Thames Water: Bonuses from £3bn emergency loan ‘withdrawn’
Hefty bonuses to Thames Water bosses that were carved out of a £3bn emergency loan have been “withdrawn” following backlash, the government has announced.
Environment secretary Steve Reed said on Tuesday he was “very happy indeed that Thames have now dropped those proposals. It was the wrong thing to do. They have now withdrawn their proposal to make those payments.”
It came after the chair of the embattled utility admitted he mispoke when questioned by MPs last week over the bonus payouts.
“I appreciate that in the heat of the moment I may have misspoken when I stated that the creditors insisted on the management retention plans,” Sir Adrian Montague wrote in a letter to the chair of the environment, food and rural affairs (EFRA) yesterday.
The letter came following a Guardian inquiry alleging it was executives at Thames Water who had pushed for the retention incentives, with all decisions ultimately made by a committee on Thames’s board of directors.
Sources and court documents suggest the bonuses were agreed to by creditors but not necessarily proposed by them.
Thames Water narrowly avoided bankruptcy earlier this year after it secured a controversial £3bn lifeline from a group of creditors. The emergency loan was contested in both the High Court and Court of Appeal as critics called it a “get out of jail free card” for the debt-laden company.
Facing MPs last week, Montague described running the utility’s finances as “hair raising.”
He claimed lenders had “insisted” that “very substantial” bonuses of up to 50 per cent of salary should be paid to senior bosses at Thames Water from the emergency loan.
Defra committee publishes Thames chair’s letter
The committee of MPs on Tuesday published Montague’s correspondence admitting he had mispoken.
“Following the session we have been approached by The Guardian who we understand intend to write a story suggesting that we misled the committee in relation to the company’s management retention plan,” the letter reads.
The City veteran goes on to argue the retention plan was “important to retain the people best placed to delvier the improved outcomes our stakeholders rightly expect during this current period of uncertainty and this was reflected in thye term sheet we agreed with our creditors.”
Montague is not among the executives who will be paid the retention incentives, according to the Guardian.
It was reported last week ministers are mooting using new powers to block Thames Water bosses from taking bonuses out of the £3bn loan.
The UK’s biggest water supplier, which serves around 16m customers, has a debt pile of around £18bn.
US private equity giant KKR is currently the preferred bidder to takeover the firm.
Thames Water has been approached for comment.