Westinghouse co-operates with federal prosecutors over VC Summer project

2 September 2021

Westinghouse Electric Company said in a statement on 30 August that it had fully cooperated with the joint federal and state grand jury investigation related to the abandonment of the VC Summer Project, that began in October 2017. Westinghouse said it had finalised two Cooperation Agreements with the US Attorney’s Office for the District of South Carolina and the South Carolina Attorney General. The terms of the corresponding agreements confirm that both federal and state authorities have declined prosecution of Westinghouse.

Santee Cooper co-owned the VC Summer project, along with South Carolina Electric & Gas (SCE&G) (a subsidiary of SCANA Corporation. They launched the project to build two Westinghouse AP1000 reactors at the site in 2009 after the state legislature passed the Base Load Review Act, which removed much of the financial risk to investor-owned SCE&G. From the beginning of the project, in 2008, Westinghouse was the lead contractor and reported on its progress to SCANA.

Construction of units 2 and 3 at VC Summer began in March and November 2013. However, Westinghouse declared bankruptcy in March 2017 after years of rising costs and delays and in late July 2017, SCANA and Santee Cooper, announced they would abandon the project. A federal investigation began shortly afterward.

Westinghouse has now agreed to pay $21.5 million in connection with its role in the 2017 failure of the VC Summer project, The State (Columbia) reported on 30 August. Announcement of the payment, made as part of a “cooperation agreement” between federal authorities and Westinghouse, was made by South Carolina’s Acting US Attorney Rhett DeHart. The payment is the latest development in a four-year federal criminal investigation that originally targeted SCANA but was subsequently expanded to include Westinghouse.

In its agreement with federal authorities, Westinghouse does not admit any fault. And, in light of the company’s cooperation with prosecutors, federal authorities agreed not to press criminal charges against the company but instead will focus on former Westinghouse employees potentially responsible for any wrongdoing. DeHart said Westinghouse has been helping prosecutors and turning over information.

The five-page agreement gives severalreasons why prosecutors are not seeking to file criminal charges against Westinghouse as opposed to individuals who worked for the company. Westinghouse has pledged “full and ongoing cooperation” with prosecutors and has instituted extensive reforms. In addition, since 2017, Westinghouse has declared bankruptcy, reorganised and is now owned by another company — Brookfield Business Partners, which had no role in the SCANA nuclear project failure.

The agreement makes clear that Westinghouse understands that prosecutors can bring criminal or civil actions against former Westinghouse employees who potentially committed fraud in connection with the VC Summer project. The South Carolina Attorney General’s Office and Westinghouse have reached a similar cooperation agreement.

Since May, federal prosecutors have charged two former Westinghouse officials involved in the SCANA project with criminal offences in connection with the nuclear project failure. In June, Carl Churchman, who managed the project for Westinghouse, pleaded guilty to lying to an FBI agent about matters connected to the project’s failure. Earlier in August, former Westinghouse senior vice president Jeffrey Benjamin, Churchman’s boss who oversaw all the company’s nuclear plant projects, was indicted on multiple counts of fraud in connection with the project’s failure.

On 31 August, Benjamin pleaded not guilty to numerous federal fraud charges. In all, he faces 16 felony counts, including conspiracy, wire fraud, securities fraud, and causing a publicly-traded company to keep a false record. After the plea, Benjamin, who lives in Florida, was released on a $25,000 personal recognisance bond pending trial.

Westinghouse has already produced “more than 3 million pages of documents, data, and correspondences to federal investigators; made employee witnesses available for interviews; and provided extensive debriefing sessions on the process and facts developed during the course of the company’s internal investigations related to the project”, DeHart said.

DeHart added that Westinghouse has since removed and re-trained Westinghouse executives; elected new members to the company board, restructured and implemented new controls in the company’s finance organisation, adopted a global ethics code; established a corporate controller position, and implemented a new whistle-blower programme to allow employees to raise concerns without fear of retaliation.

Westinghouse agreed to contribute an initial $5 million to the South Carolina’s energy assistance programme for low-income homes to help certain ratepayers affected by the project’s failure. A final payment of more than $16 million to that programme will be paid by Westinghouse on or before 1 July 2022, DeHart said. Westinghouse, through former parent company Toshiba, has also satisfied more than $2.1 billion in settlement payments related to the VC Summer project, including about $1 billion to SCANA, $976 million to Santee Cooper and $160 million to pay various contractor liens, DeHart said.

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