Wednesday, July 12, 2023

Internal Investigations into surveillance of Southern Company CEO Tom Fanning had ties to Matrix LLC, causing conflicts that turned the probe into a "farce"


An internal investigation into reports about surveillance of Southern Company CEO Tom Fanning was riddled with conflicts of interests, according to an article at the Energy and Policy Institute (EPI). Banbalch.com, which long has been a leading resource for breaking news on scandals swirling around Southern Company and its affiliate, Alabama Power, calls the investigation a "farce."

As with so many elements of the Southern Company story, this one winds its way back to Montgomery-based consulting firm Matrix LLC. Writes EPI's Daniel Tait:

A law firm that conducted Southern Company’s internal investigation into reports that a political consulting firm used by a Southern subsidiary directed private surveillance of Southern’s CEO – possibly with the approval of the subsidiary’s CEO – has its own ties to both the consultant and the subsidiary.

In 2017, the political firm Matrix LLC, or its employees, directed a private investigator to surveil Southern Company’s then-CEO Tom Fanning, according to reporting from AL.com last year. The reporting did not name Mark Crosswhite, former CEO of the Southern Company subsidiary, Alabama Power, but questions grew about his involvement after he “abruptly announced plans to retire” late last year. (After stepping down as CEO, Crosswhite had a six-month $125,000 consulting contract with Alabama Power; it was scheduled to end June 30.)  Sources told The Wall Street Journal (WSJ) “the surveillance allegations and subsequent investigation played a role in his [Crosswhite’s] decision to leave.” Southern, however, said it had “zero factor.”

But The WSJ report revealed that the target of the surveillance, Southern CEO Tom Fanning, was “incensed” about the allegations, and hired two law firms to conduct an internal investigation. 

The investigation was “unable to substantiate the allegation that the highly inappropriate surveillance of Tom Fanning was authorized by any employee of the company,” Southern told The Journal

But one of the law firms that led Southern’s internal investigation into the matter has its own ties to Matrix LLC. The ties present a potential conflict of interest, and call into question Southern’s narrative that it “conducted a thorough internal investigation.” Southern told The Journal that it has “moved on.”

Two firms conducted Southern’s internal investigation, according to The Journal: King & Spalding and White, Arnold, & Dowd P.C. Those firms may have their own interests, however. Both firms have years of experience working for Southern Company in high-profile cases and one of the firms – White, Arnold & Dowd – has worked directly with Matrix LLC.

The Energy and Policy Institute reached out to Southern Company, White, Arnold & Dowd, King & Spalding, and Matrix for comment. Southern did not have a comment. Neither White, Arnold & Dowd, King & Spalding, nor Matrix responded to EPI’s request for comment.

K.B. Forbes, publisher of banbalch.com and CEO of its parent organization, the CDLU public charity and advocacy group, said the investigation now looks like an act of "buffoonery." Writes Forbes:

Southern Company had the testicular fortitude to foolishly tell The Wall Street Journal that “it has no idea who ordered the [surveillance] operation or why” of Southern Company’s Executive Chairman Tom Fanning and his then-girlfriend in 2017. Southern Company appears to be intentionally misleading the public.

The million-dollar internal probe’s conclusion is now seen as a farce.

Why?

Because the most trusted advisor and confidant of Mark A. Crosswhite, the ex-CEO of Alabama Power who resigned in disgrace last November, was one of the key “investigators” of this buffoonery. 

That advisor was Mark White, a white-collar criminal attorney from White, Arnold, & Dowd. He was seen every day at the courthouse during the North Birmingham Bribery Trial in 2018 and allegedly cut the deal with disgraced ex-U.S. Attorney Jay E. Town to keep Alabama Power “unmentionable” during the corruption trial.

According to the Wall Street Journal, White, Arnold & Dowd was involved in Southern Company’s internal probe that concluded with no conclusion.

The Energy and Policy Institute provides more background on White Arnold & Dowd's ties to Alabama Power and related entities, which include a shadowy outfit once known by the acronym PACE. Writes Daniel Tait:

White, Arnold & Dowd represented an Alabama Power front group that had been organized by Matrix LLC at a contentious 2013 proceeding at the Alabama Public Service Commission. In the proceeding, various Matrix-connected front groups opposed an effort by consumer and environmental advocates to reduce Alabama Power’s profits to levels more commonly seen across the country.

J. Mark White, an attorney with White, Arnold & Dowd, was listed as the attorney of record for the Partnership for Affordable Clean Energy (PACE). PACE, now known as Energy Fairness, was incorporated by William "Bo" Lineberry, a former attorney with the Birmingham, Alabama office of Balch & Bingham, a firm that lobbies on behalf of Southern Company and represents Alabama Power before the Alabama Public Service Commission (PSC). (Lineberry was the Balch & Bingham attorney who killed himself in April 2022.)

