Reports of a possible Alabama Power spinoff drives high anxiety among employees as spotlight shines on board members who have allowed scandal to bloom

Jim Kerr: It's a matter of trust

Online journalist Donald Watkins was swamped with messages from Alabama Power employees and their loved ones after his report yesterday that the company might be spun off and sold in an apparent effort to deal with mounting problems related to massive accounting fraud, according to an article today at DonaldWatkins.com under the headline "Southern Company: Trust Them at Your Own Risk."

We had a similar experience here at Legal Schnauzer after our post yesterday, based on Watkins' original reporting, about the possibility of an Alabama Power spinoff. Our blog statistics showed that the post, under the headline "Southern Company's plans to cleanse its dirty books by spinning off Alabama Power could dump a heaping load of stinky laundry in someone's unsuspecting lap," drew heavy traffic. Our posts on the evolving scandal at Southern Company (of which, Alabama Power is an affiliate) have been drawing strong readership for weeks, but yesterday's particularly heavy volume seemed to be centered on two posts -- the one about the possible Alabama Power spinoff and one with this headline "Eleven executives are shown the exits at Alabama Power and other Southern Company entities as the parent firm seeks to heal its self-inflicted wounds." Our readership trends suggest there is considerable angst among those whose livelihoods are tied to Alabama Power. Watkins says, in his post today, there is good reason for that:

As I demonstrated in “Sunshine and Transparency: Southern Company Regrouping in Atlanta Today, Tomorrow," Southern Company executives do not trust each other. They are documenting and tape recording their conversations with each other, and for good reason. 

Yesterday, Southern Company executives went into overdrive to assure anxious Alabama Power Company executives and employees that the company had no plans to sell Alabama Power to NextEra Energy, or any other purchaser. This assurance was intended to calm their fears -- for a while.

This is the same false assurance that Southern Company executives gave to Gulf Power Company executives and employees to calm their fears after word leaked out in 2018 that the Southern Company was selling Gulf Power Company to NextEra Energy.

NextEra's acquisition of Gulf Power  was completed in January 2019, and a lot of Gulf Power managers and employees got screwed after the deal was consummated.

Alabama Power employees obviously remember that episode, and in a rare instance of the company actually being transparent, it has put the writing on the wall for everyone to see, Watkins reports:

Alabama Power executives and employees do not have to rely on me to learn the truth about the Southern Company's spinoff plans. They can read about the company’s plans for asset acquisitions and disposals for themselves in the Southern Company’s February 15, 2023, K-10 filing. On page I-23 of the document, the Southern Company specifically warns Alabama Power employees and other stakeholders that:

“Southern Company and its subsidiaries have made significant acquisitions, dispositions, and investments in the past and may continue to do so. Such actions cannot be assured to be completed or beneficial to Southern Company or its subsidiaries. Southern Company and its subsidiaries continually seek opportunities to create value through various transactions, including acquisitions or sales of assets.”

Personally, I do not trust the integrity of the Southern Company’s words, regulatory filings, or actions. I saw this rodeo up close at HealthSouth from 2003 to 2005.

Why the lack of trust? Watkins places the blame for that at the feet of Jim Kerr, who is described as "De Facto Chief Executive Officer of the Southern Company." The actual CEO, at least for a little while longer, is Tom Fanning. Writes Watkins:

Yesterday, I introduced my readers to James Y. (Jim) Kerr. Mr. Kerr is the general counsel and chief compliance officer of the Southern Company. He also serves as chief of staff for CEO Tom Fanning. Beginning on March 31st, Jim Kerr will become the CEO and president of Southern Company Gas.

Kerr orchestrated the sale of Gulf Power in 2018-19. He is an M&A [mergers & acquisitions] guy. Kerr will say whatever he needs to say to company executives and employees in order to get a deal done.

Jim Kerr’s official titles at the Southern Company are superfluous. In reality, Kerr is running the Southern Company. He is making all of the major decisions for the company.

At this juncture, Tom Fanning is focused on getting his retirement package secured and making sure nothing blows up in his face before he exits the company. Fanning is tired, spent, and ready to get on with his life.

