Ex-Southern Water CEO and three others charged over alleged water quality test manipulation

The ex-chief executive of Southern Water has been charged with three others over an alleged plan to manipulate water quality tests to avoid paying financial penalties of about £45m, it can now be reported.

Matthew Wright is accused of conspiring to defraud the Environment Agency (EA) and water regulator Ofwat between 2012 and 2017, along with Philip Barker, Clive Massey and Mark Gregory, who also worked at the firm.

Wright's solicitor says he "denies all wrongdoing and has co-operated fully" with the EA's investigation.

Southern Water said the charges related to "a historic set of failures" uncovered in an internal investigation. It said it was a "completely different" company to a decade ago.

The EA asked a judge to issue a summons against the four, charging them with the offence, last year, but Wright launched a legal challenge, dismissed by two senior judges on Wednesday.

Massey, Gregory and Barker did not appear at the hearing in London and were not represented.

According to court documents, the allegations include arranging for wastewater to be removed from facilities by tankers in order to create "no flow" results.

This had been "with a view to covering up pollution and deceiving those whose function is to protect the public from such harm", prosecutors allege.

In his legal challenge, Wright's lawyers argued at the High Court in June that the EA did not have the power to issue the summons and it should be thrown out.

But the judges dismissed his claim and ruled restrictions previously preventing reporting of the legal challenge should be lifted.

Separate court listings showed the case against 60-year-old Wright, of Haslemere, Surrey; Barker, 57, of West Chiltington, West Sussex; Massey, 64, of Brandhill, Shropshire; and Gregory, 63, of Southampton, were scheduled to be heard at Medway Magistrates' Court on 14 July.

The four are accused of conspiring between 2012 and 2017 to defraud those conducting the environmental and financial regulation duties of Southern Water, including the EA and Ofwat, by "the implementation of artificial no-flow events at wastewater treatment works".

Court listings also show that Southern Water has separately been charged with dozens of offences of failing to comply with or contravening an environmental permit condition between 2013 and 2017 at multiple wastewater treatment works.

This follows a previous Ofwat investigation, which resulted in a customer rebate and penalties being imposed in 2019.

The Southern Water spokesperson added: "We apologised in full at that time and repeat that apology again today."

Wastewater treatment works can only be run with an environmental permit issued by the EA.

Treated effluent discharge from the works is tested under an "operator self-monitoring" (OSM) scheme, introduced in 2009, with discharges tested annually in unannounced visits.

The tests are carried out by sampling teams, which operate separately from teams that run the works.

The results of the tests are shared with the EA and Ofwat, and can lead to penalties if the works do not comply with the terms of their permits.

If the discharge flow at the time of the test is insufficient to take a sample, it is not regarded as a fail, and no samples are taken for the rest of the testing period.

Rules around OSM have been tightened in the past year, including that samples must be rescheduled in the event that the flow is insufficient.

Issuing the summons against the four men last year, District Judge Stephen Leake said the EA alleged there had been "a deliberate plan by officers of the company to manipulate the OSM regime".

This was done by "contriving operational circumstances" so there was no flow when it was believed the site might fail the OSM test, "in order to avoid the consequences of the true OSM result being provided to the agency and Ofwat".

The BBC has been analysing the pay of Matthew Wright between 2011 to 2016, and found that, in his final full year at Southern Water, he was paid £715,900.

But, in the year prior to this, 2014-15, Wright earned close to £2m thanks to a one-off £1.25m payment as part of the water company's long-term incentive plan.

This was in addition to a bonus of £226,000 in that same year.

Alongside Wright, Barker, Massey and Gregory, three additional people have also been charged with failing to comply with or contravening an environmental permit condition.

Terry Stephens, 68, of Waterlooville, Hampshire, is charged with one count, alleged to have taken place in 2015.

David James, 60, of Worthing, West Sussex, is also charged with one count, alleged to have taken place in 2016.

Mark Butler, 47, of Hassocks, West Sussex, is charged with eight counts.