Pacific Gas and Electric (PG&E) CEO Bill Johnson earlier this month made a public apology in a courtroom in California for the deaths of 84 people who died in a wildfire started because of faulty equipment used by his company. The company pled guilty to 84 counts of involuntary manslaughter and agreed to pay compensation totaling $25.5 billion.
Yes, this is the same PG&E featured in the film “Erin Brockovich,” which is based on the discovery PG&E was poisoning employees and residents near the company’s power plant in Hinkley, Calif. That town is still fighting for clean water nearly 25 years after that infamous case.
PG&E has also been accused of failings in relation to gas explosions, which resulted in a number of deaths. It also spends tens of millions on political lobbying at a federal and state level. Employees of the company have been indicted for bribery and corruption.
This recent court case has made me ponder: What is expected of the chief compliance officer for a company like PG&E? I posit all compliance officers have a difficult job, which almost constantly draws them into conflicts—internally and externally. That being said, I sense the job at PG&E is somewhat more difficult than most, but what is expected of this person and by whom?
Do the board and the CEO want a “Yes” man/woman in the role? Is this person supposed to identify which regulations frustrate the business of PG&E and then steer the lobbying strategy? Or is their job to ensure PG&E complies? In other words, what takes priority here: compliance or lobbying? Do regulators want a person who acts independently of the board and is not influenced or, dare I suggest, manipulated by lobbying strategies? And what of the shareholders; what do they need from the chief compliance officer?
Nobody at PG&E is in the business of killing people, but it has to be acknowledged that actions, and probably inaction, on the part of the company have led to deaths. Some would assert that money spent on political lobbying could and should have been spent on better equipment, better inspections, and more generally better health and safety for employees, customers, and the people who live in the communities where PG&E does business.
Can you envisage a compliance finding, a failing if you will, being reported to the board and a decision being taken to lobby for changes to the regulation the failing related to? I am not accustomed to this level of political lobbying and can only imagine the additional conflicts and tensions this inevitably brings to the role of a chief compliance officer. I like to think, perhaps a little naively, that presently PG&E would want a chief compliance officer who can internally drive change to practices and processes that better protect people. (The company’s current CECO was questioned in court in March.)
I envisage a personality, a motivated individual who engenders confidence and inspires people. I see a person who sells the values and benefits of good compliance, because this is core to their own beliefs. They protect, guide, and educate colleagues in order to ensure compliance, safety, and mutual respect for all parties. For the employees, customers, and shareholders of PG&E, let’s hope this is the case.
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