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New criminal charges filed in SC's nuclear plant failure, revealing how project unraveled

  • Aug 19, 2021 8:36 am GMT
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State

Aug. 18—COLUMBIA, S.C. — A second high-ranking employee of Westinghouse Electric is facing criminal charges in connection with the multi-billion dollar failure of the doomed SCANA nuclear project in Fairfield County.

Jeffrey Benjamin, a former Westinghouse senior vice president of new plants and projects, faces multiple counts of fraud, according to an 18-page indictment made public Wednesday afternoon in U.S. District Court in Columbia.

It is the latest criminal charge in a four-year federal investigation of what went wrong at the highest levels of two substantial American companies — Westinghouse and SCANA.

The charges against Benjamin are "for his role in failing to truthfully report information regarding construction of new nuclear units at the V.C. Summer nuclear plant," said M. Rhett DeHart, acting United States Attorney for the District of South Carolina, in a press release.

Benjamin's alleged cover-up of billions in losses at Westinghouse's troubled nuclear plants in South Carolina and Georgia were part of a series of events leading to the company's bankruptcy in March 2017, according to the indictment.

"The defendant's misrepresentations and omissions, as well as the associated cover-up, resulted in billions of dollars in losses to (SCANA), ratepayers and investors," the indictment said.

Benjamin, who was responsible for Westinghouse's worldwide construction of nuclear reactors, is the fourth person to face criminal charges in connection with the SCANA scandal. The three others — another former Westinghouse employee and two top SCANA officials — all have agreed to plead guilty to various counts of fraud but have not yet been sentenced.

Benjamin faces 16 felony counts, including conspiracy, wire fraud, securities fraud, and causing a publicly-traded company to keep a false record.

Benjamin could not be reached Wednesday for comment.

The indictment against Benjamin means that he plans to plead not guilty and will stand trial, where numerous government witnesses — including the SCANA and Westinghouse officials who have pleaded guilty — could testify against him.

If convicted, Benjamin could face a maximum of 20 years in prison and a $5 million fine, the U.S. Attorney's office said.

Publicly traded companies like the former SCANA, which issue shares of stock, are required by law to make truthful disclosures about their events affecting their businesses so that investors may make informed decisions as to buy or sell shares of stock. It is against the law to conceal vital facts about a company.

Westinghouse was the contractor on the high-profile nuclear project, which SCANA worked on in partnership with public utility Santee Cooper, which held a minority interest in the project.

Although SCANA executives for years had made optimistic public statements about the project's progress, SCANA and its junior partner, Santee Cooper, announced unexpectedly in July 2017 that the project was a failure and they were halting work.

The FBI and prosecutors from the U.S. Attorney's office began investigating soon after the announcement.

Top officials plead guilty

The former top SCANA officials — CEO Kevin Marsh and his number two, executive vice president Stephen Byrne — agreed to plead guilty to fraud-related charges and likely face prison time. Evidence in their cases says they engaged in a conspiracy to keep the true state of the financially-plagued project from the public and regulators.

Earlier this year, Carl Churchman, another Westinghouse official who oversaw the construction of the project, agreed to plead guilty to lying to an FBI agent about what he knew about the progress of the project when it was still ongoing.

Building two nuclear reactors had been one of the state's largest construction projects ever. They were supposed to be pollution-free models of how to produce electric power in the 21st century.

But delays and cost overruns — hidden by SCANA officials from the public and state regulators — eventually doomed the effort, making it one of the largest business failures in South Carolina history. The failed project spawned some 20 lawsuits by ratepayers and SCANA shareholders, as well as federal criminal and civil fraud charges. Nearly 4,000 construction workers were laid off.

The failure also led to the collapse of SCANA, once one of the state's crown business jewels with 750,000 electric customers and 350,000 natural gas customers. In 2019, SCANA was acquired by Dominion Energy, a Virginia-based utility giant.

From the conception of the project, in 2008, SCANA had hired Westinghouse, a Toshiba-owned company that had experience building nuclear reactors, to oversee construction of two next generation reactors, called AP1000, at the nuclear facility in Fairfield County. Westinghouse's plan was to hire a contractor, who would build the two nuclear reactors for a cost estimated at that time to be about $10 billion.

Almost from the beginning, the project was in a race against time. If the two nuclear power plants were finished by Dec. 31, 2020, SCANA would qualify for $1.4 billion in federal tax credits. That money was vital to SCANA's completing the project in a cost-effective way.

The indictment alleges that Benjamin played a key role in covering up how much trouble the project was in.

In 2016 and 2017, Benjamin knew the nuclear power plants were significantly behind schedule and over budget, the indictment said. But he assured SCANA the project was on schedule "and took active steps to conceal" damaging information about the project schedule, the indictment said.

At the same time, SCANA executives, through their own contacts at the project, were becoming aware of problems affecting the project, according to evidence in the case.

Although SCANA executives' motives in the fraud to which they pleaded guilty were to hide the truth about the project to prop up SCANA's stock price, the motives of Benjamin and other Westinghouse executives in hiding the truth were to keep money flowing from SCANA to Westinghouse, Benjamin's indictment said.

During the time from 2016 to 2017, SCANA and Santee Cooper paid Westinghouse over $600 million to construct the two nuclear power plants, the indictment said.

What the indictment reveals

The indictment is one of the most detailed public statements yet by federal prosecutors about how top executives at both SCANA and Westinghouse hid the truth about the huge costs at the now-abandoned V.C. Summer nuclear plant in Fairfield County.

Details in Wednesday's indictment give a window into exactly what Benjamin is accused of doing and how Westinghouse executives, along with SCANA executives, came to be charged criminally in the case.

In 2016, Westinghouse hired Fluor, a Texas-based global construction and engineering firm, to be the chief builder at the V.C. Summer nuclear site. Fluor assessed the project's progress to date and wrote a memo that the project likely would not be completed until 2022.

The 2022 completion date would be two years after the date that would qualify SCANA for the $1.4 billion tax credit,meaning SCANA would lose the $1.4 billion and "kill the project," Benjamin's indictment said.

Although Fluor continued to insist to Westinghouse officials that completing the project by 2020 was unachievable, Westinghouse officials, including Benjamin, sent Fluor a letter telling it to "cease and desist" its efforts to set a new schedule, the indictment said.

In September 2016, after hearing from Fluor that the 2020 completion dates could not be met, Benjamin met with SCANA officials and told them the dates could be met, the indictment said.

Meanwhile, an internal Westinghouse team concluded in November 2016 that cost overruns at nuclear projects overseen by Benjamin in South Carolina and Georgia would mean a $6 billion loss to Westinghouse, the indictment said.

After hearing arguments from Benjamin that the loss would be far less, Westinghouse and its owner, Toshiba, revised the loss estimate down to about $3 billion, the indictment said.

But by February 2017, Westinghouse and Toshiba realized the projected loss was in fact around $6 billion — a financial blow that Westinghouse could not absorb, the indictment said.

"As construction problems mounted, costs rose, and schedules slipped, (and) defendants hid the true status of the project," the indictment said.

In March 2017, Westinghouse filed for bankruptcy. The same month, Benjamin was "relieved of his duties" by Westinghouse, the indictment said.

The FBI, the State Law Enforcement Division, the U.S. Attorney's office and the state Attorney General's office are all participating in the case.

Prosecutors are assistant U.S. attorneys Winston Holliday, Brook Andrews, Emily Limehouse and Jason Peavy.

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(c)2021 The State (Columbia, S.C.)

Visit The State (Columbia, S.C.) at www.thestate.com

Distributed by Tribune Content Agency, LLC.

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