Severn Trent Water fined £2m

Published: Tuesday, 1 July 2008, 11:07AM

Severn Trent Water has been fined £2 million at the Old Bailey for lying about water leaks.

Britain's second-biggest water company, with eight million customers from the Bristol Channel to the Midlands, is the first company to be prosecuted for making false statements about its leaks.

Severn Trent reported an estimated yearly water loss of 340 million litres per day to meet targets, while the true figure was around 514 million litres.

This was to stave off having to carry out millions of pounds-worth of repairs until they could be covered by future water bills, and to avoid bad publicity.

The company pleaded guilty to two offences under the Water Industry Act of making false returns to Ofwat concerning 2001 and 2002.

Judge Jeremy Roberts had been asked to make an example of the company and the Serious Fraud Office, which prosecuted the case, was reportedly hoping for a £70 million fine.

But the judge said he was bound to follow the precedent of other criminal cases, where much lower penalties are usually issued.

Severn Trent had been fined a record £35.8 million by Ofwat earlier this year for separate offences involving deliberately providing false information and poor customer service.

Edmund Wilson QC, defending, promised that consumers would not be saddled with higher bills to pay for the latest fine and £200,000 court costs.

Mr Wilson said: "Current shareholders will bear the brunt of the punishment. There will be no contributions coming from any third party."

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