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Severn Trent admits fraud squad probe


SEVERN TRENT Water confi med this week that it was being investigated by the Serious Fraud Office (SFO) for reporting irregularities, which allegedly led to customers being overcharged.

The case was referred to the SFO by industry regulator Ofwat, which had been investigating the company since January.

Investigations follow complaints from Severn Trent employee David Donnelly.

Ofwat alerted the SFO in May, following its own investigation into Severn Trent. This week Severn Trent confirmed that the SFO will be undertaking a criminal investigation.

Last year Ofwat set new leakage figures for Severn Trent after it had been found to underestimate leakage rates (NCE 12 February 2004).

At the time Ofwat suspended the company's annual leakage targets and hired Halcrow Management Sciences to investigate the company's measurement methods.

Halcrow found that Severn Trent reported leakage figures of 340M litres/day - the same as the Ofwat agreed economic leakage level.

But the actual amount of water being lost was 515M litres/day.

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