As Fanning exits the Southern Company on May 24, 2023, and his designated successor, Chris Womack, awaits his turn as CEO, Jim Kerr has moved to consolidate his relationship with the company’s board of directors. 

Those close to the situation in Atlanta have described how Jim Kerr used his legal skills, aggressive personality, assertiveness, arrogance, and subconscious “white superiority complex” to seize control of the major operations of the Southern company and its affiliates. He often uses “organized chaos,” much of which he created, as an opportunity to cement his grip on power within the company.

Very few Southern Company executives like or trust Jim Kerr, according to our sources. Many of them know, suspect, or believe that Jim Kerr shares responsibility with Fanning for the Southern Company’s widespread racketeering and massive accounting-fraud problems.

For now, the relationship between Kerr and the board of directors merits special attention, Watkins reports:

According to our sources, Jim Kerr has lulled Southern Company board members into a false sense of complacency and security by gaslighting them into believing that he has their backs, and that he can make the company’s regulatory and law-enforcement problems go away. He portrays himself as a "fixer" of all corporate problems

Jim Kerr is the reason why "dirty tricks" operative Joe Perkins and his company, Matrix, LLC, still work for the Southern Company. Kerr is the reason why Perkins gets paid millions of dollars each year, without invoicing. He is the reason why Matrix's "dirty tricks"records are maintained off-site, hidden away from auditors and compliance officials. Kerr is the reason why ex-felon Kimberly G. Hines was able to serve as Matrix's CFO while the company performed its work assignments for the Southern Company and its affiliates.

Kerr's gaslighting has aided him in crowning himself as the “de facto” CEO of the Southern Company.

How does Kerr operate? Watkins provides examples:

Reportedly, Jim Kerr advised board member and former Nuclear Regulatory Commission Chairman Kristine Svinicki that her multiple conflicts of interest on the board really didn't matter. Kerr reportedly assured Ms. Svinicki that he has the political juice in Washington to handle this issue.

According to my sources, Jim Kerr also believes that the Atlanta-based law firm of King & Spalding, working together with a properly incentivized Bill Clinton, can get Assistant Attorney General Kenneth Polite (who heads the Department of Justice’s Criminal Division) to let the Southern Company off the hook for its long-running, multi-state, racketeering enterprise and accounting-fraud schemes. After all, the Southern Company is "too politically connected to prosecute."

Furthermore, Kerr has convinced board members that: (a) the Southern Company’s problems with the Department of Justice and the negative media publicity surrounding these problems stem from infighting between Joe Perkins/Matrix and former Matrix president Jeff Pitts, (b) these problems are isolated to Alabama Power Company, (c) he (Kerr) “fixed” the Perkins/Pitts infighting problem before Matrix's "dirty tricks"information spilled into the public domain and tainted certain board members, and (d) the negative publicity engulfing the Southern Company will fade away with the passage of time.

We are also told that Jim Kerr has zero respect for Southern Company board members. Kerr believes that he is much more intelligent than they are, and that he is better equipped to make major decisions for the board. He views board members as pampered "flunkies." Board members do what they are told to do after they have been "wined and dined," according to sources familiar with Kerr.

Where does the story go from here? Watkins is preparing to shine light on board members. Until now, they largely have avoided scrutiny:

Going forward, my articles will focus on Southern Company board members. They have abdicated their duty to set and enforce operational policies that: (a) eradicate criminal activity, (b) promote “sunshine and transparency,” and (c) give life to the empty words and phrases in the Southern Company’s Code of Ethics.

When Southern Company employees feel compelled to send their company-related questions to me to publish in a news article, there is a complete breakdown in trust in the company’s workforce. Now we see why. No major Wall Street company can survive in an ecosystem that is devoid of trust.

It’s time to shine the spotlight on the Southern Company’s board members. Their apparent dereliction of duty, as a group, has allowed Jim Kerr to reign supreme at the Southern Company, without adequate supervision and oversight. In the process, Kerr has allowed the company to hurt too many innocent people.