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| Plant Vogtle, near Waynesboro, Georgia |
Construction work at a Southern Company nuclear plant in Georgia has been so poor that remedial work was required even on relatively simple portions of the job. That drove massive cost overruns and led to repeated delays in completion of the project at Plant Vogtle near Waynesboro, GA. According to numerous published reports, the exploding costs associated with the Vogtle project led Southern Company to engage in a long-running accounting-fraud scheme -- an apparent effort to hide the financial drain and keep stock prices in an acceptable range.
Is anyone in authority going to hold Southern Company accountable for its apparent criminal activity? No government agency, so far, has shown that it is inclined to take action -- and the Southern Company Board of Directors has proven they are mostly for show, with little appetite to provide oversight on matters of wrongdoing. If any government agency is going to take the alleged criminality seriously, it likely will be the U.S. Nuclear Regulatory Commission (NRC), according to a report today at DonaldWatkins.com. Why is that? Watkins, a longtime Alabama attorney and businessman and a leading voice in reporting on the burgeoning Southern Company scandal, explains in a post titled "Will the Southern Company’s “Fake It 'Til You Make It” Scheme Dupe the NRC?"
The NRC has never knowingly allowed an ongoing criminal enterprise to own and operate a nuclear power plant in the United States. Unlike the Department of Justice, which initiates or declines the prosecution of important "too big to prosecute" criminals based upon their political and financial connections to the White House, the NRC has a track record of independently protecting the public safety across-the-board, without exception.
The partial meltdown of a nuclear reactor at Three Mile Island in 1979 taught the NRC that independence from political influence peddling in Washington is critical to its mission in protecting the public safety. Investigations into the Three Mile Island mishap revealed that the meltdown occurred because of lapses by the owner, operator, and NRC in quality assurance and maintenance, inadequate operator training, lack of communication of important safety information, poor management, and complacency. The NRC vowed that these lapses would never happen again.
The NRC issued the Southern Company a combined “Owner/Operator” license for Units 3 and 4 eleven years ago. Now, it appears the circumstances that caused the meltdown at Three Mile Island are repeating themselves at Vogtle Units 3 and 4.
That last paragraph should grab the attention of every American. History has proven that poor workmanship at a nuclear facility can prove to be a massive threat to public health and safety. We know that from the Three Mile Island meltdown in 1979. Lapses that are similar to, or maybe worse than, those at Three Mile Island appear to have taken place at Plant Vogtle. How bad have the lapses been, and will the NRC step into the breach to protect the public. Donald Watkins reports:
On February 10, 2012, the U.S. Nuclear Regulatory Commission (NRC) granted a combined license to the Southern Company (D/B/A Georgia Power Company and Southern Nuclear Operating Company) to own and operate Vogtle Nuclear Power Units 3 and 4 in Waynesboro, Georgia. Since then, shoddy engineering, improper construction work, and poor construction management have delayed the project from reaching completion. As such, Units 3 and 4 have not been placed into commercial service.
According to the Georgia Public Service Commission, the work was so shoddy it included basic mistakes that required remedial work on simple things. Here are a few examples of the lapses in project construction and management:
1. Approximately 8% of the cabling that had been used in the construction needed to be re-cut/replaced, resulting in additional delays and costs to the project. Southern Company engineers ignored the age-old adage, “measure twice, cut once.” As a result, approximately 500,000 linear feet of cable – equivalent to about 95 miles – had to be replaced.2. Bolts that had been originally tightened had not been inspected at the time. So, each of those had to be loosened and then retightened to the specific torque value.
3. In 2022, there were some 26,000 electrical inspection records that had not been completed. While the work had been done, the inspection records weren’t complete at the time. The only explanation provided to the PSC for this faux pas was this: “someone didn’t do their job.”
The basic engineering and construction mistakes at Vogtle Units 3 and 4 since 2012 have been endless. They have caused the construction project to exceed the original construction budget by a whopping $21 billion dollars.
