Cobb EMC CEO Dwight Brown may or may not be guilty of fraud and racketeering, as charged in a 31-count indictment. Brown may or may not have been unfairly demonized for his controversial tenure at EMC and his masterminding of its now-defunct spinoff, Cobb Energy.
But what is not in doubt is that Brown, his board and his lieutenants are about as transparent as a lump of West Virginia coal.
For that matter, they've shown about as much transparency and responsiveness toward the desires of co-op members and the public as Egyptian strongman Hosni Mubarak has to his countrymen now protesting in the streets of Cairo. EMC officials like to boast of the company's "transparency." The facts tell a different story.
IN THE PAST FEW WEEKS MDJ readers have read letters to the editor from Brown's spin doctors ballyhooing the alleged transparency of the co-op, especially regarding its three-year-old plan to help build a controversial $2.1 billion coal-fired power plant in Sandersville. The plant was the brainchild of Brown, who meanwhile has been under fire for the past several years for his involvement in the creation of Cobb Energy. He and his wife reaped huge stock windfalls from setting up Cobb Energy.
Brown's indictment is an outgrowth of the suit filed by several co-op members alleging that he used the EMC as a piggybank to fund Cobb Energy without the approval of the co-op's members, as required in the EMC's bylaws. The creation of Cobb Energy was approved by Brown's rubber-stamp EMC board, however.
Brown and that board also have come under heavy criticism for refusing to allow EMC board elections and for unconscionably using EMC funds to pay his huge legal expenses. And though the EMC has an in-house PR team headed by Senior Vice President Sam Kelly, Brown also is making heavy use of an Atlanta PR firm - no doubt on the co-op members' dime. But here's some advice: Whatever they're paying for PR is money down the drain.
Kelly wrote a letter to the editor published Jan. 25 boasting that Cobb EMC has been "transparent and forthright in its involvement with the coal-fired plant." Oh really? Then why all the dancing around this week?
In Wednesday's MDJ Kelly and Brown confidant Dean Alford tap danced all round what was a simple, Reporting 101 question: How much of the coal-fired plant would Cobb EMC own? They contend the matter has yet to be decided, declining to offer the public even a ballpark estimate. In other words, they're saying Cobb EMC is preparing to spend millions of dollars on the plant without having any idea what they're getting in return. R-i-i-i-ght. And that their members have no right to any such information. Yes, that's "transparency" for you.
You'll recall that when the EMC's involvement in the coal plant was unveiled back in January 2008 by Alford - not, for some reason, by Brown - that Alford said Cobb EMC would be the largest owner, with 25 percent. But that was before about half the other EMC partners around the state dropped out - and before Brown was indicted. That unveiling came at a press conference at Cobb EMC headquarters. Alford, who did the talking about the plant, was identified as a plant consultant. No mention was made of the fact that he, like Brown and his wife, owned $750,000 worth of insider-held Cobb Energy stock which paid a whopping dividend of more than 8 percent on a company hemorrhaging red ink.
Also in Wednesday's MDJ, readers were treated to Kelly dodging another Reporting 101 question: Does Brown plan to honor the December 2009 settlement agreement that ended the co-op members' suit, an agreement that specifies he announce his retirement by the end of this month? The tight-lipped Kelly would only say "a process" is in place and that the board is "seeking internal and external resumes." Such evasive answers fuel speculation that the agreement to end the lawsuit was not a "good-faith settlement" on the part of Brown and his board.
In fact, the EMC is a posterboy for a "good governance be damned" corporation: It is run by a rubber-stamp board, it has refused to hold new board elections, it has tried (with some success) to manipulate the court system, and it has made it near impossible for co-op members and the public to get a straight answer to significant questions.
COMMUNITY-ORIENTED, usually gregarious Dwight Brown won well-deserved plaudits as a utility executive in the 1990s for renegotiating the EMC's wholesale contracts at lower rates, allowing it to be more competitive.
But Brown has been poorly served by his board, the legal team that defended him on the Cobb Energy scheme and by his PR team. Thanks to those self-inflicted wounds, their credibility is shot. Moreover, Brown's board has abandoned the fiduciary duties it owes to co-op members. Instead, it has stonewalled, refused to listen to critics and failed to make badly needed corporate governance changes, further offending already disgruntled members.
After three long years of playing "hide the ball," it is unlikely that, absent any court-ordered legal intervention, that there will be any changes in corporate governance, or any move toward true transparency, as long as Brown and his rubber-stamp board continue to run the EMC.