Will the Southern Company’s “Fake It 'Til You Make It” Scheme Dupe the NRC?
Updated: Aug 16
By: Donald V. Watkins
Copyrighted and Published on April 8, 2023; Updated at 6:30 P.M. PST to add information on Southern Company board member Donald M. James
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 recut/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.
Despite the continued and repeated mismanagement of the Vogtle construction project, Tom Fanning was able to seduce the Southern board of directors into retaining his services as company's CEO. By his own choice, Fanning will be retiring from the company on May 24, 2023.
A Board of Bootlickers, Influence Peddlers, and Grifters
The board members from the time the NRC license was issued in 2012 to today are mostly Tom Fanning bootlickers, influence peddlers, and grifters. 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 board of directors and oversaw its nationwide crime spree from 2002 to 2016.
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.”
The Southern Company’s Pattern and Practice of Lying About the Things that Matter
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.
The SEC is Asleep at the Wheel
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.
The NRC is the Public’s Last Line of Protection
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 that the circumstances that caused the meltdown at Three Mile Island are repeating themselves at Vogtle Units 3 and 4.
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 Coop, 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) reign-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.