Where was the Southern Company Board of Directors when this horror show was taking place? "Out to lunch" appears to be the answer, writes Watkins:
The board members from the time the NRC license was issued in 2012 to today are mostly bootlickers, influence peddlers, and grifters for CEO Tom Fanning. One of the influence peddlers is Kristine L. Svinicki, a former NRC chairwoman who joined the Southern Company board of directors ten months after she left the Commission.
Svinicki's story is featured in a February 21, 2023, article titled, “Who is Kristine L. Svinicki, and Why Does She Matter?” Since 2021, Svinicki’s job has been to get Vogtle Units 3 and 4 across the NRC finish line.
Another influence peddler is Ernest Moniz, former Secretary of Energy (2013 to 2017) and Southern Company board member since March 1, 2018. Moniz, who is a close friend of President Joe Biden, is featured in a March 28, 2023, article titled, “Did Joe Biden’s DOJ ‘Fix’ Criminal Case for Southern Company?”
According to our sources “inside” the Southern Company and Department of Justice (DOJ), Moniz and former president Bill Clinton were successful in getting a non-prosecution agreement for the Southern Company. The company’s racketeering enterprise has been forgiven by the DOJ, for now, and its massive $27-billion accounting fraud is being ignored.
In Washington, a well-connected “fixer” can make DOJ criminal problems go away. Just ask Wells Fargo Bank. It has committed 230 major violations of criminal and civil laws since 2000, with no federal indictment of Wells Fargo or its senior-management executives.
Interestingly, Donald M. James has been a Southern Company board member since 1999. He also served on the board's Audit Committee during the accounting-fraud period. James is also a member of Well Fargo's Board of Directors and oversaw its nationwide crime spree from 2002 to 2016.
What about the director who is supposed to be leading the other directors? He is wealthy, but seemingly toothless:
One of the grifters on the Southern Company board of directors is David J. Grain, the designated Lead Independent board member. Grain and his grifting were featured in a March 25, 2023, article titled, “David J. Grain: Getting Rich from His Southern Company Platform.”
Despite influence peddling in Washington by Svinicki, Moniz, and Bill Clinton, the Georgia PSC Staff contends that “The repeated materially inaccurate cost estimates are an example of management’s continuous poor judgment…that should be taken into account when the Commission conducts its prudence review.”
That's a polite way of saying, "These folks have a tortured relationship with the truth, and we should look out for more lies in the future." Watkins says Southern Company's history of dishonesty amounts to a "pattern and practice":
Not only has the Southern Company amassed a record of basic engineering and construction mistakes at Vogtle Units 3 and 4, and not only has the company compromised Joe Biden’s weak and incompetent DOJ, but the Southern Company also has a long track record of "cooking" its financial books and records. This criminal conduct is very similar to the accounting fraud used in the HealthSouth Corp. case and the Ponzi scheme operated by Bernie Madoff.
The nature and scope of the Southern Company’s fraud scheme is reported in an April 2, 2023, article titled, “The Southern Company Fraud Scheme: Is This the Resurrection of Bernie Madoff?”
The two main drivers of the Southern Company’s accounting-fraud schemes were: (a) the desire to pump up and maintain the company’s stock prices within the range of Wall Street forecasts and expectations, and (b) the need to meet or exceed the earnings per share expectations of Wall Street analysts for the company’s utilities and power industry sector.
Like HealthSouth’s and Bernie Madoff's fraud schemes, the Southern Company has been "cooking" the books for many years. Since 2017, the company has created a financial mirage to prop up its stock prices and pay consistent, regular earnings per share. This mirage was good enough to lure new investors and retain existing common-stock shareholders the Vanguard Group, Inc., and BlackRock, Inc.
The Southern Company has gotten away with the fraud scheme by paying consistent, regular dividends to shareholders from borrowed money and new investments, as opposed to retained earnings. This made the company look profitable, when it was not. Because of the cost overruns at Vogtle, the company's dividend-funding technique is not expected to change until sometime after 2025.
