Play all audios:
The scandal of Southern Water is so shocking and on such a vast scale that its full implications have not yet sunk in. After the largest investigation in the history of the Environment
Agency and a major criminal trial, this giant utility has been fined a record £90 million for deliberately pumping between 16 and 21 billion litres of raw sewage over nearly six years into
protected seas. By its actions, Southern Water has endangered the delicate coastal ecology of England, devastated the shellfish industry and put the health of millions of people at risk.
Even this list of superlatives does not convey the enormity of Southern Water’s guilt. The trial at Canterbury Crown Court revealed a pattern of corporate negligence, with a list of 168
previous offences and cautions for what the judge, Mr Justice Jeremy Johnson, called “a shocking and wholesale disregard for the environment” over an even longer period. “There is no
evidence that the company took any notice of the penalties imposed or the remarks of the courts,” he said. “Its offending simply continued.” In other words, Southern Water has behaved as if
it were above the law. With annual profits of more than £200 million, it can easily absorb even very large fines. As it enjoys a quasi-monopoly, they can be passed on to customers and
treated simply as a cost of doing business. The judge’s hope that shareholders would now demand that the company improve its compliance is not borne out by its history of recklessly ignoring
its legal obligations in pursuit of profit. Its underreporting of sewage discharges amounted to a massive cover-up. This is a corporate culture that simply cannot be trusted with providing
such a vital public service. For a water company to knowingly pollute coastal waters on such a scale is not merely criminal — it is evil. Though the utility pleaded guilty to 51 counts of
knowingly permitting entry into the sea of untreated sewage from 17 wastewater treatment works between 2010 and 2015, its counsel excused its conduct by blaming mechanical faults and claimed
that the dumping had not been deliberate. The court rejected these arguments: the discharges were not due to accidents, but to a deliberate policy, while the failure to maintain its
infrastructure was also part of the corporate culture. The prosecution argued that there was “long-term corporate knowledge of the situation”. There was also an element of fraud: “It was
being paid for something it was not doing.” Moreover, Southern Water appears to have instructed its staff not to cooperate with investigators. Some of these staff have since been convicted
of attempting to conceal evidence. Yet the management of Southern Water is evidently still in denial about what it has done. The 4.6 million people for whose sewage it is responsible, plus
another two million whose drinking water it supplies, have no say in the matter. But the consortium that owns the company, Greensands Holdings Ltd, most certainly does. This consortium,
which took over Southern Water in 2007, consists of investment funds, pension funds and private equity. It is managed by the three major financial institutions: JP Morgan, UBS and Hermes. JP
Morgan Asset Management is represented on the board. All of these organisations share moral responsibility for the crimes of the company they own. Yet nobody is going to jail. No individual
has been fined. No senior officer of the company has even been sacked. Ian McAulay, the chief executive of Southern Water, is paid a basic salary of £435,000 a year. Last year — when the
scale of the pollution for which he bears ultimate responsibility was already clear — McAulay was given a bonus of £538,100. In other words, Southern Water rewarded its boss with more than a
million pounds for keeping profits high by flooding the seas off the southern coast with effluent. Not a single penny of the £90 million fine imposed by the court will come out of McAulay’s
salary and bonus, or those of his colleagues. Meanwhile the Environment Agency, whose eight-year investigation uncovered these crimes only in the teeth of obstruction, abuse and
intimidation, had its budget cut by more than half last year, from £157 million to £75 million. Given the scale of corporate malfeasance revealed by the Southern Water trial, this is simply
not enough to police the many industries that affect the environment, let alone the agency’s other duties. For those like me who defend the market economy, this case is especially disturbing
and depressing. The disgusting conduct of Southern Water’s owners and management calls into question the principle of privatisation; it is enough to make one despair of business leadership
in Britain. A change in the law is evidently overdue. As executives expect to share in profits and help themselves to huge rewards after corporate takeovers, they should also be liable for
fines imposed for the kind of corporate criminality uncovered at Southern Water. Courts should also impose custodial sentences in the worst cases. The sight of white collar criminals going
to jail is common enough in the US, but far less so in the UK. That needs to change. The British public should never again endure the spectacle of a major utility wantonly polluting the
environment while its executives and owners go unpunished. A MESSAGE FROM THEARTICLE _We are the only publication that’s committed to covering every angle. We have an important contribution
to make, one that’s needed now more than ever, and we need your help to continue publishing throughout the pandemic. So please, make a donation._