Rooting out potential crimes in South Carolina’s $9 billion nuclear plant debacle could take years and lots of outside help as the state’s top police agency looks for signs of fraud and deceit amid the project’s complicated history.
The State Law Enforcement Division took on a criminal investigation of the failed V.C. Summer project this month at the urging of lawmakers. But it remains unclear how the agency will go about untangling a mess that unfolded over a decade’s time, with evidence and witnesses scattered from tiny Jenkinsville to Tokyo.
SLED is seen as the Palmetto State’s gold standard for law enforcement, but deciphering the project’s complicated finances, decision-making and technological blunders will likely take an elite team of forensic accountants, nuclear engineers and other highly trained specialists, according to experts.
One former prosecutor compared the Summer case to unraveling the financial meltdowns of duplicitous New York stockbroker Bernie Madoff or Houston’s Enron Corp. Another said it would require technical expertise on par with deconstructing the Challenger space shuttle disaster.
It’s a massive undertaking for an agency already investigating dozens of officer-involved shootings around South Carolina and a Statehouse corruption probe that’s now in its fourth year.
SLED Chief Mark Keel has so far been mum on his plans for the V.C. Summer investigation, and a spokeswoman told The Post and Courier he would have no comment on the matter.
Legislators, however, said they have confidence in Keel and his agency to do what it takes to get the job done.
"One thing that I will say about Mark Keel is that he is not shy," said Sen. Shane Massey, an Edgefield Republican who chairs a Senate committee looking into the project’s failure. "If he thinks he does not have enough manpower, he will tell us. If he needs something, he will let us know."
SLED joins crowded field
The V.C. Summer project, started in 2009, drew national attention because it promised to usher in a new era of nuclear power in the United States. Instead, the project became a crater of debt that left electric customers on the hook for a squandered investment larger than the state's $8 billion annual budget. Utility customers and politicians have been demanding answers since the owners walked away from the project in July after repeated cost overruns and delays.
SLED joins a gaggle of investigative efforts already under way. The FBI also is probing the plant’s failure, along with two legislative committees and the state Attorney General’s Office.
Keel’s predecessor, former SLED Chief Reggie Lloyd, said he expects the agency will follow the FBI’s lead on the probe. Lloyd also is a former U.S. attorney for South Carolina. That office recently subpoenaed records from the two utilities that partnered on the Summer project, SCANA and state-owned Santee Cooper.
“There will be a need for expertise that they don’t necessarily have locally,” Lloyd said of SLED’s effort. “In a very complex case like this, you can be presented with a mountain of evidence and witnesses and not know what they are talking about.”
The FBI and the Justice Department’s fraud division have far greater experience in this type of arena, said Lloyd, now a lawyer in private practice. In addition to their in-house experts, the FBI can tap into key staffers at the Nuclear Regulatory Commission, the Securities Exchange Commission and other entities, as well a cadre of outside specialists, he said.
SCANA revealed Tuesday that the SEC, the nation’s top stock market regulator, had already subpoenaed documents related to the nuclear plant expansion. Lloyd said the SEC will likely want to make sure SCANA, as a publicly traded company, complied with federal disclosure laws and was forthright with investors.
SLED spokeswoman Kathryn Richardson wouldn’t discuss details of the probe, but she hinted at possible collaboration behind the scenes, saying her agency is no stranger to joint investigations with the FBI.
“This is not unusual,” she said. “SLED conducts investigations with the FBI on a regular basis.”
SLED agents have been coordinating with the FBI of late on the Statehouse corruption probe, which so far has ensnared four lawmakers. And reports out of Allendale earlier this month described a joint operation in which the two agencies raided a City Hall office in connection with another undisclosed investigation.
Experts, patience needed
Even with a team-up, however, a thorough investigation of the Summer project will take considerable time, and the two agencies will need experts to help guide them through what is likely a mountain of evidence, Lloyd said.
“Something like this could take years to investigate,” he said. “They’re going to be getting a few hundred thousand pages of documents and trying to figure out what it all means.”
Consider that some 5,000 people worked on the plant's construction, many of whom have since moved on to new jobs. Several engineers involved worked out of state, including a Westinghouse team in Pennsylvania. Others reportedly checked in from as far away as Spain.
All told, workers produced volumes of correspondence, technical drawings, specification sheets, procurement orders, progress reports and other documents associated with the project. SCANA and Santee Cooper generated plenty of their own paperwork as well, as did the NRC and state regulatory agencies. Other clues can be found in transcripts from earnings calls with investors, testimony from hearings on rate increase requests, and emails and letters among the various principals, including Japan-based electronics giant Toshiba, parent of Westinghouse.
Miller Shealy, a former federal prosecutor who now teaches at Charleston School of Law, said he suspects investigators will want to follow the money trail and see if fraud or misspending hampered the project. That would be a simple, natural path — “pure detective sleuthing” — if not for the complicated labyrinth agents must navigate to answer those questions, he said.
Shealy said the sprawling project was akin to building a pyramid in modern times. Without bringing in specialists in nuclear construction to advise them, investigators could “end up on a nightmarish fishing expedition that gives you nothing at the end of the day," he said.
State Rep. Micah Caskey is a West Columbia Republican who is on a House committee looking into the nuclear plant fiasco. He said there is a clearer path for a federal investigation, particularly in regard to representations that were made to utility shareholders about the plant’s progress. But there are avenues to be explored on the state side as well, he said, including whether the utilities were up-front with South Carolina regulators and shared all of the available information at their disposal.
“Were all those communications forthright and honest?” Caskey, a former state prosecutor, said. “If I was at SLED I would want to see those communications.”
A question of accountability
V.C. Summer and Plant Vogtle in neighboring Georgia represented the first new nuclear power plants to begin construction in the country in about three decades.
Utility officials remained publicly bullish on the effort right up until they pulled the plug on the project. But letters and emails that have surfaced in recent weeks show Santee Cooper Chief Executive Lonnie Carter first raised concerns about the construction in 2013 — roughly a year after construction began in Fairfield County. A once-secret audit completed in February 2016 also informed the partnering utilities of serious construction failures at the site.
Caskey said SLED may be quite interested in The Post and Courier’s reporting about a decision by contractors not to use professional engineers to stamp and approve critical blueprints for the plant — a potential violation of South Carolina law.
The state Department of Labor, Licensing and Regulation, which oversees the certification and use of professional engineers, said it has not opened an investigation into the concerns raised by the newspaper because no one has filed a formal complaint with the agency.
Santee Cooper and SCANA officials won't say if they have been approached by SLED agents looking into the plant failure, but they said they plan to cooperate with all ongoing investigations.
The bottom line, Caskey said, is that the people want and deserve accountability for what happened with the nuclear project.
SCE&G, owned by SCANA, is collecting $37 million per month, or nearly a half-billion dollars per year, from its customers to pay for the failed project. About 18 percent of each customer’s monthly bill goes toward the debt.
“What happened appears to me to be deliberate, intentional and purposeful,” Caskey said. “And I think the public is rightly aggravated that those actions led directly to higher rates. “
Andrew Brown contributed to this report.