The accounting fraud has allowed the Southern Company to “fake it 'til we make it.” In the company’s view, it can “make it” when Vogtle Units 3 and 4 are placed into commercial service.
As was the case with HealthSouth and Bernie Madoff, the phony 10-Qs and 10-Ks issued by the Southern Company since 2017 have successfully hoodwinked its shareholders, Wall Street analysts, commercial lenders, and regulatory agencies.
There was no need to hoodwink the DOJ. With the right amount of influence peddling and “other valuable considerations” during an upcoming presidential campaign season, the criminal case could be “fixed.” And, it was.
What about the U.S. Securities & Exchange Commission (SEC)? After all, we're talking about financial fraud here. Watkins looks for the SEC to remain in "sleep mode." For good measure, Watkins sees signs that senior-management officials at the SEC have been bought off:
Likewise, there is no need for the Southern Company to worry about the U.S Securities and Exchange Commission (SEC). As was the case with Bernie Madoff’s fraud scheme, the SEC has been asleep at the wheel in the Southern Company's accounting-fraud case.
Senior-management personnel from the SEC’s Atlanta Regional Office have reportedly busied themselves by enjoying the perks that the Southern Company and its affiliates routinely make available to public officials (e.g., tickets to sporting events and concerts in venues around the nation, wining and dining in restaurants and bars, free out-of-town luxury getaways, and other unreported snuggling with mega-SEC Registrants).
It does not appear that the SEC gives the Southern Company’s 10-Qs and 10-Ks more than a cursory glance. If it does, the SEC has ignored the company's massive accounting fraud for years, just like the Commission did in Bernie Madoff’s case.
That brings us back to the NRC, which Watkins calls "the public's last line of defense":
Section 2133(d) of the Atomic Energy Act of 1954, as amended, prohibits any regulated person or entity that threatens the safety of the public from owning and operating a nuclear power facility in the United States. Section 2133(d) expressly states that “no license may be issued to any person within the United States if, in the opinion of the Commission, the issue of a license to such person would be inimical to the common defense and security or to the health and safety of the public.”
By definition, a publicly traded utility company that operates a multi-state racketeering enterprise and implements a massive $27-billion accounting-fraud scheme poses a great danger to America’s national security and public safety.
On February 3, 2023, formal complaints were filed with Christopher T. Hanson, chairman of the NRC, by two groups that challenged the Southern Company’s "fitness" to hold this combined license, in light of the company's documented racketeering history. Since then, the Southern Company’s massive $27-billion accounting fraud has come to light.
When the licenses were issued for Units 3 and 4 on February 10, 2012, the NRC made this express finding: “The issuance of this license will not be inimical to the common defense and security or to the health and safety of the public.” No doubt that eleven years later, this finding by the NRC is no longer true.
The Commission’s staff is presently investigating the Southern Company’s “fitness” to hold the Vogtle license. This investigation demands heightened scrutiny into all aspects of the Southern Company, its operations, and its history of lawlessness.
If the NRC determines that the Southern Company’s criminal history and propensity to lie about material matters that impact public safety renders the company no longer “fit” to hold the combined license for Vogtle Units 3 and 4, there are scores of utility companies that are capable and qualified to own and operate Vogtle, including the Tennessee Valley Authority, Constellation Energy Generation Company, Entergy, Duke Energy, Old Dominion Electric Cooperative, NextEra Energy, and Florida Power & Light.
Today, the Nuclear Regulatory Commission is the only independent federal government agency with the integrity and ability to (a) rein in the Southern Company’s lawlessness, and (b) protect the public safety from runaway criminal conduct. The other federal agencies have been hopelessly compromised by influence peddlers and Washington “insiders” in furtherance of a political agenda to get a weak, increasingly senile, unpopular, and inept Joe Biden re-elected as president.
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