to the conviction. But hear, what you have with P G and E is you have a company acknowledging that

it killed eight four different people. And so this is really going to be very costly for p G and E. Even after the San Bruno explosion that happened south of San Francisco that killed eight different people, you're still going to have the company on probation. And I would expect that the federal judge in San Francisco who's overseeing the probation to crack the whip on them and force p G and E to upgrade its towers and upgrade the

hooks that are holding onto the various power lines. And it would not surprise me if the federal district judge in San Francisco said, look, you have to improve how you are operating theater. Explain why prosecutors couldn't charge individual executives. It's essentially a case that involves corporate negligence. And that's why the CEO of the company came in and pleaded guilty eighty four times and said that we can't make

up for the loss of life here. And so what I think we're going to see happen with p G and E is that there is a real chance that the state is going to take them over and run them as a public utility and uh not allow them to raise their rates to cover the cost of the thirteen and a half billion dollars that they have agreed to pay out to the various families of the victims.

And so I would not surprise me if Governor Knew some stepped in and said, look, p g NY, you're not going to continue to operate the way you've been operating. You've got to take a step back, and you've got to be run as a public utility. This is the second bankruptcy for pg n E in twenty years. So when they've run into serious problems, they go into bankruptcy and then they're guaranteed to come out of it because

the state needs them. Absolutely. The state needs p G n E because it it covers most of northern California and UM and so there's no way really to shut the utility down, and they're going to need to come up with a way to figure out how they can turn p G and E into a public utility and ensure that it continues to operate properly and that they they improve their UM power grid and the power lines. And I think they're going to have to go back and replace all the hooks that are holding up the

various power lines. This is really going to be an issue for Governor Newsom. I think he's going to try to step in and say, look, p G and E, you can't continue to operate the way you have been operating. I want to get your take on this. I read that prosecutors have been trying for forty years to charge companies for killing people, and the closest comparison is BPS

manslaughter play in the deep Water Horizon. That's probably the closest analogy, because ten people on the deep Water Horizon died and so BP ended up pleading guilty UM in that case and paid a very substantial fine. UM. And because of the blowout that happened on the deep Water Horizon, you have beaches for miles that were polluted, and so British Petroleum had to go and clean up all those

beaches and so UM. It would not surprise me if Governor Knewsome stepped in and said, look, p G. And E cannot continue to operate the way it has been operating. That they have to improve how they are preventing fires and trying to keep fires from happening. And it would not surprise me if Governor Knewsome got the state legislature to step in and say, look, you're no longer a private utility, You're now a public utility. The judge is going to allow the victims and relatives of the victims

to make impact statements before the sentencing. The sentencing has already been agreed to. Do victim impact statements really help? I think it might well affect the sentencing because the judge Weims in Butuque County is going to listen to the victim impact statements and make a decision um based on you know, the three and a half million PG

and E has to pay UM. He could increase that fine and a look, you've got to compensate these victims, and you have to pay them um substantially more than the thirteen and a half billion that p G and E has agreed to. So far, do victims finding cathartic to make these statements in court? I think it certainly provides the measure of Catharsis because families of the victims can come in and point the finger at P. G

and E and say, you destroyed lives. You destroyed eighty four different lives by pleading guilty to the manslaughter charges, and now you're going to have to pay a cost for that. Thanks for being on Bloomberg Law, Peter. That's Peter Henning, a professor at Wayne State University Law School. Coming up next on Bloomberg Law. Why the Supreme Court gave the Atlantic Past pipeline the Okay, I'm jam Brasso and this is Bloomberg