Severn Trent faces charges for giving false data on water leaks to regulator

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The Serious Fraud Office is charging Severn Trent with three criminal offences for supplying inaccurate leakage data to Ofwat, the water regulator.

The charges against the water company relate to leakage data filed with Ofwat in 2000, 2001 and 2002. No individuals are being charged, but, if convicted, the company may face fines . The company was unable to comment on the substance of the charges.

The SFO decision is a fresh blow to Severn and follows a 2005 referral by Ofwat, which was investigating other allegations of false reporting by a former Severn Trent employee.

In its interim report, published in March 2006, Ofwat, which did not investigate leakage data, had concluded that the company submitted regulatory data which was "either deliberately miscalculated or poorly supported" and Severn was ordered to return £42m to its customers through credits to their accounts and adjustment to its price limits.

The company is also in the dock for mis-stating customer relations data in its submissions to the regulator. In June 2006, Ofwat warned the company that it would be fined for these misdemeanours. Analysts yesterday forecast that fines for the leakage and customer service data could total £50m.

Severn Trent's chief executive, Tony Wray, was keen to point out that his company's latest travails related to actions under a "previous regime".

"What I can say is that this new board and management team has taken, and will continue to take, all actions we think appropriate to ensure the maintenance of both high ethical and professional standards," he said. "There has been a comprehensive review of Severn Trent Water since I became managing director in March 2005, and I and my new management team are determined to continue to drive improvements."

Since 2006, Ofwat has also investigated Thames Water and Southern Water for separate reporting failures.

On Wednesday, before news of the SFO decision about Severn, Dame Yve Buckland, the national chair of the Consumer Council for Water, the industry watchdog, expressed concern about the number of cases concerning misreporting. "The accumulation of cases raises the need to question the accuracy of information being submitted to Ofwat by water companies, on which important regulatory decisions are made," she said.

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