The ongoing prosecution of a former water industry executive is worth watching as an indicator of an assertive and expansive approach to criminal enforcement by the Environment Agency ("EA").

Matthew Wright, Chief Executive of Southern Water between 2011 and 2016, is due before Maidstone Crown Court on 9 October. The case proceeds after his unsuccessful challenge to the EA's power to prosecute the common law offence of conspiracy to defraud, which the Divisional Court rejected.

Background

The EA alleges that senior executives deliberately manipulated the Operator Self-Monitoring regime (under which water companies must monitor and report their own wastewater discharges), including by removing wastewater by tanker to engineer artificial "no-flow" results and avoid reporting non-compliant samples. It says this masked pollution and avoided penalties it estimates at over £45 million.

The EA charged the former CEO and three other "officers or senior operations managers" with conspiracy to defraud at common law, rather than a statutory environmental offence. The defendants argued the EA had no power to bring that charge and that the summons was a nullity.

The legal issue: What are the limits of the EA's prosecutorial powers?

The dispute centred on section 37(1) of the Environment Act 1995, which empowers the EA to "do anything which, in its opinion, is calculated to facilitate, or is conducive or incidental to, the carrying out of its functions" and states that "the Agency may institute criminal proceedings in England and Wales". Mr Wright argued this power was limited to statutory environmental offences and could not extend to common law offences. The EA argued, first, that it has a general prosecutorial power unfettered by its founding statute and, alternatively, that prosecuting conspiracy to defraud on these facts fell within what the statute permits, provided it reasonably considered the prosecution incidental to its functions.

The Court's decision

In a judgment handed down on 22 July 2026, the Divisional Court rejected the EA's claim to a general power of prosecution, holding that as a "creature of statute" its powers begin and end with section 37. This distinguishes the EA from bodies like the Financial Conduct Authority, which, per the Supreme Court's decision in R v Rollins [2010] UKSC 39, enjoys the ordinary prosecutorial capacity of a company (there, allowing its predecessor, the Financial Services Authority, to prosecute money laundering offences under the Proceeds of Crime Act 2002) unless Parliament restricts it. The FCA is likely to remain an outlier; most UK regulators are statutory bodies constrained by their governing legislation.

That said, the absence of a general power did not defeat this prosecution. The Court found the relevant statutory language extremely broad, not confined to any particular offence category, and held that a narrow reading would produce absurd results by preventing the EA from prosecuting theft, criminal damage or fraud connected to its own functions. On the facts, prosecuting the alleged conspiracy was plainly incidental to the EA's functions: it protects the regulatory system's integrity, deters similar conduct, and supports recovery of criminal benefits through confiscation or compensation orders. Permission for judicial review was refused as unarguable.

Why this matters

The decision's implications may extend well beyond these facts. By confirming the EA can prosecute offences sufficiently connected to its statutory functions, the Court has endorsed broader criminal enforcement than traditionally associated with environmental regulators. The EA already shows signs of moving in this direction, having established a dedicated Economic Crime Unit and publicly flagged money laundering investigations, asset recovery and fraud-related work as part of its toolkit. The decision supports pursuing offences outside those expressly created for the sector where a sufficient connection to the EA's regulatory objectives can be drawn.

That prospect will likely draw attention beyond the environmental sphere. Regulators in sectors where criminal prosecutions have historically been rare, such as online safety, data protection and supply chain compliance, face pressure to demonstrate effective enforcement. The ability to prosecute a wider range of offences, rather than being confined to sector-specific powers, could give such authorities a more forceful and flexible means of responding to alleged misconduct.

This is not only a matter for individuals. Recent reforms to corporate criminal liability sharpen its relevance for companies. Had the alleged conduct occurred after section 196 of the Economic Crime and Corporate Transparency Act 2023 came into force on 26 December 2023, the EA could have considered attributing "senior managers'" conspiracy to defraud to the corporate entities they acted for. Section 250 of the Crime and Policing Act 2025, in force from 29 June 2026, extended this attribution regime beyond economic crime to virtually all UK criminal offences. An expansive approach to a regulator's prosecutorial powers may therefore now carry consequences for corporates as well as individuals.

For companies, the practical response is not simply to monitor enforcement policy but to revisit the governance, oversight and escalation mechanisms around areas of regulatory risk. As attribution of senior managers' conduct to corporates continues to expand, and regulators increasingly deploy criminal offences beyond their traditional remit, organisations should ensure compliance frameworks, reporting lines, internal controls and decision-making processes can identify and address misconduct early. Broader prosecutorial powers combined with broader attribution rules mean that deficiencies once seen as regulatory risk may increasingly carry criminal consequences.