Water company pledges to plug reporting leaks

Severn Trent Water
has overhauled its reporting controls after pleading guilty to falsely reporting
its water leakage and agreeing to pay a potential £35.8m fine.

The UK’s second largest water company is to pay the fine, about 3% of its
turnover, to OFWAT for providing false information and poor customer service.

Tony Wray, chief executive of Severn Trent, said: ‘We have carried out a
fundamental review of every single control and process. We have re-engineered
our governance framework and all the assurances which go with this.’

The OFWAT fine relates to issues from 2004/05. Separately the company said
this week it was pleading guilty to charges of misreporting its water leakage to
the UK regulator.

In 2001 and 2002 it gave estimates of daily water leakage, which it knew was
not based on accurate data, triggering an investigation by the Serious Fraud
Office into reporting irregularities between 2000 and 2003.

The pleas relate to data provided in 2001 and 2002 with an initial hearing at
the City of London Magistrates Court this week with the case referred for
sentencing to the Crown Court.

Severn Trent said since 2001, when the investigation began into the then
management’s reporting conduct, it had made ‘ample disclosures’ relating to any

Finance director Mike McKeon said there was no provision in the accounts for
the year ended 31 March 2008 because the size of the SFO fine was not yet known.

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