CRANBERRY TWP — Westinghouse Electric Co. reached a more than $21 million settlement, avoiding corporate criminal prosecution for its role in failing to construct two nuclear units in South Carolina, although two former executives face federal criminal charges in the state.

Acting U.S. Attorney M. Rhett DeHart announced a $21.25 million cooperation agreement with Westinghouse this week in connection with what DeHart's office called “criminal misconduct surrounding the failed construction of two new nuclear units at the V.C. Summer nuclear plant.”

As part of the settlement, Westinghouse will pay $5 million within 30 days to the South Carolina Low-Income Home Energy Assistance Program to help ratepayers affected by the company's failure to complete a project, and will pay $16.25 million by July 2022 to the same program.

Included deception

The alleged misconduct included deception of South Carolina utility companies, “regulators, investors and ratepayers in order to maintain cash flow and liquidity for Westinghouse,” according to an indictment in federal court against one of Westinghouse's former executives.

In 2008, Westinghouse signed a contract with the two utility companies — SCANA and Santee Cooper — to build two AP1000 nuclear reactors in Jenkinsville, S.C., at the V.C. Summer site, adding two new reactors to an existing power plant.

Beginning in 2015, according to the indictment, Westinghouse became increasingly aware it would be unable to complete the project on schedule.

Failing to complete the project on schedule, the investigators claimed, would result in significant pecuniary losses to the utility companies — and, in turn, their ratepayers — creating significant monetary harm. The indictment identifies $1.4 billion in tax credits SCANA would receive if the project were completed by the end of 2020.

Rather than informing the companies of their likely inability to complete the project by Dec. 31, 2020, Westinghouse provided “substantially and materially false” schedule updates, representing to the companies they would be able to complete the project on time, the executive's indictment states.

In fact, when Westinghouse engaged an independent evaluator in 2016 to determine when the project could be finished, they buried the results of the evaluation, according to the indictment.

The company's “preliminary analysis predicted that Unit 2 would not be finished until August 2022, a three-year delay from the August 2019 completion date that SCANA had just submitted to the Public Service Commission for regulatory approval,” the indictment states. “According to a Westinghouse scheduler, it was very possible that public dissemination of (the company's) preliminary completion date for Unit 2 would kill the project.”

Westinghouse, the indictment states, didn't inform the companies of the more likely completion dates until 2017, months before the company filed for reorganizational bankruptcy.

Individual liability

The two Westinghouse executives facing criminal charges are former senior vice president for new plants and major projects Jeffrey Alan Benjamin and former manager Carl Dean Churchman.

Benjamin, who was arraigned Tuesday in the U.S. District Court for the District of South Carolina, faces four charges, including one count of conspiracy, 14 counts of wire fraud, one count of securities fraud and one count of causing the failure to keep accurate corporate records. The government claims Benjamin misled government agencies, investors and ratepayers to prevent a pecuniary loss to Westinghouse.

“The object of the conspiracy was for the defendant ... and others, through Westinghouse, to provide false representations and omit necessary facts in disclosures to the PSC, the (South Carolina Office of Regulatory Staff), the owners, SCANA investors and to ratepayers, so that the construction of the project would continue, minimizing regulatory risk and avoiding legislative oversight, all for the purpose of obtaining money from the owners,” it states.

Benjamin remains free on $25,000 unsecured bond.

Churchman, who only faced one count of making a false statement to investigators, pleaded guilty in May.