Ofwat chair wades into new controversy

Water regulator is accused of conflict of interest over appointment to advise US fund looking to invest in utilities

Britain’s top water regulator has been drawn into a conflict-of-interest row after taking an outside job with a $2bn (£1.2bn) New York fund looking to invest in European utilities. Jonson Cox, who has been Ofwat chairman for a year, agreed to join the former UN secretary general Boutros Boutros-Ghali as an adviser to Squared Capital earlier this month.

The move has infuriated the water companies Mr Cox regulates. One senior water-industry source said: “How on earth can a regulator be an adviser to a fund that invests in regulated utilities?” The accusations come at a delicate time for Mr Cox, as he is pushing water utilities to lower bills in 2015-20 and demanding that they “build trust” with their customers.

Ofwat insisted that Mr Cox would not be advising I Squared on the UK’s water industry, with a prohibition of discussing that sector written into his contract.

His critics argue that trust in Mr Cox has been undermined by the appointment. They say a regulator should not be allowed to work for a group that could potentially invest in British utilities and infrastructure. Rival investment firms worry that the appointment could give I Squared an edge on certain deals.

“It’s not just industry who worry about his judgement. It’s the financial community which is behind future investment in the water business – or not. The biggest issue for them is trust in the regulator. And this is just the sort of thing that spooks investors,” one executive said.

Gary Smith, the GMB union’s national secretary for utilities, was also dismayed by the appointment. “This is absolutely disgusting and is also very dangerous for a regulator in terms of transparency. People will think it stinks that a regulator who is supposed to be there to protect consumers is now advising companies who seek to profit from them on regulatory regimes,” he said.

I Squared, which was formed this year by a group of former bankers at Morgan Stanley, says it is looking to Mr Cox’s expertise in industrial sectors in which he has “relevant experience”, according to minutes from a recent Ofwat board meeting. 

Its managing partner Sadek Wahba said that Mr Cox “has a unique combination of regulatory as well as operational experience in the infrastructure sector”.

Mr Cox was chief operating officer of Railtrack, before being fired in 2001, and spent the early part of his career at the oil giant Royal Dutch Shell. However, he is best known for his work in water utilities, having led Anglian Water from 2004 to 2010.

In barely 12 months at Ofwat, where he is paid a six-figure salary for a three-day week, Mr Cox has already courted controversy. Earlier this year he was accused of hypocrisy after criticising “morally questionable” tax structures in the sector, even though Anglian Water had paid only £1.6m in corporation tax during his six years in charge.

An Ofwat spokeswoman said:  “Jonson Cox has been appointed on a 12-month contract to an international advisory panel for I Squared, a US-based investor in asset-based industries. The agreement with I Squared fully recognises Mr Cox’s Ofwat appointment and that he will not be providing advice on the UK water sector. This appointment was cleared in advance by government and was also declared in advance to the Ofwat board in October.”

Suggested Topics
Start your day with The Independent, sign up for daily news emails
  • Get to the point
2015 General Election

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before