Speaker 1: You're listening to Bloomberg Law with June Grassoe from Bloomberg Radio.
Speaker 1: It's the deadliest corporate crime in US history. And P
Speaker 1: G and E pleaded guilty to eighty four counts of
Speaker 1: manslaughter on Tuesday for its role in igniting the California
Speaker 1: wildfire that killed eighty four people, destroyed nearly nineteen thousand
Speaker 1: homes and businesses, and the entire town of Paradise. On
Speaker 1: the same day that CEO, Bill Johnson, repeated the guilty
Speaker 1: plead to involuntary manslaughter eighty four times before Judge Michael Deames,
Speaker 1: another judge, cleared the way for the company to exit bankruptcy,
Speaker 1: although the long term future of the utility Giant remains
Speaker 1: in question. Joining me as former prosecutor Peter Henning, a
Speaker 1: professor at Wayne State University Law School, how unusual is
Speaker 1: it for a corporation to plead guilty two felonies. Well,
Speaker 1: Bill Johnson, the CEO of P G and E, stood
Speaker 1: up in the Bauque County the Superior Court and pleaded
Speaker 1: guilty eighty four times. This is unprecedented. We haven't seen
Speaker 1: a company stand up and say we're guilty of manslaughter
Speaker 1: eighty four different times. Ke g and E is still
Speaker 1: under probation for a conviction for a gas pipeline blast
Speaker 1: that killed eight people. So were they sort of backed
Speaker 1: into a corner here? They really were backed into a corner.
Speaker 1: They had to negotiate some kind of a deal with
Speaker 1: the county prosecutor and they're going to end up paying
Speaker 1: three and a half million dollar fine, and then they're
Speaker 1: also going to pay five hundred thousand dollars to the
Speaker 1: Butte County Prosecutor's office to cover the cost of the investigation.
Speaker 1: So what had happened was that there was a hook
Speaker 1: that was on one of the power lines that came
Speaker 1: detached and that ended up starting the Paradise fire. And
Speaker 1: so you now have Bill Johnson standing up in court
Speaker 1: saying we're sorry for what happened here. So, Peter, some
Speaker 1: people look at this and say, Okay, they're going to
Speaker 1: pay a lot of money, but no executives are being
Speaker 1: sent to jail when this is the company that has
Speaker 1: repeatedly done things that were illegal. Yes, and in fact,
Speaker 1: you know, with the various fires that have started in
Speaker 1: northern California, much of it is traceable to p genese
Speaker 1: failures and what you have happening here is no one
Speaker 1: is being held responsible except for Bill Johnson CEO, who
Speaker 1: had to show up in court and plead guilty. But
Speaker 1: no one in the corporate Hiero or key is being
Speaker 1: held responsible for this beyond the three and a half
Speaker 1: million dollars that Penny has to pay. Plus they've entered
Speaker 1: into a settlement with the families of the people who
Speaker 1: died for thirteen and a half billion dollars and they're
Speaker 1: going to pay that in stock. So, you know, is
Speaker 1: a stock going to be worth anything? That's an interesting
Speaker 1: question to ask because it may be worthless stock. There
Speaker 1: was a lot of talk about the governor threatening a
Speaker 1: state takeover of p g n e. In a situation
Speaker 1: like this, or a company has repeatedly failed to live
Speaker 1: up to standards and affects community after community, why not
Speaker 1: have a public takeover of it. Well, I think that's
Speaker 1: an interesting question because Governor Gavin Newsome has said that
Speaker 1: he wants to see p g n e UM respond
Speaker 1: to it's many and various failures, the many fires that
Speaker 1: have broken out in northern California and killed any number
Speaker 1: of people. He wants to see them perhaps be taken
Speaker 1: over and run like a public utility that would allow
Speaker 1: for people to um pay their bills, but to still
Speaker 1: it would still be a public utility and it would
Speaker 1: be regulated by the states. So the Public Service Commission
Speaker 1: is still going to be regulating p G and E,
Speaker 1: and I don't think they're going to allow p G
Speaker 1: and E to raise its rates very much. I do
Speaker 1: think that they are going to say, look, you're not
Speaker 1: going to cover the thirteen and a half billion dollars
Speaker 1: by raising your rates and forcing people to pay much
Speaker 1: higher rates. Coming up next, Don Bloomberg Law victims will
Speaker 1: get a chance to speak their piece before the sentencing
Speaker 1: of p G n E. I've been talking to Professor
Speaker 1: Peter Henning of Wayne State University Law School about p
Speaker 1: G and E pleading guilty to involuntary manslaughter and admitting
Speaker 1: that it killed eighty four people after its equipment ignited
Speaker 1: the deadliest fire in California state history. Explain what happened
Speaker 1: to Arthur Anderson and how that won't happen here because
Speaker 1: basically California residents can't say I'm not going to use
Speaker 1: p G n E anymore. Well, what it happened with
Speaker 1: Arthur Anderson was they were convicted of obstruction of justice.
Speaker 1: It turned out three years later the Supreme Court reverse
Speaker 1: to the conviction. But hear, what you have with P
Speaker 1: G and E is you have a company acknowledging that
Speaker 1: it killed eight four different people. And so this is
Speaker 1: really going to be very costly for p G and E.
