Hong Kong billionaire faces UK sewage scandals

• The company has been criticized for pouring raw sewage into the region’s rivers.
• It serves 2.7 million people in northeast England.
• It is controlled by Hong Kong billionaire Li Ka-Ching’s CK Hutchison.

Asian financial circles applauded Hong Kong billionaire Li Ka-CK shing’s Group’s sale of a 25% share in its UK-based water company to New York-listed investment giant KKR.

The $1bn agreement infuriated Northumbrian Water Limited (NWL) customers.

NWL, which serves 2.7 million people in northeast England and is controlled by Li’s CK Hutchison, CK Asset, and CK Infrastructure, has been criticized for pouring raw sewage into the region’s rivers.

The company has been fined 780,000 British pounds ($896,000) for environmental infractions since 2021 and was among 11 UK water suppliers forced to decrease consumers’ bills by 150 million pounds ($172m) this month for failing to achieve pollution limits.

“I think in the end this will turn out to be the biggest-ever swindle imposed on the people in the UK, with NWL laughing all the way to the bank,” Whitburn’s veteran anti-pollution advocate Bob Latimer told Al Jazeera.

Latimer, who has battled NWL since 1996, lives next to a NWL outfall that he claims spilled a record 820,000 tons of untreated sewage into the sea in 2021, the equivalent of 325 Olympic-size swimming pools.

English water businesses like NWL, a privatized monopoly with solid assets to borrow against and a captive customer base, have long been a safe option for international investors, especially Asian ones.

UK sewage contamination crises have drawn media attention, public outrage, and political criticism.

Li, one of Asia’s richest tycoons, and his CK Group face additional dangers and reputational damage as the UK’s regulatory and political environment is changing rapidly.

The 94-year-old Hong Kong-based businessman, who retired in 2018 but continues involved in the enterprises as an adviser, is lauded by lawmakers in greater China as a “superman” for his influence and commercial and philanthropic success. Northeastern England, though, is less enamored.

Steve Lavelle, vice-chair of the Whitburn Neighborhood Forum and anti-pollution campaigner, told Al Jazeera that NWL was “sweating the assets” for shareholders at the detriment of the local ecology.

Lavelle, Latimer, and their colleagues have provided Al Jazeera with evidence that NWL is illegally releasing sewage in violation of Environment Agency permits and an October 18, 2012 European Court of Justice judgement. They filed complaints with the UK Environment Agency and Office of Environmental Protection.

NWL denies it.

A NWL representative told Al Jazeera that discharges at Whitburn follow Environment Agency licenses. Hong Kong-based CK Group declined comment.

Local environmentalists aren’t the only ones doubting NWL. Since late last year, the Environment Agency (EA) and Ofwat have been conducting an industry-wide criminal investigation into possible wastewater treatment works non-compliance by five water firms, including NWL. NWL management were disappointed by the May 2022 inquiry update.

“Our first examination of the evidence collected to date has revealed that there may have been widespread and serious non-compliance with the relevant regulations,” the Department for Environment, Food, and Rural Affairs said at the time.

NWL said their company was under investigation for all sewage treatment works.

A spokeswoman stated the EA has not released any findings. “We have fully complied with the requests and the Board takes its obligations extremely seriously”.

The EA called the environmental performance of the nine English water corporations, including NWL, “the worst on record” in its July annual report.

Then-EA chair Emma Howard Boyd warned investors that UK water monopolies were no longer a “one-way bet” and proposed that CEOs at businesses responsible for the “most serious instances” should be imprisoned.

NWL claims good environmental performance.

“In its current evaluation, the EA gave our environmental performance Four Stars, the best rating attainable, and we are proud of this and our industry-leading pollution performance,” its spokeswoman stated.

In response to public concern, the UK government announced a new storm overflow discharge plan in August, requiring water companies to “deliver their largest-ever environmental infrastructure investment – 56 billion pounds ($64.2bn) of capital investment over 25 years – into a long-term program to tackle storm sewage discharges by 2050.”

It also proposes 1,000-fold sanctions for polluter water businesses at 250 million pounds ($287m).

CK Group and its UK sister companies are struggling with the water sector’s unpleasant smell.

Felixstowe, the UK’s largest container port, is under fire for a disruptive industrial relations conflict.

Despite being successful, union officials have accused CK Hutchison, the group’s port management subsidiary, of underpaying workers. NWL’s most recent company report lists environmental contamination occurrences “giving rise to potential fines and reputational damage,” despite its strong environmental standards.

CK Hutchison, which earned 33.5 billion Hong Kong dollars ($4.3bn) in 2021, and its subsidiary businesses may not have advised management on UK sustainability issues.

The criminal investigation’s scope and strong language are unprecedented. The findings could change Li and CK Group’s UK water sector investments.

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