Corruption control or turning a blind eye?
Did you expect the Environment Agency to allow its staff and directors to own shares or hold directorships and business interests in the very companies it is supposed to regulate?
If you didn't, or even if you did, take a seat and prepare for some revelations that may leave you wondering who is in control of regulation and whether the failure of both the Environment Agency and Ofwat is overdue a deep inquiry to find out what really went wrong, and keeps going wrong.
We are running this story as a series of blogs.
WASP has been investigating 'conflicts of interest' in the Environment Agency since 2019 when we discovered that not only did the Agency allow its staff to have shares in water companies, but also directorships and business interests in regulated companies:
This is what the Agency believed to be the best indication of shareholdings in water companies in 2019 - because they did not know the true extent.
When it came to broader business interests, the takeup was even more extensive:
We already knew there was a worrying revolving door of employment between water companies and the Environment Agency but the toleration of shares and directorships came as a shock.
Details of conflicts of interest declared by Environment Agency Directors are supposed to be publicly available for inspection, and transparency is supposed to be important but we have met with obstruction, delay, apparent breaches of the law, and responses that lack credibility. There is something very wrong with the way the Agency behaves in this respect and that should concern government - but plainly doesn't.
After months of ducking, dodging, and delay from the then CEO of the Agency, Sir James Bevan in response to our questions about conflicts of interest, we sent a report on his response to Environment Secretary, Dr Thérèse Coffey, also setting out five examples of directors holding such interests, but three months on, she has not replied.
Over the following days, we will show you what Dr Coffey has declined to acknowledge. The information is in the public domain, being derived from Freedom of Information law requests and eventual responses.
PLEASE NOTE. We are not alleging corrupt activity by any of the individuals named but we are raising questions about the nature of the interests and the adequacy of the measures in place to safeguard the integrity of the Environment Agency and individuals.
A key principle in respect of Non-Executive Directors is stated in this extract from Agency guidance dated 2020:
The Board of the Environment Agency is responsible for the corporate governance of the Environment Agency. The Environment Agency must therefore satisfy itself that no non-executive Board member has a financial or other interest of any kind that is likely to be prejudicial to the discharge of his/her functions, and that decisions by the Board and its committees are not influenced by members’ personal or business interests.
Bear that in mind as we recount what we have uncovered. Our first example crosses over from the water industry that is WASP's focus, into industrial food production and processing - another well-known river polluter.
Richard Auld MacDonald. Deputy Chair of the Environment Agency 2016 to 2022.
Mr Macdonald was appointed to the Environment Agency in 2013 and he was made Deputy Chair in 2016. From September 2015 (our earliest record) he declared he was also a Non-Executive Director at Dairy Crest – Dairy processing, and also at Moy Park – chicken production and processing both since 2010.
Many people will now know how industrial-scale chicken farming has proliferated, particularly in the Wye Valley, and its relevance in any discussion about river pollution.
If you are wondering if we have evidence of this conflict of interest, here is a section of the declaration form provided by the EA to WASP.
Moy Park did not appear on his declarations after one dated 20 September 2017 by which time he described his role as 'strategic advisor'.
In June 2022 Dairy Crest was sentenced at Crown Court for a series of serious pollution offences committed over 5 years starting in 2016.
The Defra press release states: The environmental performance of Dairy Crest Limited has been unacceptable for too long and needs to significantly improve, says the Environment Agency.
The judge identified a poor, middle management culture as a contributing factor to the environmental harm caused that should have been dealt with by senior management much sooner.
He said it felt like there was never a time without a problem and some of those responsible for the wastewater treatment plant felt bullied and unable to come forward.
By 9 March 2020 his declarations omitted Dairy Crest - records show that he had resigned on 15 April 2019.
Mr Macdonald remained in post at the Agency until 31 March 2022.
The roles he held in industrial farming appear to bring into serious question the Agency's grip on conflicts of interest, the protection of its operations, and the maintenance of public confidence.
Once again this was what the Agency claimed to be its position:
The Environment Agency must therefore satisfy itself that no non-executive Board member has a financial or other interest of any kind that is likely to be prejudicial to the discharge of his/her functions, and that decisions by the Board and its committees are not influenced by members’ personal or business interests.
But the reality seems very different,
Why were these interests permitted and why was the Agency so evasive when answering questions about the way it handled the examples we identified?
Watch out for the second in this series - It's about to get even more worrying.