The former chief executive of Southern Water has been charged with conspiracy to defraud authorities over allegations he was involved in a plan to manipulate water quality tests to avoid millions of pounds in penalties.
Matthew Wright has been accused alongside three others of conspiring to defraud the Environment Agency (EA) and water regulator Ofwat. The summons was issued last year, but Wright launched a legal challenge over the move, with his lawyers telling the High Court in June that the EA did not have the power to issue it and that it should be thrown out as a “nullity”.
Legal challenge dismissed
On Wednesday, two senior judges dismissed Wright’s claim, and ruled that restrictions previously preventing reporting of the legal challenge should be lifted. Stephen Shergold, Wright’s solicitor, said following the ruling: “Mr Wright denies all wrongdoing and has co-operated fully with the Environment Agency’s investigation.”
Separate court listings show that the case against 61-year-old Wright, of Haslemere, Surrey, Philip Barker, 58, of Chiltington, West Sussex, Clive Massey, 65, of Brandhill, Shropshire, and Mark Gregory, 64, of Southampton, were scheduled to be heard at Medway Magistrates’ Court on July 14.
Allegations of manipulation
The four are accused of conspiring between 2012 and 2017 to “defraud persons performing public duties in respect of environmental and financial regulation” of Southern Water, including the EA and Ofwat, by “the implementation of artificial no-flow events at waste water treatment works”.
The 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. Three individuals 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, alleged to have taken place between 2015 and 2024.
Background on testing regime
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, which sees 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 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, this 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, with the current Labour government pledging to end the practice.
Judge's ruling
In his ruling issuing the summons against the four men last year, District Judge Stephen Leake said: “The agency alleges, in the present case, that there was a deliberate plan by officers of the company to manipulate the OSM regime by contriving operational circumstances so that there was no flow through the relevant site at times when it was believed that the site would, or might, fail the OSM test, in order to avoid the consequences of the true OSM result being provided to the agency and Ofwat.”
Lawyers for Wright told the High Court that the EA only has the power to bring private prosecutions for environmental offences, not those such as fraud or conspiracy. Barristers for the EA said that the body had a general power to bring private prosecutions, and alternatively that allegations of conspiracy to defraud were connected to its functions.
Lord Justice Popplewell, sitting with Mr Justice Hilliard, ruled on Wednesday that the EA only being able to prosecute environmental offences would “produce unreasonable and anomalous results”. He continued that the law “enables the EA to prosecute for any offence of any nature in circumstances in which such a prosecution is capable of being calculated to facilitate, or conducive or incidental to, the carrying out of any of its functions”.
In the 48-page judgment, the senior judge continued that the charge against Wright involves “very serious allegations of criminal misconduct”. He said: “What is alleged … involves carefully planned and extensive fraud and dishonesty at a high level within the company and on a large scale, including, for example, arranging for wastewater to be removed from facilities by tankers in order to create no flow results, with a view to covering up pollution and deceiving those whose function is to protect the public from such harm. The EA says that by the company’s own assessment, it avoided penalties of the order of £45 million, and on the EA’s assessment the figure is higher.”
Following the judgment, an EA spokesperson said: “We can confirm that we are taking criminal proceedings against Southern Water Services Limited and a number of former employees. We take our responsibility to protect the environment very seriously and will always pursue and prosecute those alleged to have committed serious offending against the environment. We welcome this important judgment.”
