Thames Water's foreign owners rinsing dividends
Milliond of pounds have been paid out to the foreign owners of Britain's biggest water company even as it picked up almost £29million in fines for leaks and pollution and paid no corporation tax.
Thames Water rewarded investors with £100million in dividends last year including £26million to Australian bank Macquarie and £10million to Abu Dhabi's sovereign wealth fund, despite profits sinking 86 per cent to £71million.
Yesterday, it was fined £8.6million for missing leak reduction targets by 47million litres a day – and could face further enforcement action.
Fishy: Thames Water rewarded investors with £100m in dividends last year despite profits sinking 86 per cent to £71m
It follows a £20.3million fine in March for polluting the River Thames with 1.4billion litres of sewage.
The company allowed 677million litres of water to leak every day last year.
Cathryn Ross, chief executive of water regulator Ofwat, said the failings were 'unacceptable', adding: 'Thames Water will now face the maximum penalty.'
Thames, which serves around 15m people in the Thames Valley and London, is banned from passing the fine on to customers. Ofwat is also considering further enforcement action.
The company was bought from its German owners RWE by Australian bank Macquarie in 2006, for around £8billion.
It has paid only around £100,000 in corporation tax – back in 2006. It says this is due to a rule allowing it to defer tax based on investment, and that it has invested £12billion in the past ten years.
GIANT WITH £10BN DEBT Thames Water began as a state-owned authority in 1973
It was privatised in 1989 and joined the FTSE 100. In 2001 it was bought by German firm RWE
In 2006, the business was sold to Kemble Water Holdings – a consortium of investors led by controversial Australian bank Macquarie
An extremely complex structure involving nine firms was then set up
This includes two firms from the Cayman Islands tax havenBosses claim this structure is completely normal, but they have been criticised for creating a web of businesses and it has also become loaded with £10billion of debt
But in that time Thames Water has been loaded with more than £10billion of debt. Macquarie and other shareholders have taken out about £1.2billion in dividends during its ownership, not including its latest payout.
It sold stakes to foreign investors with the final 26.6 per cent going last month to Kuwaiti and Canadian investors.
The company is now owned by a group of mostly foreign investors including Abu Dhabi, Dutch and Chinese funds.
Hermes GPE, which manages the asset on behalf of the BT pension scheme, owns 13pc.
New chief executive Steve Robertson, who took over in September on a basic salary of £550,000 and got a £54,000 bonus last year, yesterday admitted the company would probably miss its leakage target again next year.
He said it plans to spend an extra £150million to cut leaks, adding: 'I am extremely sorry that we missed the target and we are going to pay money back.
'We have the largest domestic urban area by a mile – over 40 per cent of our pipe infrastructure is more than 100 years old, therefore, logically, we would say it's more likely to suffer from leaks.
'London now has a larger population than ever, so for me the question is we have got to look forward and make sure we are putting the infrastructure in, and supporting that growth.'
The company's record fine in March was for allowing sewage into waterways in 2013 and 2014, leaving people and animals ill, and killing thousands of fish.