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Federal prosecutors increase focus on Energy Harbor in Ohio bribery case – WSJ

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Federal prosecutors increase focus on Energy Harbor in Ohio bribery case – WSJ

The U.S. Department of Justice has reportedly subpoenaed Energy Harbor Corp. for information that will shed light on its role in payments made to advocate for the passage of Ohio's nuclear subsidy law.

Federal prosecutors asked Energy Harbor executives to provide documents and communications as part of the criminal investigation into whether company representatives knowingly participated in an alleged "pay-to-play" corruption scheme, The Wall Street Journal reported Oct. 14, citing people familiar with the matter.

Energy Harbor Executive Chairman John Kiani and Stephen Burnazian, the company's chief strategy officer, are among the company executives asked to turn over documents, the newspaper reported. Kiani and Burnazian are former hedge fund investors who helped steer Energy Harbor's bankruptcy reorganization, The Wall Street Journal reported.

Kiani was the co-founder of Cove Key Management LP, and Burnazian served as senior vice president with Avenue Capital Group LLC, according to Energy Harbor's website.

Former FirstEnergy Corp. subsidiary FirstEnergy Solutions Corp. emerged from bankruptcy as Energy Harbor in February.

In July, federal prosecutors filed bribery charges against former Ohio House Speaker Larry Householder and four associates, who have been indicted and accused of using "more than $59 million" through a "slush fund" used to steer a nuclear subsidy law known as House Bill 6 through the Ohio Legislature. An affidavit filed by an FBI special agent implies that FirstEnergy and affiliated entities, though not mentioned by name, wired funds through a 501(c)(4) nonprofit group called Generation Now to support H.B. 6 and combat a statewide referendum to repeal the law.

H.B. 6 provides $150 million in annual financial support for the 908-MW Davis-Besse and 1,268-MW Perry nuclear plants now owned by Energy Harbor.

Energy Harbor did not immediately respond to a request for comment.

FirstEnergy faces similar questions about whether it knowingly participated in a corruption scheme, sources told The Wall Street Journal.

"The revelation of a subpoena and investigation into Energy Harbor is not a surprise," Guggenheim Securities LLC analyst Shahriar Pourreza wrote in an Oct. 14 research report. "In our view, this is simply the foil to the already-public investigation that is ongoing at FirstEnergy corporate, although the omission of any incremental data points related to [FirstEnergy] is a slight positive."

The analyst expects the case to slowly unravel with "an uncertain timeline on resolution."

"We do not ascribe to the view that this somehow indicates the focus of the investigation has shifted to Energy Harbor — there is simply too little visibility into the process," Pourreza wrote.