Wessex Water chief protests innocence over ?1m payment

Colin Skellett, chairman and chief executive of Wessex Water, yesterday strongly protested his innocence, insisting he had not been given a £1m bribe during the sale of Wessex Water to YTL, a Malaysian company.

Back at his desk after being released on police bail following a second day of questioning by fraud squad officers, Mr Skellett did not deny receiving the money.

But, the 57-year-old water industry veteran described the sum as an upfront payment for a five-year job as a consultant with YTL: "The money went into a standard bank account and I paid Malaysian tax."

Mr Skellett, who is also chairman of the train contracting firm Jarvis, was arrested at his home near Bath at 6.30am on Thursday by seven police officers as part of a City of London police fraud squad investigation.

Describing himself as "tired" and "disappointed" after hours in police cells, Mr Skellett said the payment had been agreed in July, two months after the deal to sell the Bath-based company to YTL had been clinched.

He had been preparing to declare the payment to the British tax authorities and it would have been declared at the company's next set of reports and accounts.

He insisted that he had only learnt of the identity of the new owner of Wessex, part of a fire sale by the bankrupt Enron oil group, after the deal had been completed by the Houston head office.

The £1.2bn deal caused controversy when it was announced in May because the City believed that a consortium led by Royal Bank of Scotland had won the auction for the highly respected water company that serves part of the south-west of England.

Mr Skellett said he too was surprised. He had worked with Royal Bank of Scotland for weeks and was told only the weekend before the deal was due to be announced that the successful bidder was YTL.

"We even had the [Royal Bank] release ready to go out on the Monday," he said.

Michael Anderson, chairman of Azurix, the Enron subsidiary that owned Wessex, told him personally of the deal with YTL, 60% owned by a Malaysian family-run company after it had been signed.

City of London police yesterday would not comment on Mr Skellett's explanation. "We do not want to get involved in what he said," the police said.

Mr Skellett has been released on bail until January and next week is preparing to offer to "stand aside" from the boards of both Wessex and train contracting company Jarvis if necessary.

A second man who handed himself over to City of London police on Thursday after hearing news of Mr Skellett's arrest on the radio has also been released on police bail.

Sources close to the investigation indicated that he was Martin Bushnall, a consultant who acted as a facilitator between YTL and Wessex during the sale. He was not immediately available for comment.

The police refused to reveal his identity other than to say he had "no direct connection" with Wessex Water.

YTL supported Mr Skellett's description of the payment while Wessex Water released a statement, saying it was "pleased that matters seem to be resolving themselves".

Mr Skellett, who joined Wessex at 29 when it was still state-owned, said that the consultancy agreement had been agreed after "several weeks" of dialogue with YTL. Because he had been considering retiring next year after 40 years in the water industry, he had not been sure whether to stay on. But, he had agreed in "early July" directly with Hong Yeoh, a member of the family that controls YTL, to take the consultancy. It was at the Malaysian's insistence that he took the £1m as an upfront payment. "It was Hong's view that it locks you in more," Mr Skellett said.