SCANA wants to freeze lawsuits that could force its executives to give up bonuses
Under siege on multiple fronts, SCANA is asking state and federal courts to freeze at least five lawsuits filed against it in the wake of its bungled V.C. Summer nuclear project.
Those lawsuits, called shareholder derivative lawsuits, seek to force the Cayce-based utility’s top executives and directors to give back pay, bonuses and other compensation – totaling in the millions of dollars – that they have received in recent years.
During those years, SCANA was telling the public and investors that construction of its Fairfield County nuclear project was going well. But, according to the lawsuits, SCANA officials knew the project was destined to fail.
The SCANA officials issued the rosy statements to pump up their company’s stock price, the lawsuits claim. That, in turn, pumped up their compensation.
“We will vigorously oppose the motion” to freeze the lawsuits, said Columbia attorney Eric Bland, who is pressing one of the shareholder derivative lawsuits.
SCANA vigorously denies the allegations, saying neither it nor its executives did anything improper. Instead, the utility says it was the victim of unanticipated cost overruns and design failures by the contractor for the multi-billion-dollar nuclear project.
In its motion to freeze — or “stay — the lawsuits, SCANA says the shareholder derivative lawsuits should not play out at the same time as other legal actions. The lawsuits pose a conflict with the “flood of legal and regulatory action” that has engulfed SCANA since last summer.
That was when SCANA’s SCE&G subsidiary and its junior partner in the nuclear project, the state-owned Santee Cooper utility, announced they were abandoning the nuclear project, citing financial and construction difficulties.
SCANA’s 34-page motion, filed this week in federal court, is noteworthy, in part, because it lays out – in one document – all the legal actions engulfing SCANA.
They include:
▪ Environmental interest groups and others have filed actions before the Public Service Commission to block SCANA from charging its customers any more to recoup its costs for the failed nuclear plant. SCE&G now collects about $445 million a year from its customers for those costs. Some of the PSC actions also seek refunds for the almost $2 billion that SCE&G customers already have paid for the nuclear project.
▪ Five lawsuits in state courts, filed by ratepayers, seeking to block SCE&G from continuing to bill its customers for its nuclear-related costs and to strip SCANA’s board of its authority over the utility. Another ratepayer lawsuit is pending in federal court. All of the suits also seek refunds for money that customers already have paid for the nuclear project.
▪ Four lawsuits in federal court alleging civil securities fraud by SCANA top officials.
▪ Various state and federal criminal investigations by the State Law Enforcement Division and FBI into whether SCANA officials intentionally misled the public about the nuclear project in order to get higher pay, based on their company’s artificially inflated stock price. The Securities and Exchange Commission and a federal grand jury also are investigating SCANA. SCANA has said it is cooperating with investigators.
To have to defend the shareholder derivative lawsuits at the same time as the other proceedings “places the company in an untenable position, potentially undermining its defenses,” according to SCANA’s motion seeking a freeze.
“And to top it all off, SCANA recently announced that it has entered into an agreement to be sold to another company (Dominion) in return for a sizable premium to SCANA’s shareholders,” the motion says.
Dominion is offering stock worth about $50 a share for SCANA stock that sold for almost $75 a share earlier this year.
This story was originally published January 19, 2018 at 4:42 PM.