Enough evidence exists to show a jury that former SCANA executives deliberately concealed the shaky status of their doomed Fairfield County nuclear power plant project from investors, a federal judge has ruled.
The ruling in federal court by U.S. Judge Margaret Seymour allows a civil fraud lawsuit by former SCANA shareholders to go forward to a future jury trial. Shareholders seek to recover some $2.7 billion in alleged losses to their stock holdings.
The losses came after the shocking 2017 collapse of a $9 billion project by SCANA and its junior partner, Santee Cooper, to build two nuclear reactors in Fairfield County. SCANA — which was acquired in January by Virginia-based Dominion Energy — was one of the state’s biggest electric utilities. Santee Cooper is a large, state-run electric utility.
The lawsuit argues that deceptive statements by SCANA about the health of the project artificially propped up the company’s stock price for months. Then, when the project failed, SCANA’s stock price plummeted to $43 per share from a healthy high of $72 per share. In all, shareholders contend they lost some $2.7 billion.
The project’s failure destroyed SCANA’s status as one of South Carolina’s largest independent publicly traded companies. Now, its subsidiaries are being run by Dominion.
In their lawsuit, the shareholders demonstrated they have enough evidence to credibly show that the three former top SCANA executives “acted at least recklessly and possibly deliberately” to cover up troubles at the nuclear project, Seymour wrote in a 26-page order Friday.
The three former executives are SCANA former CEO Kevin Marsh, former chief financial officer Jimmy Addison, and former chief operating officer Stephen Byrne.
At a March 4 hearing in federal court, lawyers for the former SCANA officials argued that the shareholders’ lawsuit should be dismissed for lack of evidence. A SCANA attorney asserted that company officials told investors the truth and disclosed risks.
Had Seymour sided with the ex-officials, it would have stopped the lawsuit in its tracks.
But Seymour sided with shareholder lawyer John Browne, who argued, “They bottom line is they (SCANA executives) lied to everyone, and they did it intentionally.”
Browne also referred repeatedly to a document known as the Bechtel report, which SCANA had commissioned in 2015 to evaluate progress on on the nuclear project.
As early as fall 2015, a draft of the assessment presented to SCANA detailed substantial cost overruns, construction delays and shoddy work at the nuclear plant site. From that time on, SCANA executives hid those woes, which only increased, from the public, Browne told Seymour.
Brown said Monday, “We are pleased with Judge Seymour’s decision and we are looking forward to moving into discovering and pushing this case forward.”
Seymour also kept three former SCANA board members — Harold Stowe, Maybank Hagood, and James Roquemore — as defendants in the case. Hagood was added to Dominion’s board as part of the takeover.
The FBI and the U.S. Attorney’s office of South Carolina have been conducting an investigation into alleged criminal fraud by former SCANA top officials.
Their investigators have been followed the civil fraud case closely. A spokesman for the U.S. Attorney’s office said Monday the office has no comment.