Speaker 1: Even after the San Bruno explosion that happened south of
Speaker 1: San Francisco that killed eight different people, you're still going
Speaker 1: to have the company on probation. And I would expect
Speaker 1: that the federal judge in San Francisco who's overseeing the
Speaker 1: probation to crack the whip on them and force p
Speaker 1: G and E to upgrade its towers and upgrade the
Speaker 1: hooks that are holding onto the various power lines. And
Speaker 1: it would not surprise me if the federal district judge
Speaker 1: in San Francisco said, look, you have to improve how
Speaker 1: you are operating theater. Explain why prosecutors couldn't charge individual executives.
Speaker 1: It's essentially a case that involves corporate negligence. And that's
Speaker 1: why the CEO of the company came in and pleaded
Speaker 1: guilty eighty four times and said that we can't make
Speaker 1: up for the loss of life here. And so what
Speaker 1: I think we're going to see happen with p G
Speaker 1: and E is that there is a real chance that
Speaker 1: the state is going to take them over and run
Speaker 1: them as a public utility and uh not allow them
Speaker 1: to raise their rates to cover the cost of the
Speaker 1: thirteen and a half billion dollars that they have agreed
Speaker 1: to pay out to the various families of the victims.
Speaker 1: And so I would not surprise me if Governor Knew
Speaker 1: some stepped in and said, look, p g NY, you're
Speaker 1: not going to continue to operate the way you've been operating.
Speaker 1: You've got to take a step back, and you've got
Speaker 1: to be run as a public utility. This is the
Speaker 1: second bankruptcy for pg n E in twenty years. So
Speaker 1: when they've run into serious problems, they go into bankruptcy
Speaker 1: and then they're guaranteed to come out of it because
Speaker 1: the state needs them. Absolutely. The state needs p G
Speaker 1: n E because it it covers most of northern California
Speaker 1: and UM and so there's no way really to shut
Speaker 1: the utility down, and they're going to need to come
Speaker 1: up with a way to figure out how they can
Speaker 1: turn p G and E into a public utility and
Speaker 1: ensure that it continues to operate properly and that they
Speaker 1: they improve their UM power grid and the power lines.
Speaker 1: And I think they're going to have to go back
Speaker 1: and replace all the hooks that are holding up the
Speaker 1: various power lines. This is really going to be an
Speaker 1: issue for Governor Newsom. I think he's going to try
Speaker 1: to step in and say, look, p G and E,
Speaker 1: you can't continue to operate the way you have been operating.
Speaker 1: I want to get your take on this. I read
Speaker 1: that prosecutors have been trying for forty years to charge
Speaker 1: companies for killing people, and the closest comparison is BPS
Speaker 1: manslaughter play in the deep Water Horizon. That's probably the
Speaker 1: closest analogy, because ten people on the deep Water Horizon
Speaker 1: died and so BP ended up pleading guilty UM in
Speaker 1: that case and paid a very substantial fine. UM. And
Speaker 1: because of the blowout that happened on the deep Water Horizon,
Speaker 1: you have beaches for miles that were polluted, and so
Speaker 1: British Petroleum had to go and clean up all those
Speaker 1: beaches and so UM. It would not surprise me if
Speaker 1: Governor Knewsome stepped in and said, look, p G. And
Speaker 1: E cannot continue to operate the way it has been operating.
Speaker 1: That they have to improve how they are preventing fires
Speaker 1: and trying to keep fires from happening. And it would
Speaker 1: not surprise me if Governor Knewsome got the state legislature
Speaker 1: to step in and say, look, you're no longer a
Speaker 1: private utility, You're now a public utility. The judge is
Speaker 1: going to allow the victims and relatives of the victims
Speaker 1: to make impact statements before the sentencing. The sentencing has
Speaker 1: already been agreed to. Do victim impact statements really help?
Speaker 1: I think it might well affect the sentencing because the
Speaker 1: judge Weims in Butuque County is going to listen to
Speaker 1: the victim impact statements and make a decision um based
Speaker 1: on you know, the three and a half million PG
Speaker 1: and E has to pay UM. He could increase that
Speaker 1: fine and a look, you've got to compensate these victims,
Speaker 1: and you have to pay them um substantially more than
Speaker 1: the thirteen and a half billion that p G and
Speaker 1: E has agreed to. So far, do victims finding cathartic
Speaker 1: to make these statements in court? I think it certainly
Speaker 1: provides the measure of Catharsis because families of the victims
Speaker 1: can come in and point the finger at P. G
Speaker 1: and E and say, you destroyed lives. You destroyed eighty
Speaker 1: four different lives by pleading guilty to the manslaughter charges,
Speaker 1: and now you're going to have to pay a cost
Speaker 1: for that. Thanks for being on Bloomberg Law, Peter. That's
Speaker 1: Peter Henning, a professor at Wayne State University Law School.
Speaker 1: Coming up next on Bloomberg Law. Why the Supreme Court
Speaker 1: gave the Atlantic Past pipeline the Okay, I'm jam Brasso
Speaker 1: and this is Bloomberg