UK: SFO to investigate Southern Water
The Serious Fraud Office today announced an investigation into whether Southern Water deliberately misled the water regulator, Ofwat, about its failure to meet customer service standards.
Southern admitted that figures it provided to Ofwat relating to response times for billing inquiries and service complaints from customers were inaccurate. As a result, it may have failed to pay customers compensation, as water utilities are required to do if they fall short of standards under the industry's Guaranteed Standards Scheme.
Southern, which was informed of the investigation by the SFO on yesterday, said it would cooperate with the investigation, which could lead to a prosecution.
The privately held company, whose biggest shareholders include Royal Bank of Scotland, supplies 2.3 million people in Kent, Sussex and Hampshire and provides sewerage services to 4.5 million.
The inconsistencies were discovered last October when a new management team took over at the company and informed Ofwat, which subsequently referred the matter to the SFO.
Separately, Ofwat announced that it planned to fine Thames Water up to £140m for failing to provide an adequate service to its eight million customers in the south-east of England. Thames also failed to pay customers compensation, but there is no suggestion that it deliberately misrepresented itself to Ofwat.
Since April Ofwat has had the power to impose a fine on water companies of up to 10% of their turnover. Thames, which is owned by German group RWE, had a turnover of £1.4bn last year, up more than 18% on the previous year. The fine cannot be recouped from customers.
Southern and Severn Trent Water are already also facing fines for customer service failures, and the SFO is also investigating Severn Trent.
Last month Thames, whose pre-tax profits increased by almost a third to £346m, announced that it had failed to meet targets for reducing leakages for the third year in a row, but escaped a fine after it agreed to increase investment in its antiquated network of pipelines.
Ofwat and Thames Water have appointed Ernst & Young to carry out an independent investigation. Ofwat said today it would consider what further action it needed to take, including the amount of the fine to be imposed, after the investigation had been completed.
- 190 Natural Resources
Related Articles
A U.S. federal court ruled in favor of the Osage Nation in Oklahoma after it sued Enel Group for violating its tribal sovereignty.
Read More
When black rain poured down around the Tata Steel plant in IJmuiden, a shipping town in the Netherlands, residents were told that they had no need to worry so long as they kept their windows closed, peeled their vegetables, and washed their hands more frequently. Read More
Spills from Petroperú’s oil drilling have devastated the Marañón river in Peru for some 50 years. In order to tackle the pollution, a group of Kukama Indigenous women sued the government and Petroperú asserting that the river is a living entity with rights that should be protected. Read More
A proposed US$2.5 billion open-pit copper and iron mining complex, under development by Andes Iron, that would have threatened Humboldt penguins and other marine species, has been denied permission to proceed after a years-long legal battle fought by local communities and environmental groups. Read More