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Thames Water Accused Of ‘Financial Chicanery’ Over £150 Million Dividend

By Nithya Bose in Business News, posted July 2, 2024

Thames Water faces accusations of "financial chicanery" and calls for greater transparency after its board approved a £150m dividend shortly before shareholders retracted a pledge for £500m in emergency funding.

The Guardian revealed this approval, noting the board's decision on 27 March, followed by the funding withdrawal the next day without mentioning the dividend.

Ofwat, the water industry regulator, is set to investigate the circumstances surrounding the dividend payment.

Thames Water is also under scrutiny for a separate £37.5 million dividend issued around the same time.

“Thames Water needs to front up about its financial chicanery, while shareholders need to cough up to fill the pensions black hole – not customers or taxpayers”

The company said the £150 million payment was made to its intermediate parent company, Kemble Water Eurobond, for a "pension top-up payment" and "surrender relief" on tax losses.

Gary Carter, GMB national officer, said: “Thames Water has once again shown an alarming lack of transparency.

“Of course GMB wants our members’ pension pots to get back in the black – but shareholders should be topping it up.

“Instead they’re taking money out of the regulated company, money needed to stop spills and pay our members’ wages.”

He added: “Thames Water needs to front up about its financial chicanery, while shareholders need to cough up to fill the pensions black hole – not customers or taxpayers.”

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Sarah Olney, Liberal Democrat Treasury spokesperson, condemned the payout amid environmental and financial crises, calling for the abolition of Ofwat and establishing a more robust water regulator.

While the £150 million dividend did not reach external shareholders, it left the ringfenced portion of the group's corporate structure.

Ofwat has been tightening regulations to prevent cash flow from regulated water companies to holding companies, concerned about these entities' financial weakening.

Ofwat is expected to release its draft response to water firms' five-year business plans on 11 July, and Thames Water must publish its annual results by 15 July.

Thames Water has yet to comment on the matter.

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