Former Southern Water chief charged with fraud over water test manipulation

Former Southern Water chief charged with fraud over water test manipulation

Matthew Wright, the former chief executive of Southern Water, has been charged with conspiracy to defraud authorities. He is accused of involvement in a plan to manipulate water quality tests to avoid millions of pounds in penalties.

Wright is accused alongside three other former company employees: Philip Barker, Clive Massey, and Mark Gregory. The four are alleged to have conspired between 2012 and 2017 to defraud the water regulator Ofwat and the Environment Agency (EA) by implementing artificial no-flow events at wastewater treatment works.

The charges involve allegations that officers of the company contrived operational circumstances to ensure there was no flow through sites when they believed the site would fail a test. This was allegedly done to avoid providing true results to regulators.

According to a judgment by Lord Justice Popplewell, the allegations include carefully planned and extensive fraud and dishonesty at a high level within the company and on a large scale. This included the use of tankers to remove wastewater from facilities to create no-flow results, which the judge said was intended to cover up pollution and deceive those protecting the public from harm.

The financial implications of the alleged fraud are substantial. The EA states that by Southern Water's own assessment, the company avoided penalties of the order of £45 million, though the EA believes the actual figure is higher.

Legal Challenges and Court Rulings

The path to these charges involved a legal battle over the EA's authority. After a judge issued a summons against the four men last year, Wright challenged the move in the High Court in June. His lawyers argued the summons should be thrown out as a nullity because the EA only has the power to bring private prosecutions for environmental offences, not for fraud or conspiracy.

The EA's barristers countered that the agency has a general power to bring private prosecutions or that the conspiracy charges were connected to its functions.

On Wednesday, two senior judges dismissed Wright's claim and lifted reporting restrictions on the challenge. Lord Justice Popplewell, sitting with Mr Justice Hilliard, ruled that limiting the EA to only environmental offences would produce unreasonable and anomalous results. He stated the law allows the EA to prosecute any offence that is conducive or incidental to its functions.

The Monitoring System

The alleged manipulation centers on the operator self-monitoring (OSM) scheme. Introduced in 2009, this system requires annual unannounced visits by sampling teams who operate separately from the teams running the works. If the discharge flow is insufficient to take a sample during a visit, it is not recorded as a fail, and no further samples are taken for that testing period.

District Judge Stephen Leake, in the ruling that issued the initial summons, noted the agency's allegation that the company deliberately manipulated this specific regime to avoid the consequences of true results.

The current Labour government has pledged to end the practice of ignoring insufficient flow results, and OSM rules were tightened over the past year to require that samples be rescheduled in such events.

Wider Criminal Proceedings

The fraud conspiracy is part of a larger set of legal actions. Southern Water has been separately charged with dozens of offences for contravening or failing to comply with environmental permit conditions at multiple wastewater treatment works between 2013 and 2017.

Additional individuals face charges related to environmental permit conditions:

• Mark Butler (47, of Hassocks, West Sussex): Charged with eight counts alleged to have occurred between 2015 and 2024.
• Terry Stephens (68, of Waterlooville, Hampshire): Charged with one count alleged to have occurred in 2015.
• David James (60, of Worthing, West Sussex): Charged with one count alleged to have occurred in 2016.

An EA spokesperson stated that the agency is pursuing criminal proceedings against Southern Water Services Limited and several former employees, adding that they will always pursue and prosecute those alleged to have committed serious offending against the environment.

The case against Wright, Barker, Massey, and Gregory was scheduled to be heard at Medway Magistrates’ Court on July 14.