The High Court has dismissed a legal challenge brought by former Southern Water chief executive Matthew Wright, clearing the way for the Environment Agency (EA) to pursue criminal prosecutions against former senior employees over allegations linked to the company’s historic wastewater compliance monitoring.
In a judgment handed down on 22 July, the court ruled that the EA does have the legal authority to prosecute the common law offence of conspiracy to defraud in connection with its regulatory functions. The decision rejects arguments that the regulator’s powers are limited to offences created by environmental legislation and allows the long-running criminal case to proceed.
The case centres on allegations that between 2012 and 2017, former Southern Water employees conspired to manipulate wastewater compliance sampling by creating artificial “no-flow” events at treatment works. The EA alleges the scheme deceived both the EA and Ofwat, enabling Southern Water to avoid regulatory penalties estimated at around £45 million. Those allegations have not yet been tested in court, and the defendants deny wrongdoing.
The ruling means the criminal proceedings against Wright and three other former employees can continue. If convicted, conspiracy to defraud carries a maximum prison sentence of 10 years. Separate environmental permit prosecutions against Southern Water and other former employees are also continuing.
Southern Water said the proceedings relate to “a historic set of failures” involving individuals who no longer work for the company. The utility said the issues were identified through an internal investigation in 2017 and voluntarily reported to regulators, adding that it has since undergone significant changes to its leadership, governance and operational practices.
Following the ruling, Southern Water said:
“We’re aware of today’s judgement permitting prosecution by the Environment Agency of former employees. The individuals named are no longer with the company. The charges relate to a historic set of failures between 2012 and 2017. These were uncovered through an internal company investigation in 2017. As soon as they were identified, Southern Water reported them to regulators, including the Environment Agency.
“As previously announced, the company is separately facing charges of breaching environmental permits. This follows an earlier Ofwat investigation into the same issue, which resulted in a customer rebate and penalties being imposed in 2019. We apologised in full at that time and repeat that apology again today.
“Southern Water is a completely different company now than it was a decade ago. Under new leadership and backed by new shareholders, we’ve radically addressed our culture, governance and operations. We’re serious about further change and improvement, and are investing in our largest ever programme to protect the environment.”
Campaign group River Action welcomed the judgment, describing it as an important step towards ensuring accountability for alleged environmental wrongdoing at senior levels within the water industry.
Speaking after the judgment, CEO of River Action James Wallace said:
“Today’s judgment is a victory for the Environment Agency and a welcome sign that our environmental regulator is beginning to show real teeth. The High Court has confirmed the EA’s power to hold individual executives, as well as water companies, to account for alleged fraud linked to environmental regulation.
“We also pay tribute to Peter Hammond of Windrush Against Sewage Pollution, whose investigation helped expose the alleged manipulation of sewage monitoring data and bring it to the Environment Agency’s attention.
“The allegations at the heart of this case represent an egregious abuse of power. According to the Environment Agency, senior figures at Southern Water deceived regulators, enabling the company to avoid tens of millions of pounds in penalties while securing financial rewards.
“The prospect of executives facing criminal prosecution should send shockwaves through the water industry. But it should not have taken five years to reach this point. We need faster enforcement so that those responsible cannot simply move on before the law catches up with them.
“We now call on the Prime Minister and the Secretary of State for the Environment to ensure the Environment Agency has the resources and backing to pursue polluters without fear or favour and make personal accountability the norm for environmental crime.”
The ruling clears the way for the Environment Agency’s prosecution to proceed ahead of a criminal trial due to begin in September. The High Court also refused the defendants’ application for anonymity, confirming that those facing prosecution can be publicly identified.
