Fraud probe puts Severn on slide

SEVERN Trent has launched an internal disciplinary investigation after the water giant was accused of fiddling its accounts to the tune of £75m.

The allegations sent its shares into a spin, down 15½p to 866p, and immediately put the spotlight on the group's accounting and regulatory department, headed by finance director Mark Wilson.

In a statement in response to allegations by its own income and debt reporting manager that accounting documents were falsified, the Midlands water group admitted it has launched a probe into the actions of unnamed staff after an investigation by its auditors, PricewaterhouseCoopers.

'The investigation revealed prima facie evidence of some behaviour that the board believes falls short of the high standards it expects from its employees. Accordingly, a disciplinary investigation has been instigated,' Severn said.

The probe comes at a difficult time, with its four most senior directors all gone or in the process of departing.

Wilson, 46, has been in his board-level job for only three months but had previously been head of finance and regulation within Severn Trent Water.

Wilson had previously been at International Leisure when the Harry Goodman holiday company went bust, and had worked for defunct accountant Arthur Andersen.

Severn Trent is within days of hearing how much it is allowed to charge its customers over the next five years - price caps determined by regulator Ofwat on the basis of the firm's internal accounts.