A PG&E shareholder today filed a lawsuit against the utility’s management alleging that they diverted money for pipeline safety and used it for other corporate uses, including giving themselves hefty bonuses.
The lawsuit, filed in San Mateo County Superior Court by shareholder Hind Bou-Salman, argues that PG&E’s executives created a “profits over safety” corporate culture that led to tragedies like the 2010 pipeline explosion in San Bruno that killed eight people and destroyed 38 homes.
PG&E officials said earlier this month that the utility has settled nearly 500 confidential claims totaling more than $565 million related to the San Bruno explosion.
The California Public Utilities Commission is also currently considering a financial penalty against PG&E that could exceed $2 billion.
“Had PG&E’s management required that corporate funds be used for maintenance and repairs when it should have, the cost to PG&E would have been minimal in comparison to the significant financial injury the company now faces and will face in the future,” the lawsuit states.
Instead, the lawsuit states that PG&E executives “promoted an atmosphere and culture in which short-term profits, cost cutting and personal profiteering was put ahead of the proper management of the company.”
Bou-Salman, a Millbrae resident and PG&E stockholder for 23 years, is seeking changes in the utility’s management policies and for the return of executive bonuses approved by PG&E’s board of directors.
“PG&E and its shareholders are bearing the financial brunt of decisions made by the company’s executives,” Mark Molumphy, the attorney representing Bou-Salman, said in a statement.
“The complaint today alleges that PG&E’s executives, not its shareholders, should be held responsible for fostering a corporate culture that minimized the need to address safety,” Molumphy said.
PG&E spokeswoman Brittany Chord said, “We are carefully reviewing the allegations and we’ll respond according to the process set by the court.”
Chord said, “We remain committed to providing our communities with a safe and reliable gas system.”
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