Severn Trent Water has already been fined £36m in April. It
faces another fine of perhaps £70m for vast frauds on its customers and upon
the general public. Here’s the story.
The water companies were privatised by the Tories to harness
‘the dynamism of private enterprise’ to the water industry. Most people at the
time didn’t realise there was a problem with the water supply. They could turn
a tap on any time and water rates were low. There’s a problem now – the problem
is private ownership.
In April Severn Trent were done for falsifying a report to
Ofwat, the useless regulator of the water industry. The Serious Fraud Office
found that Severn Trent had been lying about its performance in order to
inflate the bills to its 8 million customers.
Now it has been caught lying about the amount of leakages
from the water supply. One justification for privatisation was that the private
firms could afford to deal with leakages. Well, they could afford to, but they
find it much more pleasant to pay the money out in dividends to their
shareholders. Thames Water, for instance loses one third of its water supply in
leaks. The present court case showed that Severn Trent falsified its losses as
340 megalitres a day when the real figure is 514 megalitres. This is not just a
cover for incompetence. The prosecution showed the firm was using
‘sophisticated dishonesty.’
Part of the evidence was an email from the leakage manager of
Severn Trent who, the SFO showed, had devised a ‘template for deceit’. In his
email, titled, ‘Lies, damned lies and statistics’, he wrote, “You asked me, ‘are
you telling porkies?’” [pork pies = lies] “My answer is, I have done what I
believed was necessary to deliver a certifiable 340 megalitre target. Because I
was unable to do that within the bounds of credibility, I have had to be
selective in the data I have used and put forward.
“I think it depends on your definition of porkies. I have
been economical with the truth. I think I have had to go too far.”
The court decided that porkies had indeed been told and
fraud committed.
Water bills are due to go up by 6% this year, twice the
official rate of inflation. The water companies are due to make £1bn this year,
20% up on last year. Invest it in the industry? Not likely. £700m will go
straight out as dividends. The water companies are having a laugh.
It
is clear the water companies think that Gordon Brown and New Labour are fools.
They are not far wrong. Severn Trent has committed real crimes with real
victims. We ask Gordon Brown – how many frauds do these firms have to commit
before they are sent packing without compensation, and water taken back into
public ownership where it belongs?
