Former SCANA executive “silenced” for pointing to issues with nuclear project
SCANA executives deliberately lied to investors about the future of a doomed nuclear construction project, a lawyer representing former SCANA shareholders argued in court Monday.
“The bottom line is they (SCANA executives) lied to everyone, and they did it intentionally,” attorney John Browne told U.S. Judge Margaret Seymour.
The cost was tremendous, said Brown, whose lawsuit argues shareholders lost some $2.7 billion in stock value when the company’s stock price plummeted.
Seymour has a crucial decision to make about Browne’s lawsuit that alleges SCANA executives committed civil fraud that deflated investors’ stock valuations. She will decide whether to allow Browne’s lawsuit to go forward or dismiss it. She gave no hint Monday on how she might rule, or when.
Watching the proceedings Monday at the federal courthouse in Columbia were several attorneys from the U.S. Attorney’s office, which is working with the FBI to investigate criminal fraud allegations against SCANA and some of its former executives.
Federal law officials are keeping a low profile, but the investigation into the now-abandoned nuclear project in Fairfield County is an open secret in the state’s legal community.
The U.S. Attorney’s office would not comment on the investigation Monday.
During the hearing, Browne referred repeatedly to a document known as the Bechtel Report, which SCANA commissioned in 2015 to evaluate progress on the V.C. Summer nuclear plant under construction.
The Bechtel report, a draft of which was presented to SCANA the fall of 2015, detailed substantial cost overruns, construction delays and shoddy work at the nuclear plant site. But the report was never publicly released or discussed.
The company, which was publicly traded on the New York Stock Exchange, hid its findings from investors, the press and the public, Browne said.
“They treated it (the Bechtel report) as something to hide! They treated it as something to whitewash! They treated it as something to bury!” Browne said. He told the judge SCANA wanted to portray the nuclear plant’s ongoing construction as “hunky-dory” and “rosy” so as not to deflate the stock price.
During a 10-month period, from about late December 2016 to late-October 2017, as SCANA’s woes at the nuclear facility became known, SCANA’s stock price plummeted from to $43 a share from $72.
SCANA and its junior partner on the project, state-owned Santee Cooper, announced they were abandoning construction on the project on July 31, 2017.
The chaos unleashed by the nuclear failure led to SCANA, once a profitable showpiece of the state’s business community, being sold to Virginia-based energy giant Dominion Energy earlier this year at a bargain price.
At Monday’s hearing, lawyers representing SCANA and the company’s former executives belittled the claims by Browne that the company’s public statements about progress in 2015, 2016 and 2017 on the nuclear power plant were deliberately meant to mislead the public.
On the contrary, attorney Matthew Martens told the judge, SCANA was consistently open with investors and made sure that people knew the nuclear project was not a sure thing.
“Were risks disclosed? They were disclosed extensively by Mr. Bryne,” Martens said, referring to his client, Stephen Byrne, SCANA’s former chief operating officer. “No one was misled.”
Statements by Bryne and other SCANA officials were informed opinions by officials giving their best, honest assessments of the nuclear project, Martens said.
“There’s no argument that if you make a statement about something that turns out not to be true, that it is going to turn into securities fraud,” Martens said.
SCANA lawyers referred repeatedly to a legal term called “scienter” — meaning that former SCANA shareholders will have to prove that the SCANA executives intended to deceive the public. That’s difficult to prove in most cases.
Moreover, SCANA lawyers said, the shareholder plaintiffs can’t show that the executives enriched themselves by selling big batches of stock at inflated prices or accepting unusual bonuses.
State Sen. Marlon Kimpson, D-Charleston, a lawyer representing the plaintiffs told the judge that news about the project continues to unravel that supports claims about SCANA’s intention to deceive investors and SCANA retirees — many of whom owned SCANA stock.
“We are ready to hit the ground running,” said Kimpson, whose side has compiled a 200-plus page complaint packed with specific instances of alleged deceit by SCANA.