The Atlanta Journal-Constitution
Published on: 07/18/08
The president of Marietta-based Cobb EMC has blamed plaintiffs suing the co-op for costing its electric customers $2.25 million in legal fees.
In a letter sent Wednesday to employees and others, Dwight Brown named the six suing customers and called it "unfortunate" that they "should impose such an expense on the rest of our members."
Brown's letter comes two weeks before the co-op and its operating affiliate, Cobb Energy, begin settlement talks in a lawsuit that alleges financial mismanagement and questions the relationship between the two companies.
The plaintiffs' attorney, Pitts Carr, on Thursday called the letter "outrageous and asinine."
"It certainly casts grave doubt on whether there is any serious interest in resolving the matters," Carr said.
Brown's letter praised a recent report of a special EMC committee that examined the lawsuit's merits.
The committee said Cobb EMC should recoup about $13 million from Cobb Energy, including about $10 million paid to Cobb Energy without formal approval of the co-op's board.
But Brown said the report exonerated co-op officials. Brown, who is also president of Cobb Energy, quoted sections of the report that said the board made decisions in good faith and never engaged in misconduct.
"We were confident that we would be found to have done nothing improper —- and that is exactly what has happened," Brown wrote.
Carr blasted Brown's letter for key omissions: "The letter suggests that the [committee] gave the EMC management a clean bill of health. Nothing could be further from the truth."
The report said Cobb EMC and Cobb Energy should stop allowing officials to hold roles at both entities, noting that it put them "in the difficult and potentially compromising position" of negotiating transactions between "potentially antagonistic interests." It called for changes to "eliminate any actual or perceived conflicts of interest."
Brown's only reference to the negative portions of the report was to note that it had recommended changes "to further protect from the appearance of impropriety."
Large legal bills in the lawsuit are not surprising. At hearings, the tables for legal counsel cannot accommodate all the lawyers present, forcing some to sit against the wall of the courtroom.
Separate law firms represent the co-op, Cobb Energy, Brown, two different sets of co-op directors and the special litigation committee.
Carr said Brown should not blame the plaintiffs in the lawsuit for the expenses.
He said the co-op's governance violated corporate ethics standards. "It's the departure from those standards that has resulted in the issues brought to light in this case."
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