The boys from Southern reach over the ocean

Click to follow
The Independent Online
Southern Company is among the largest and most colourful of the North American utilities, with operations across the southern states and overseas.

Its roots lie in the Alabama Power Company, founded in 1906 by a steamboat captain, WP Lay, to develop power on the Coosa River. Alabama's utility industries provided the basis for expansion until 1920 when Tom Martin, then legal counsel, took up the presidency and bestowed on the company the more ambitious title of Southeastern Power and Light.

Southern now has electricity supply companies in four US states and to this day operates a generating station on the Coosa River. Its overseas arm, Southern Electric International, has become increasingly aggressive in extending the reach of the empire beyond home territory. But for the Southern boys last year's acquisition of South Western Electricity in the UK was the largest bite so far to swallow. It was also the first hostile takeover bid they had made.

Not content with power plays in its own sector, Southern is expanding into communications services - primarily for the companies within the group but with a view to offering its skills to the business community at large. It has apparently taken the view that a company of its experience can span the range of utility activities. The next development - flagged earlier this week by chairman Bill Dahlberg - is likely to be the acquisition of a water business.

Southern is not without its critics. It gained notoriety in the 1980s for attracting the attention of the Securities and Exchange Commission after allegations of tax violations and allegations of unethical business practices.

In April 1991 two shareholders filed a suit against a number of its directors alleging fraudulent accounting, illegal political campaign contributions and violations of federal securities laws. In 1992 the suit, brought under Federal Racketeer Influenced and Corrupt Organisations Act, was dismissed by the US District Court for Southern Georgia but that dismissal was reversed by the US Court of Appeal in April 1994 and the action is still pending.

According to Southern's offer document for Sweb, one of its subsidiaries, Georgia Power, is also in dispute with the Internal Revenue Service over unpaid taxes of up to $32m. The company has challenged the IRS in a petition to the US Tax Court but meanwhile it made a payment to the IRS in September 1994.

In 1995 it was ordered to pay $2m in legal fees related to defamation and breach of contract suit by a former executive.

The publicity has not deterred it from the high-profile approach to Britain's larget power generator and all the political scrutiny that will inevitably involve.