SEC Charges South Carolina Companies, Executives in Failed Nuclear Project Case -- Update
29 February 2020 - 3:00AM
Dow Jones News
By Mengqi Sun
Two South Carolina companies and two former top executives face
civil fraud charges in relation to a failed nuclear power plant
expansion project, the Securities and Exchange Commission said
Thursday.
Scana Corp. and two of its former senior executives allegedly
repeatedly made false and misleading statements to investors,
regulators and consumers between 2015 and 2017 about the status of
the $9 billion nuclear project that ultimately failed, the SEC said
in a complaint filed in a federal court in South Carolina.
The charges came after Cayce, S.C.-based Scana, the primary
owner of the Virgil C. Summer power plant, abandoned the project of
building two nuclear reactors in July 2017 after close to a decade
of planning and construction, citing high construction costs and
delays.
The SEC also charged a Scana subsidiary, South Carolina Electric
& Gas Co., which is now known as Dominion Energy South Carolina
Inc.
Dominion Energy Inc. acquired Scana in January 2019.
"This is a disappointing development related to a long-standing
investigation by the SEC regarding pre-merger activities," the
company said in a statement. "Dominion Energy has been fully
cooperating with the SEC in this investigation. That cooperation
began prior to completion of our merger. We are taking this matter
very seriously, and are reviewing the complaint to determine our
next steps."
The defendants claimed the project was on track even though they
knew it was significantly delayed and wouldn't be completed on time
by Jan. 1, 2021, to qualify for $1.4 billion of federal tax
credits, the securities regulator alleged.
Scana touted the progress of the project in its regulatory
filings, earnings calls and press releases, according to the
complaint. The statements helped bolster the company's stock price,
sell $1 billion of corporate debt at favorable rates and obtain
approval from utility regulators to charge its customers higher
rates, the SEC said.
The SEC also charged Kevin Marsh, Scana's former chief executive
and chairman, and Stephen Byrne, Scana's former executive vice
president with responsibilities of overseeing all nuclear
operations at Scana. The SEC alleged that the two former executives
were at the center of the fraud.
The SEC charged all defendants with violations of the antifraud
provisions of the federal securities laws, and charged Scana,
SCE&G and Mr. Marsh with reporting violations. The SEC is also
seeking return of allegedly ill-gotten gains, financial penalties
from all defendants and a bar against Messrs. Marsh and Byrne
serving as officers or directors of public companies.
Mr. Marsh didn't immediately respond to a request for comment. A
lawyer for Mr. Byrne had no immediate comment on the charges.
"We just received the complaint this evening, and we're
reviewing it," said Matthew Martens of the law firm Wilmer Cutler
Pickering Hale and Dorr LLP, who is representing Mr. Byrne. "We'll
respond in an appropriate time."
Billions of dollars in cost overruns connected to the failed
expansion of the nuclear station in Jenkinsville, S.C., helped
drive the lead contractor on the project, Westinghouse Electric
Co., to file for chapter 11 bankruptcy in March 2017.
Scana announced months after the bankruptcy filing it was
abandoning the project, which was one of the largest and most
expensive in the history of South Carolina, the SEC said.
Meanwhile, Westinghouse was acquired the following year by
Brookfield Business Partners LP.
A Westinghouse spokeswoman declined to comment.
--Jonathan Randles contributed to this article.
Write to Mengqi Sun at mengqi.sun@wsj.com
(END) Dow Jones Newswires
February 28, 2020 10:45 ET (15:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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