“Criminal Capitalism”

 

Southern Water has been fined £90m for deliberately dumping billions of litres of raw sewage into protected seas over several years for its own financial gain. It had discharged between 16bn and 21bn litres of raw sewage into some of the most delicate environments in the country. Investigators found that over the period 2010-15, the company was deliberately responsible for more than 8,400 illegal sewage discharges, which amounted to 61,704 hours of releases. For nearly six years Southern Water deliberately poured enormous volumes of untreated sewage into the seas off north Kent and Hampshire to avoid financial penalties and the cost of upgrading and maintaining infrastructure. 

The company, whose operating profits were £213m in 2019, covered up its actions by “very significant under-reporting” of the number of illegal pollution spills it had made

“These offences show a shocking and wholesale disregard for the environment, for precious and delicate ecosystems and coastlines, for human health, and for fisheries and other legitimate businesses that operate in the coastal waters,” said the judge.

The company had a history of criminal activity for its “previous and persistent pollution of the environment”. It had 168 previous offences and cautions but had ignored these and not altered its behaviour. “There is no evidence the company took any notice of the penalties imposed or the remarks of the courts. Its offending simply continued,” he said.

Instead of treating the volume of sewage it was required to by law at each treatment plant, the company was holding enormous volumes of raw sewage in storm tanks and discharging it into the sea. Then Southern covered this up by manipulating the data it submitted to the authorities to avoid more than £90m in penalties for non-compliance with environmental regulations.

The company’s lawyers instructed staff not to cooperate. Three members of staff were later convicted of obstructing Environment Agency officials during the investigation.

The pollution damaged the shellfish industry, as faecal bacteria contaminated its product, making businesses unviable. Nearly all of the waters which received the raw sewage were covered by domestic and international environmental protections. 

“The facts reveal long-term corporate knowledge of the situation,” Andrew Marshall, prosecuting, told the court. “The company did not pay for the maintenance and repair of its equipment or the improvements necessary. It under-reported its performance. There has been considerable financial advantage to the company … It was being paid for something it was not doing.”

Southern Water is ultimately owned by Greensands Holdings Limited, which is owned by a consortium of long-term investors representing infrastructure investment funds, pension funds and private equity firms. These include UBS Asset Management, JP Morgan Asset Management and Whitehelm Capital, and Hermes Infrastructure funds. Its 2019-20 turnover was £878m and operating profit before interest and tax was £213m.

David Jarrad, the chief executive of the Shellfish Association of Great Britain, called for the fine to be used to recompense the industry. 

“If an oil tanker had gone down and spilt oil in protected waters the oil company would have to pay millions to rectify the damage caused to the environment. But with water companies that does not happen.”

Hugo Tagholm of Surfers Against Sewage said the activities amounted to “criminal capitalism”.

Southern was not alone. South West Water and Thames Water are among the regional firms to have regularly been found releasing untreated sewage that they cannot cope with into rivers and the sea. Environment Agency data for 2020 showed water companies discharged raw sewage into rivers and coastal waters in England more than 400,000 times, up 37% on the previous year. 

Thatcher's government removed the industry’s debts prior to privatisation and since 1989 the industry has loaded it back up again with £48bn at a cost in annual interest of £1.3bn. Research by David Hall and Karol Yearwood of Greenwich University found that the debt was not used to fix leaky pipes or treatment works but went straight into shareholders’ pockets. Adding up the shareholder dividends paid since 1989, they reached a total of £57bn.

In that time, customers’ water bills have increased by 40% above the rate of inflation. It is the water users who have paid for upgrades to the network, such as they are, while shareholders walk off with cash paid for by higher debt.

Southern Water fined record £90m for deliberately pouring sewage into sea | Pollution | The Guardian