ESG Enforcement Tracker

The EA has publicly confirmed that it is pursuing criminal proceedings against four former Southern Water employees and has announced that Southern Water and a further three individuals will face separate charges following a multi-year investigation into wastewater treatment works.

The announcement followed the judgment of the Administrative Court in The King (on the application of Matthew Wright) v Medway Magistrates’ Court and others [2026] EWHC 1842 (Admin), which confirmed the regulator’s power to bring the prosecution and lifted reporting restrictions that had previously prevented public identification of Mr Matthew Wright (the former CEO).

The judgment of the Administrative Court is significant because it confirms that the EA’s prosecutorial powers are not limited to offences created by environmental legislation. The High Court held that section 37 of the Environment Act 1995 permits the EA to prosecute any offence that is capable of facilitating, being conducive to, or being incidental to the exercise of its statutory functions. The Court rejected arguments that the EA could only prosecute statutory environmental offences or offences for which it possesses express investigative powers.

At the same time, the Court emphasised that the EA’s powers are not unlimited. As a statutory body, it may only bring prosecutions that fall within the scope of the powers conferred on it by Parliament. The Court held that section 37 of the Environment Act 1995 permits the EA to prosecute offences that are sufficiently connected to the exercise of its statutory functions.

Four former employees, including Mr Wright, now face a charge of conspiracy to defraud. The EA alleges that between 1 January 2012 and 31 December 2017 the individuals conspired to defraud the Environment Agency and Ofwat through the implementation of artificial “no-flow” events at wastewater treatment works operated by Southern Water. According to the prosecution, the alleged conduct was intended to manipulate the Operator Self-Monitoring (OSM) compliance testing regime.

OSM was introduced for the water industry in 2009 and requires water companies to take samples at wastewater treatment works and report the results to the EA, as part of the wastewater permitting regime. The results are used for environmental compliance purposes and are also provided to Ofwat, which uses them to assess company performance and determine financial penalties. Testing is undertaken under procedures designed to ensure independence and accuracy. Following increased scrutiny of the regime, requirements have been strengthened, including a requirement to reschedule samples where there is no flow at the time of testing.

The OSM regime included a “no-flow” provision under which a sample could not be taken if there was insufficient flow at the time of testing. A no-flow result was not treated as a failure for the purposes of OSM compliance monitoring. The EA alleges that Southern Water officers deliberately created no-flow conditions at sites that were expected, or might be expected, to fail testing, thereby preventing the true position from being reported to regulators.

The Administrative Court judgment summarises the alleged conduct as the deliberate manipulation of wastewater treatment works to undermine the regulatory monitoring regime. The EA alleges that the conduct enabled Southern Water to avoid approximately £45 million in penalties based on the company’s own assessment, with the EA contending that the true figure may have been higher.

The case will proceed before Medway Magistrates’ Court.
The EA also stated that Southern Water will face separate charges alleging breaches of environmental permits linked to the same conduct. Three additional individuals, Mark Butler, Terry Stephens and David James, will also face charges linked to alleged failures to comply with environmental permits. Contravention of an environmental permit condition is a criminal offence under the Environmental Permitting (England and Wales) Regulations 2016 and may result in an unlimited fine and/or imprisonment for up to five years on conviction on indictment.