SCANA conspirators helped Byrne spin lies about nuclear project, document alleges

Documents made public Tuesday allege that former SCANA second-in-command Stephen Byrne and “others known and unknown” to federal officials mounted a years-long cover up to hide huge losses in then-ongoing construction at the V.C. Summer nuclear plant.

For years, Byrne and unidentified “others” orchestrated a cover-up of costly errors at the nuclear construction site and “deceived regulators and customers in order to maintain financing for the project and to financially benefit SCANA,” court records say.

“As construction problems mounted, costs rose, and schedules slipped, the defendant Stephen A. Byrne, and others, hid the true state of the project,” said an information — an official federal charging document — filed in U.S. District Court in Columbia.

“The members of the conspiracy’s actions and the associated cover-up allowed the project to continue until the contractor went bankrupt and the project was abandoned, resulting in billions of dollars of loss,” the information said.

The false information that Byrne and his alleged fellow conspirators gave out to regulating authorities allowed SCANA to apply for numerous rate increases to help pay for the ongoing construction for the doomed nuclear project, rate increases that were “fraudulently inflated bills to customers for the stated purpose of funding the project,” the information said.

The information was made public late Tuesday morning along with an 11-page plea agreement signed by Byrne that says he has agreed to plead guilty to the information, which charges a criminal conspiracy to commit mail and wire fraud.

While the information doesn’t say that all top SCANA officials were part of the conspiracy, it asserts that leading the “failed effort to construct two nuclear power generators in Fairfield County” were “executives, employees and the lawyers who advised them.”

The alleged crime of being part of a conspiracy to lie to regulatory officials is a felony, and Byrne faces up to five years in prison, a maximum fine of $250,000 and a possible forfeiture of approximately $1 million, the plea agreement says.

Byrne, 60, a former Irmo resident, now lives in Mt. Pleasant.

The matter comes under federal jurisdiction because for years the now-defunct SCANA was an investor-owed utility.

As a company whose stock is publicly traded, SCANA and its officials had a legal obligation to tell the truth about their financial status so as not to deceive investors who hold the company’s stock. Federal officials also have jurisdiction because the alleged crime took place involved interstate commerce and phone and mail communications, which are federally regulated.

SCANA investors weren’t the only ones deceived — the company’s 1 million energy customers who paid monthly power bills to SCANA had their bills unnecessarily inflated more than half a dozen times for rate increases that were supposed to pay for ongoing construction at the V.C. Summer plant.

Before Byrne’s plea agreement is finalized, he must appear before a U.S. District Court judge, who will formally accept it. No judge has yet been assigned to the case.

A three year investigation

Byrne is the first former SCANA executive to plead guilty in the conspiracy alleged in the documents made public Tuesday.

But he may not be the last.

Byrne’s plea agreement says he has promised to cooperate with federal law enforcement and testify “before any grand juries and at any trials or other proceedings if called upon to do so....”

For nearly three years, the FBI and prosecutors in the U.S. Attorney’s Office have been investigating financial questions in the $10 billion failure of the V.C. Summer nuclear plant plant project. Byrne’s agreement to plead guilty is the first public indication of the fruits of that investigation.

Typically, in federal investigations involving alleged conspiracy, federal officials try to peel off one member of the conspiracy and work a deal for that defendant to testify against others.

The records made public Tuesday detail numerous specific incidents in which Byrne confesses to how he deliberately gave false information to regulators, information that allowed SCANA to increase monthly power bills to its 1 million gas and electric customers. Those were “fraudulently inflated bills,” the information says.

The information also says that from 2015 to 2017, Byrne was paid approximately $6.3 million in compensation bonuses and salary.

The information also says that “Person A” received approximately $7 million in compensation bonuses and salary, and “Person B” received approximately $15 million in bonuses and salary.

Person A and Person B are possible targets in the federal investigation, which the documents say is still ongoing and may result in more charges against others.

Years of cost overruns

For years, SCANA — a Fortune 500 company whose stock gave off a dependable stream of ample dividends to investors and current and retired company employees — was traded on the New York Stock Exchange. It was long one of South Carolina’s preeminent companies, tracing its corporate lineage back to 1846.

Headquartered in Cayce, SCANA had thousands of employees, some 700,000 electric power customers and 350,000 natural gas customers in South Carolina.

In 2008, enabled by a state law that allowed it to require its monthly ratepayers to pay for future and ongoing construction at the nuclear plant site, SCANA began planning with Santee Cooper, a state-owned utility that didn’t need permission from state regulators to pass rate hikes along to its customers, to build two new nuclear reactors in Fairfield County. The project’s initial cost was estimated at $9.8 billion.

But as the years went by, the project was plagued by numerous cost overruns and missed work deadlines. Although SCANA by 2015 knew the project was in deep trouble, its officials kept lying to the public, to regulators and government officials about the real status of the project, according to charges in the case.

Starting in 2016, Byrne made “false and misleading statements in an effort to continue the nuclear project by minimizing regulator risk and avoiding state government oversight,” the information says.

In July 2017, SCANA and Santee Cooper announced they were abandoning the project in July 2017, SCANA’s stock price plummeted and the company’s financial problems mounted. Hundreds of people were thrown out of work at the nuclear project’s Fairfield County site.

In January 2019, the financially-troubled SCANA was absorbed by the energy giant Dominion Energy.

Byrne, however, had left SCANA at the end of 2017, several months after SCANA abandoned the nuclear project. Up until that time, Byrne was SCANA’s executive vice president and CEO of SCE&G, a major SCANA subsidiary. Byrne’s responsibilities included overseeing the building of two additional nuclear reactors at the V.C. Summer nuclear plant in Fairfield County — a $10 billion project.

‘It takes more than one person to conspire’

Byrne’s attorneys include Jim Griffin, Maggie Fox and Matt Martens, according to federal court records.

Federal prosecutors on the case include Jim May, Brook Andrews, Winston Holliday and Emily Limehouse, according to the plea agreement. Also signing the plea agreement was Don Zelenka, a veteran prosecutor with the S. C. Attorney General’s Office.

John Crangle, a longtime observer of ethics in public life in South Carolina, said the publicity in recent years over SCANA’s gross mismanagement in the nuclear project had prepared him for criminal charges. “I’m awfully glad the federal prosecutor is moving forward with this case and I expect good results.”

Lynn Teague, a spokeswoman for League of Women Voters of South Carolina who has raised numerous questions about the nuclear project, said the guilty plea is “very welcome. Having followed this very closely for years, it’s very obvious they (SCANA executives) were not dealing honestly. ... They basically were stringing everybody along with something that was doomed, and that they knew was doomed.”

State Sen. Dick Harpootlian, D-Richland, a former prosecutor, said, “This appears to be a massive criminal conspiracy that took one of the oldest corporations in the state down. ... If found guilty, the conspirators should pay dearly. As a former prosecutor, I’m sure this is the first shoe to drop — prosecutors have alleged conspiracy, and it takes more than one person to conspire.”

Bob Guild, a Columbia lawyer who handles utility cases and who for years urged more transparency and accountability about the project noted that for years SCANA officials had told everyone the project was “prudent.”

Byrne’s admissions in the plea agreement not only show that the project was not “prudent,” but that there were shortcomings in the regulatory process that allowed SCANA’s project to go forward unchallenged for many years, Guild said.