The former chief executive of Southern Water, Matthew Wright, faces up to ten years in prison after being charged with conspiracy to defraud. The charges stem from an alleged plot to manipulate water quality tests to avoid at least £45 million in penalties.
Wright, who led Southern Water from 2011 to 2016, has been charged alongside three other former employees at the firm, according to the Environment Agency. The alleged conspiracy to defraud the Environment Agency and water regulator Ofwat occurred between January 1, 2012, and December 31, 2017. Prosecutors claim the men manipulated water quality compliance testing by ensuring insufficient water flow through sites for sampling when bosses believed tests would be failed.
The Environment Agency had previously asked a judge to issue a summons against Wright, Philip Barker, Clive Massey, and Mark Gregory. Wright challenged the summons, arguing the agency lacked the power to issue it and that it was invalid. In June, his lawyers presented this argument to the High Court. On Wednesday, two senior judges dismissed Wright's claim and lifted previous reporting restrictions on the legal challenge.
The offence of conspiracy to defraud carries a maximum sentence of ten years imprisonment. Lawyers for Wright stated that he denies all wrongdoing and has fully cooperated with the Environment Agency's investigation.
Separate court listings indicate that the case against Wright, 61, of Haslemere, Surrey; Barker, 58, of Chiltington, West Sussex; Massey, 65, of Brandhill, Shropshire; and Gregory, 64, of Southampton, was scheduled to be heard at Medway Magistrates' Court on July 14. The four are accused of conspiring to defraud public bodies responsible for environmental and financial regulation, including the EA and Ofwat, by implementing artificial no-flow events at wastewater treatment works.
Southern Water itself faces dozens of charges for failing to comply with environmental permit conditions between 2013 and 2017 at multiple wastewater treatment works. Three additional individuals will also face charges related to environmental permit violations. Terry Stephens, 68, of Waterlooville, Hampshire, is charged with one count from 2015. David James, 60, of Worthing, West Sussex, is charged with one count from 2016. Mark Butler, 47, of Hassocks, West Sussex, is charged with eight counts spanning from 2015 to 2024.
Wastewater treatment works operate under environmental permits issued by the EA. The Operator Self-Monitoring (OSM) scheme, introduced in 2009, requires annual testing of treated effluent discharge through unannounced visits by independent sampling teams. Results are shared with the EA and Ofwat, with penalties issued for non-compliance. Insufficient discharge flow during a test means no sample is taken, which is not considered a fail. Rules for OSM have been tightened, requiring rescheduling of samples if flow is insufficient, and the current government has pledged to end the practice.
In a ruling last year, District Judge Stephen Leake stated that the agency alleged a deliberate plan by company officers to manipulate the OSM regime by creating circumstances of no flow at sites believed to be failing tests. This was allegedly done to avoid the consequences of actual results being reported. Lawyers for Wright contended that the EA only has the power to bring private prosecutions for environmental offenses, not fraud or conspiracy. However, barristers for the EA argued that the body possesses a general power to bring private prosecutions and that the fraud allegations were connected to its functions.
Lord Justice Popplewell and Mr Justice Hilliard ruled that restricting the EA to prosecuting only environmental offenses would lead to unreasonable outcomes. They determined that the law allows the EA to prosecute for any offense if it is conducive to carrying out its functions. The judgment noted that the charges against Wright involve very serious allegations of criminal misconduct, including carefully planned and extensive fraud at a high level within the company. It was alleged that wastewater was removed from facilities by tankers to create no-flow results, intended to conceal pollution and deceive regulatory bodies. The EA estimates that Southern Water avoided penalties of approximately £45 million, with their own assessment suggesting a higher figure.
An Environment Agency spokesperson confirmed criminal proceedings against Southern Water Services Limited and former employees, stating their commitment to prosecuting those alleged to have committed serious environmental offenses. Environment Secretary Angela Eagle commented that attempting to cover up pollution is outrageous and that those found guilty will face the full force of the law, emphasizing the government's support for enforcement actions to protect waterways.