Just £2m penalty for Severn Trent lies over water leaks

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In the first conviction and fine of a company for such criminal behaviour, the Midlands water giant pleaded guilty to reporting and covering up misleading leakage data.

Despite a Serious Fraud Office investigation that uncovered a web of orchestrated deception, Judge Jeremy Roberts fined Severn Trent £4 million, commuted to £2 million because of its early plea.

The fine for a cover-up of a huge leakage problem, in a bid to avoid running up huge remedial costs that would have hit future profits and the share price, represents less than 1% of Severn Trent's £292 million profits last year. There had been investor fears the company could be hit for as much as £70 million.

Today's fine follows a previous one of £36 million by Ofwat and rebates of £52 million to customers after Severn Trent was found also to have lied about customer service and satisfaction statistics and about bad-debt levels in a bid to get the regulator to raise customers' bills.

The executives behind the Severn Trent deception are to escape criminal charges. The SFO said it would not be in the public interest to pursue charges against former managing director Brian Duckworth or ex-finance director Mark Wilson, who were implicated in court as directing a "successful and sustained" campaign of dishonesty. Severn Trent today said it too would not be following any legal claims.

Chief executive Tony Wray said after the hearing: "We deeply regret the mistakes of the previous regime, for which we have apologised to customers. There were indefensible shortcomings in the previous management and control system."