Severn Trent Water firm prosecuted for 'lying' over leaks

It is the first time a water firm has faced a criminal prosecution for this sort of offence.

Severn Trent could also be fined more than £30million by the industry regulator Ofwat for a series of service failures.

Company records submitted to Ofwat between 2000 and 2002 gave the impression Severn Trent was performing to a far higher standard than it was.

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Ofwat used these records when deciding by how much Severn Trent should be allowed to raise its prices until 2010.

But after being alerted by a whistle-blower in the company in 2004, both the Serious Fraud Office and Ofwat itself investigated the records.

The regulator has concluded that if the misinformation had not been discovered, customers would have been overcharged by around £42million.

Ofwat has also ordered Severn Trent to cap price increases until 2010.

The company's new chief executive, Tony Wray, was yesterday keen to distance the current management from previous failures.

He said the charges "relate to the responsibilities of a previous regime".