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.