Wessex CEO says £1m payment was no bribe

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Colin Skellett, the chairman and chief executive of Wessex Water, was yesterday loudly protesting his innocence after police questioned him for a second day on suspicion of accepting a £1m bribe.

Speaking from the company's Bath headquarters yesterday, after being released on bail, Mr Skellett said: "I am absolutely certain I have done nothing wrong and I'm sure that, in due course, this will emerge."

Mr Skellett, 57, was arrested at his home on the outskirts of Bath at 6.30am on Thursday on suspicion of taking a £1m bribe in connection with the £1.2bn sale of Wessex Water to the Malaysian energy group, YTL Power, earlier this year.

He was not charged and was yesterday released on police bail, after intensive questioning and after documents were seized from his home and office. He is due to reappear towards the end of January.

"Being woken up at 6.30 in the morning by 7 police officers is not a particularly pleasant experience. They were very polite and did things properly but it's not something I'd want to do very often," he said.

While Mr Skellett confirmed that he had received a payment of £919,000, he said the sum had been an incentive payment to ensure he stayed on with the business for another five years.

The incentive payment had been agreed on and paid out in early July – three months after the sale of Wessex Water had been announced.

The £919,000 payment, made after the deduction of Malaysian tax but before the deduction of UK tax, is in effect five years' worth of Mr Skellett's annual £200,000 salary. The police have a copy of the agreement.

"I had been saying I might be getting ready to step down before too long because next year I've done 40 years in the water industry. And we had a discussion over a number of weeks about ideas and it culminated in an agreement that is essentially a five-year lock-in for me to carry on working with them," Mr Skellett said.

He said he thought that suspicions had been aroused by "a large sum of money" going into his account but said he did not know what had made police "link it to the allegation that's been made".

Mr Skellett denied he had played any role in the sale of the British utility to YTL. "Neither me nor any of the other directors at Wessex Water played any part in the decision on who was going to be the owner of Wessex," he said.

The sale process, he said, had been managed by the Enron unit Azurix, the then owner of Wessex Water, and the investment bank Schroder Salomon Smith Barney.

"Any idea that we'd been capable of influencing the thing toward YTL was crazy because we weren't even involved at all," he said.

Ironically, he said incentive measures had been discussed with Royal Bank of Scotland, the rival bidder to YTL. "Management would have had incentives within there and there would have been incentives for me to stay," he said. "That is the crazy thing, that we were there batting away for RBS and what I'm actually accused of something with YTL."

Mr Skellett pledged to step aside from his position at Wessex Water and as non-executive chairman of the rail maintenance company Jarvis should those businesses request such a move. Jarvis is the company at the centre of the Potters Bar train cash probe.

"I will say to both boards: if you feel it will be better for me to step aside from the chairmanship during this period while the investigations go on, I'll happily do that. I'll be talking to both boards next week. Right now, I'm rather pleased to be back in the office doing normal things again rather than walking around a cell floor," he said.