Edison Admits Management Lax on Fraud

Management?s complacency contributed to employee fraud continuing without detection or correction, Southern California Edison conceded in a June 25 report to the California Public Utilities Commission. Edison, which first revealed the scandal in March, said at least 36 employees falsified performance surveys. To make amends, the utility offered to refund $14.4 million out of $48 million earned and pending awards dating back to 1997 ( Circuit , March 19, 2004). The report noted that in some instances, employees substituted their own phone numbers for customer phone numbers and replaced less satisfied customer responses with more favorable ones to inflate survey results. Overemphasis on positive survey results, criticism for negative results, workload pressures, personnel turnover, and inexperienced planners contributed to the misconduct. Edison also revealed that problems were prolonged in part because ?senior management was complacent in assuming that employees would rarely if ever engage in deliberate alteration of data as a basis of customer contact information.? Frontline supervisors were ?active participants? in inflating survey results. Specifically, eight of the 36 personnel fingered for fraud and five of the nine terminated were supervisors. The Design Organization unit was cited as solely responsible for the misconduct. ?In twenty years I can?t remember a utility?s employees and management lying about this type of behavior,? said Scott Hempling, an attorney focusing on regulated utilities. Hempling said that while it would be unfair to assume that corruption extends to other Edison operations, ?prudent regulators should now open their eyes wide and ask what is the highest level of the company to which potentially some of these problems [could extend]? and trace employees? actions to those of supervisors. Allowing Edison to return $14.4 million would not act as a deterrent to future misconduct, in Hempling?s view. The CPUC must come up with more appropriate penalties, he added. When Edison came forward with news of the scandal in March, Michael Peevey, CPUC president and former president of the utility, called for an investigation and said penalties could be leveled against the company. An ?informal investigation? is continuing, said Terrie Prosper, commission press secretary, but no date has been set for action on the matter.

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Edison Admits Management Lax on Fraud

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