Lance Brown served as the executive director of PACE from January 2009 through June 2017, according to his LinkedIn profile. Brown claimed a $100,000 per year income from Matrix LLC, according to August 2009 divorce filings in Montgomery County, Alabama. Brown participated in the 2013 hearings about Alabama Power’s profits while White was PACE’s attorney.

PACE appeared to continue receiving payments from Matrix LLC as late as 2018, according to files sent from Matrix to then-chairman of NextEra Energy James Robo in November 2021, along with a partially redacted cover letter. The files were sent to Robo amidst a feud and litigation between Matrix’s founder, Joe Perkins, and its former CEO, Jeff Pitts, who conducted political work for Florida Power & Light, a NextEra subsidiary. The letter to NextEra and accompanying files were sent anonymously to press outlets who used them in reporting, but they have not been published in full; the Orlando Sentinel independently corroborated many of the details contained in the files. EPI obtained the files from multiple sources who asked to remain anonymous.

EPI reached out to PACE and Perkins for comment but did not receive any response.

PACE defended the positions of Alabama Power in the docket and claimed the method used to calculate Alabama Power’s return on equity (ROE), a measure of its profit, was fair despite it being one of the highest in the nation. PACE claimed that it had “no hidden agenda or intent” and that its work at the PSC was “geared toward serving the economic interests of it [sic] partners.” 

PACE did not disclose its relationship with Matrix or Alabama Power to the PSC or the public.

In the intervening years, an EPI analysis of the ROE changes made in 2013 demonstrated that Alabama Power earned $1 billion in excess profits over a five-year period compared to the utility-industry average. Commissioner Terry Dunn, who served on the Commission from 2011 – 2015, called the hearings at the time “just a dog and pony show. It was all staged. The people that you saw get up, they were reading off the same script.” 

An internal email between Mark White and a number of Southern Company and Matrix LLC officials from 2013 also appears to show White working directly with Southern Company and Matrix LLC officials at that time, months before he began representing PACE at the Alabama PSC. White was emailing about a briefing that he and Perkins would co-lead for company officials about “the laws of defamation in Alabama.” In the email, White described Perkins as a long-time colleague with whom he had worked on political campaigns. The email was obtained by the Energy and Policy Institute from a source who asked to remain anonymous.

The Journal’s report said that an ex-Matrix employee, Jeff Pitts, alleged that a motivator for the surveillance of Fanning could have been concerns about a proposal at Southern to consolidate certain resources, “such as consulting and legal services” away from Alabama Power and into Southern, which is based in Atlanta. Such a consolidation would have potentially meant lost business for Matrix – but also possibly for White, Arnold & Dowd.

White did not respond to a request for comment.

Conflicts appear to extend to the King & Spalding law firm of Atlanta, Tait reports:

King & Spalding has represented Southern in lawsuits before, most notably in an ongoing dispute between Oglethorpe Power Corporation (OPC) and Georgia Power. OPC claimed Georgia Power was unlawfully attempting to force it to pay for more than its fair share of cost overruns for the long-delayed Plant Vogtle Units 3 and 4 after an agreement in 2018 between the parties to keep the project going and shift more risk onto Georgia Power. OPC said it could lose more than $400 million because Georgia Power was refusing to abide by an agreement that would limit how much OPC would pay in the event of additional cost overruns. 

Should King & Spalding have been involved in an internal investigation at Southern Company? Officials from the law firm did not respond to a request for comment.

Southern Company seems to be taking a "we're moving on" approach to its evolving predicament. But K.B. Forbes, of banbalch.com and the CDLU, has other ideas. He writes:

Southern Company may claim it does not know who authorized the surveillance of Fanning and for what purposes, but we do know who authorized, and which individuals were involved in the campaign, of assault, intimidation, defamation and theft against the CDLU, attorney Burt Newsome, K.B. Forbes, the Newsome family, and the Forbes Family.

Like David Copperfield, Southern Company wants to make these embarrassing million-dollar expenditures simply disappear with a half-baked internal probe, while “hiding the goods.”

Between 2018 and 2020, children were targeted, terrorized, and caused to cry in fear by Southern Company.

And for what fudiciary duty to shareholders ? None. Zero. Zilch.

And that, our dear reader, is why Southern Company appears to have “covered up and swept the criminal misconduct under the rug.”

Crosswhite’s problem has now become new Southern Company CEO Chris Womack’s problem, even though his spin doctors claim they have “moved on.”

Investigators from the U.S. Securities and Exchange Commission, the U.S. Nuclear Regulatory Commission, Wall Street plaintiff attorneys for investors, and major civil RICO litigators are currently digging, probing, and preparing, sources affirm.

The anonymous spreadsheets and documents that we received show that Southern Company executives Zeke Smith and Jeff Peoples were involved in authorizing expenditures to scare and terrorize young children.

No matter how badly Southern Company wants to “move on,” the evidence is rock solid. Even the laughable internal probe, with no conclusion, affirmed that millions were wasted by Southern Company.

Spying. Terrorizing. Defaming. Stealing.

What a farce!

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