SFO lands in hot water

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The Serious Fraud Office is facing a potentially embarrassing court appearance later this year, when it will be the defendant in a breach of contract lawsuit over a disputed water bill rebate.

The suit has been brought by Thames Water Meters Ltd, a consultancy which advises businesses on how to reduce water bills. It alleges that the Serious Fraud Office reneged on a contract to pay half of an estimated pounds 300,000 rebate received from Thames Water Utilities plc to the consultancy.

For the previous five years the SFO had been paying for its water based on the rateable value of its Elm House headquarters in London, when there was already a water meter installed in the basement of the building. The consultants were asked by the SFO to negotiate a rebate based on the difference between what the SFO had used and what it had paid for. In return, the consultants would get half of any rebate received.

According to Peter Auburn, managing director of Thames Water Meters, getting this kind of overpayment rebate was very rare. "But when they saw that it was the SFO making the request, not some ordinary company, the water company got their act together very quickly."

Auburn says that he and his business partner Nick Fogden were subsequently "frozen out" by the SFO and Thames Water Utilities, and the rebate, estimated by them to be pounds 300,000, was credited to the SFO alone.

Affidavits signed by Thames Water Utilities officials state that Fogden and Auburn's company was authorised by the SFO to act as agents to secure the refund, and indicate that the SFO officials decided to bypass their agents and deal directly with Thames Water Utilities when they discovered the size of the rebate.

"I was just amazed," said Fogden, who negotiated the contract, which was signed by an authorised representative of the SFO, according to the statement of claim accompanying the action. "You don't expect to get done over by the SFO, of all people."

Fogden added that the company had received two offers of settlement, one of pounds 3,000 and another, quite recently, of pounds 10,000. Both offers had been rejected. "We want this case to be heard in court," he said. No High Court date has been set for the case, but it is likely to be heard within the next six months.

A spokesman for the SFO said: "There is no basis for this claim. Liability is denied and the action will be contested." The spokesman declined to comment further.