Severn Trent Water were fined £2 million and ordered to pay £220,000 costs at the Old Bailey yesterday after pleading guilty to two offences relating to false leakage data supplied to Ofwat, the water industry regulator, with false leakage estimates in 2001 and 2002.

Severn Trent is the UK’s second biggest water company and the first utility company to face such charges in a criminal court. Water industry regulator Ofwat also confirmed yesterday that  it will fine Severn Trent £35.8 million for deliberately providing false information to Ofwat and for delivering poor service to its customers

Commenting on the £2million fine handed down to Severn Trent Water from the Serious Fraud Office prosecution, Ofwat said:

"We referred Severn Trent Water's deliberate misreporting of leakage data to the Serious Fraud Office (SFO) in 2005, which led to these criminal proceedings. For a water company to be prosecuted like this is unprecedented.

"Severn Trent Water's behaviour in misleading both customers and regulator was unacceptable. Ofwat will protect consumers and companies must comply with their legal obligations or pay the price.

"Following a separate investigation we have also proposed to fine the company £35.8 million in April 2008 for deliberately misreporting customer service data. We will issue our conclusions on this shortly."

Ofwat also said said it was still considering taking further action against Severn Trent over the leakage disclosures.

Commenting on the court case, Tony Wray, Chief Executive of Severn Trent Plc, said:

"We are finally close to resolving these issues from the past and putting this organisation back into the positive position our customers, regulators and staff deserve.

"We deeply regret the mistakes of the previous regime for which we have apologised to customers.  There were indefensible shortcomings in Severn Trent's previous management and control systems during the 2000 to 2004 era.

"On behalf of our customers and staff we deplore the breach of the essential trust between Severn Trent and all our stakeholders. We are already repairing that trust with the root and branch reorganisation of Severn Trent undertaken since 2005.

"Almost four years of intensive management time and effort has been spent sorting out these legacy issues – time better spent benefiting customers.

"No one who was responsible is with our organisation now and we have already ensured that Severn Trent did not profit from these failures by crediting customers' accounts and altering bills appropriately,” he concluded.

Having taken legal advice, and considered the best interests of customers and stakeholders generally, the Board of Severn Trent has decided not to take action against the former management.

Tony Wray said: “Severn Trent is now focused on our ambition – to achieve the highest quality of customer service standards while offering our customers the lowest prices.”