Former Southern Water CEO and Company Face Criminal Charges Over Alleged Sewage Compliance Fraud

The Environment Agency has commenced criminal proceedings against Southern Water, its former chief executive Matthew Wright, and three other former employees over allegations that they conspired to defraud the Environment Agency and Ofwat by manipulating sewage treatment compliance checks between 2012 and 2017. The case concerns alleged “artificial no-flow events” at wastewater treatment works, used to conceal pollution and defeat the self-monitoring regime.

The Environment Agency said Matthew Wright is among the four former employees charged with conspiracy to defraud, marking the first criminal proceedings brought by the regulator against the chief executive of a water company for alleged failings during their tenure. Southern Water will also face separate charges of breaching environmental permits in connection with the same conduct, and three further individuals will also face charges linked to failure to comply with environmental permits.

According to the judgment handed down on Wednesday by Lord Justice Popplewell and Mr Justice Hilliard, the allegations involve “carefully planned and extensive fraud and dishonesty at a high level within the company and on a large scale.” The judgment said the scheme involved sewage being removed from treatment sites by tankers in order to create no-flow results and cover up pollution.

The self-monitoring regime requires water companies to take samples at wastewater treatment works and report the results to the Environment Agency. The Environment Agency said strict rules govern how samples must be taken to ensure their independence and accuracy, and that it is an offence if flows or data are deliberately manipulated to avoid compliance checks.

According to the judgment, the alleged scheme enabled Southern Water to avoid penalties of about £45 million, while the regulator’s own assessment put the figure higher. Conspiracy to defraud carries a maximum sentence of 10 years imprisonment.

Stephen Shergold, Wright’s solicitor at White & Case, said he denies all wrongdoing and has co-operated fully with the Environment Agency’s investigation.

Southern Water, which serves more than 4 million customers across Kent, Sussex and Hampshire, said the charges relate to historic set of failures between 2012 and 2017 that were uncovered through an internal investigation in 2017. It said the issues were reported to regulators, including the Environment Agency, and added that under new leadership and backed by new shareholders, it has made significant changes to its culture, governance and operations.

The proceedings are due to move forward before Medway Magistrates Court.