Photo credit: Daniele Levis Pelusi
The Environment Agency has confirmed that it is bringing criminal proceedings against Southern Water Services Limited, four former employees and three further individuals, following an Administrative Court judgment on 22 July that upheld the Agency’s power to prosecute for offences connected to its regulatory functions. The four former staff, including former chief executive Matthew Wright, will face a charge of conspiracy to defraud, a common law offence carrying a maximum sentence of ten years’ imprisonment. The company itself, together with the three further individuals, faces charges of breaching environmental permit conditions.
What is alleged
The Environment Agency alleges that between 1 January 2012 and 31 December 2017 the four defendants conspired to defraud the regulator and Ofwat by engineering “artificial no-flow events” at wastewater treatment works. Because samples cannot be taken when effluent is not flowing, the alleged manipulation would have allowed the company to avoid failing compliance tests under the Operator Self-Monitoring regime. In the Administrative Court judgment, Lord Justice Popplewell described the allegations as involving “carefully planned and extensive fraud and dishonesty at a high level within the company”, including the use of tankers to remove wastewater from facilities so that no-flow conditions could be recorded. According to the judgment, the Environment Agency says that on Southern Water’s own internal assessment the practice would have avoided penalties of the order of £45 million, and that on the Agency’s own assessment the figure is higher.
The regulatory backdrop
Operator Self-Monitoring was introduced across the water industry in 2009 and places responsibility for effluent sampling on companies themselves, with independent sampling teams and unannounced visits intended to preserve accuracy. The Environment Agency has tightened oversight in the past year, requiring samples to be rescheduled where flow is insufficient, shadowing water company sampling teams, and beginning to take its own cross-check samples. The current government has committed to ending Operator Self-Monitoring altogether and developing what it calls an “Open Monitoring” approach for wastewater.
Defence and company response
Wright’s solicitor, Stephen Shergold, said following the ruling that his client denies all wrongdoing and has co-operated fully with the Environment Agency’s investigation. In a statement carried by ITV, Southern Water said the charges relate to “a historic set of failures” first identified through its own internal investigation in 2017 and reported to the Environment Agency at the time. The company said the individuals named are no longer employed there and pointed to a 2019 Ofwat investigation into the same conduct, which resulted in customer rebates and penalties. It said it was under new leadership and new ownership and had “radically addressed” its culture, governance and operations, and repeated an earlier apology. All defendants are entitled to the presumption of innocence and the case will now proceed at Medway Magistrates’ Court.
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