Wednesday, March 08, 2006

Rip-off merchant to head CBI

Severn Trent – Britain’s largest water company – has been ordered to reimburse overcharged customers to the tune of £42m, after deliberately supplying false information to industry regulator Ofwat.

The Serious Fraud Office is mounting a separate criminal investigation, and the business faces additional fines that will probably total tens of millions of pounds.

Ofwat found that Severn Trent deliberately miscalculated levels of income and bad debt in 2000-2004, in order to justify artificially inflated bills.

Incidentally, the company is a financial supporter of … New Labour. Severn Trent is listed as a ‘£5,000-plus’ sponsor of the Labour Party annual report in 1999. If anyone has access to the relevant accounts for that year, it would be interesting to know just how much more than £5,000 was handed over.

Sir David Arculus - chairman of Severn Trent while this sharp practice was going on - is of course a card-carrying Tony Crony, having served on the government’s Better Regulation Task Force. Oh, the irony. Severn Trent could certainly have done with better regulation.

I must of course stress that Ofwat dismissed employee allegations that the company’s board ‘directed the deliberate miscalculation’. So Sir David and his colleagues emerge, as the Establishment cliché has it, without stain on their characters. I guess £42m in illegal extra turnover is hardly the sort of detail busy executives on six-figure salaries can be expected to notice.

And here’s another thing. Sir David is about to take over as president of the Confederation of British Industry. If a trade union official had been in charge of a union during a comparable scandal, it’s a fair bet he or she wouldn’t be heading for the top job at the Trades Union Congress.

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