John Monk, The State Published 10:10 a.m. ET March
5, 2019
OLUMBIA, SC
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.
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.
Scott Elliott tells the VC Summer committee that, after studying the
Bechtel report, that SCE&G should have disclosed it's findings.
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.
