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The New Media Department of The Post and Courier

WEDNESDAY, MAY 18, 2005 12:00 AM

Senators grill utility in hearing

Panel raises 'issues' concerning board of Santee Cooper

BY KYLE STOCK
Of The Post and Courier Staff

COLUMBIA--Confirmation hearings for two Santee Cooper board members took on the air of an inquest Tuesday, with lawmakers raising pointed questions about what they viewed as intrusive and possibly improper conduct by long-serving directors at the state-owned utility.

Even before the day's drama began, the five state senators who make up the panel learned that the nomination of board member Carl Falk, representing Horry County, was pulled off the table by the man who appointed him, Gov. Mark Sanford.

Sanford told Falk on Sunday night that he was suspending his appointment. Two days earlier, the Sanford administration sent out word that it had put interim Chairman Guerry Green's nomination on hold. His reason for doing so in both cases was unknown.

The hearings got under way with Judiciary Committee attorneys detailing a litany of instances in which board members potentially overstepped their bounds, violated state open-meeting laws and took unilateral actions that they said could damage the Moncks Corner-based utility.

Although they were not at the Senate meeting, the three directors who drew the greatest focus of Senate attorneys said that they consistently had tried to do what they thought was best for Santee Cooper.

"If any of the current board members knew what we were going to be subjected to, we would never had agreed to serve," board member Richard Coen said in a phone interview. "We have all said and done things that in hindsight we wished we had not said and done. However, we are businessmen and professionals and are not accustomed to being publicly attacked for our public service."

Senate staff attorneys released a 4-inch stack of documents detailing actions with which they had "issues."

The documents showed that directors Coen, Green and Keith Munson violated South Carolina open-meeting laws in the fall when they met to screen investment banks bidding on a contract to look into the value of the utility.

Although Sanford repeatedly has denied it, Senate attorney Mike Couick told those attending Tuesday's hearing that "it's clear that this (was) something done in consideration of privatizing."

At the time, the three directors represented a quorum of Santee Cooper's Executive Corporate Planning Committee and, as such, were required to post notice of any meetings where they were all present, Couick said.

Senate staffers also said that the three directors should have told the full board before collaborating with Sanford's office on the study.

In response, Green and Coen said that no more than two of the three board members named by the staffers had met at one time, meaning they never violated meeting laws.

Staffers also criticized Munson for overstepping his bounds as a board member when the valuation study of Santee Cooper was released early this month.

Munson penned a six-page forward that was included in the report without the knowledge of other board members or Santee Cooper executives. The passage asserts that Santee Cooper has fulfilled its original mission in providing cheap power to rural areas and that the utility should pay more to the state. Couick said the forward was a biased and one-sided opinion that could hurt Santee Cooper.

Green agreed with Couick and said Munson's comments were out of line.

James Gilreath, a Greenville attorney who testified as an expert on proper board conduct, said Munson's actions were improper.

"If something like that happened on my board, we'd be talking to a lawyer . about trying to get that guy off," he told the lawmakers.

Munson rejected the criticism.

The Judiciary Committee also said Coen overstepped his bounds in setting up and attending a February 2004 meeting with two companies interested in providing fuel to the utility.

Jack Maybank, of Charleston-based Maybank Shipping, had contacted Coen and said he was interested in delivering South American coal to the utility.

These meetings between a board member and a company "indicated that they were getting involved in the day-to-day management of Santee Cooper, and I don't believe that they knew the gravity of what they were involved in," said Senate attorney Nancy Coombs.

Coen said he was instructed by Santee Cooper management to set up the meeting. Both Green and Coen rejected the notion they were out of line in dealing with potential suppliers.

"If you ask me, that's part of the normal role of a board member: You take advantage of a relationship you have to solve a problem." Green said.

"Nobody mentions the beneficial things that happen that way because it might make somebody look good," Green added.

The Senate subcommittee also heard testimony from John Rainey, a longtime Santee Cooper chairman and the governor's top economic adviser.

Both Rainey and Gilreath said the primary duty of a board of directors is to hire, fire and oversee the organization's top few executives.

Directors should not deal with day-to-day activities such as acquisitions. Rainey said the current Santee Cooper board is taking on issues that should be left to the executive staff.

"They've crossed that bright line," Rainey said. "There has to be a chain of authority and command or else there will be chaos."

Sanford's two remaining nominees up for confirmation are Dial Dubose, a developer from Easley, and Dr. John Molnar, an Horry County physician. The hearing Tuesday did not focus on these nominees but instead on longtime board members.

The Judiciary Committee is scheduled to screen both men today, and it is expected to release more documents showing that individual board members possibly had improper discussions with Wall Street credit-rating firms.

The other current Santee Cooper board members are Patrick Allen, Pat Campbell, Clarence Davis, J. Calhoun Land IV and James W. Sanders.

The utility's power is routed directly and indirectly to about 760,000 homes, businesses and factories statewide.


This article was printed via the web on 5/19/2005 4:59:13 PM . This article
appeared in The Post and Courier and updated online at Charleston.net on Wednesday, May 18, 2005.