SOUTHERN Water is being investigated by the Serious Fraud Office after "inconsistencies" were discovered in the manner in which the company reported its service standards to the industry’s regulator Ofwat.

The problems were discovered by the firm itself after a new managemnt team took over in October 2005 and were immediately brought them to the attention of the Serious Fraud Office.

Les Dawson, Southern Water’s chief executive, said: "We launched a joint inquiry with Ofwat, bringing in a specialist team of independent investigators to look at inconsistencies relating to the reporting and handling of response levels to customer enquiries and complaints.

"As a result of information gathered during the course of this independent inquiry and subsequently passed to the SFO, they have now advised us they will carry out their own formal inquiry into this matter."

The inconsistencies identified showed that figures reported to Ofwat, relating to response times for written billing inquiries and service complaints, did not always match performance. They were discovered during a project to install a new customer billing system.

The company pledged to continue to co-operate with the SFO in every way possible.