Court hears details of water firm's dishonesty

Executives, current and former, at Severn Trent Water have been hastily distancing themselves from accusations of dishonesty, as sentencing on convictions for deliberate falsification of leak statistics was adjourned until next month.

In precedent-setting proceedings at London's Old Bailey, a criminal court judge heard detailed accusations of "sophisticated dishonesty" at the company and "deliberate decisions" taken by senior staff to mislead the regulator.

Although no individual is named as a defendant, former executives are accusing the company's current management of using them as scapegoats and claiming that the case is one-sided.

The utility pleaded guilty to two charges of providing incorrect information to Ofwat in 2001 and 2002. It has already been fined a record £35.8m by the regulator for false recording and poor customer service and now faces an unlimited fine under criminal proceedings brought by the Serious Fraud Office (SFO). Severn Trent has admitted reporting leaks of 340 megalitres per day, when in reality the losses were 514 megalitres. In some instances, the erroneous figures were blamed on data problems, in other cases on floods or foot-and-mouth. In some cases, the numbers were manipulated to artificially inflate domestic water usage.

Evidence for the prosecution included an email from Will Bradford, Severn Trent's leakage manager, in September 2002 which acknowledges the manipulation of data in order to hit the 340-megalitre target. "Because I was unable to do that within the bounds of credibility, I have had to be selective in the data I have used," wrote Mr Bradford in an email to Mark Wilson, the regulatory director. "I have been economical with the truth."

But Mr Wilson claims he never read any incriminating emails. "None of the allegations of dishonesty asserted against me were ever put to me by the SFO," he said in a statement.

Brian Duckworth, Severn Trent's former managing director, said: "I have consistently denied any criminal activity. As the prosecution made clear, any finding is not against any named individual since they are not parties and therefore cannot set out their side of the story."

The current management has blamed the scandal fairly and squarely on its predecessors. In April, Tony Wray, who took over as chief executive last year, said: "We deeply regret the mistakes of the previous regime."