The former chief executive of Southern Water has been charged with conspiracy to defraud authorities over allegations he was involved in a plan to manipulate water quality tests to avoid millions of pounds in penalties.

Matthew Wright and three other former employees have been accused of conspiring to defraud the Environment Agency (EA) and water regulator Ofwat.

They are accused of manipulating the Operator Self-Monitoring (OSM) compliance testing regime which requires water firms to to take samples at their wastewater treatment works and report the results to the EA.

The EA previously asked a judge to issue a summons against Wright, as well as Philip Barker, Clive Massey and Mark Gregory, who also worked at the company, charging them with the offence.

The summons was issued last year, but Wright then launched a legal challenge over the move, with his lawyers telling the High Court in June that the EA did not have the power to issue it and that it should be thrown out as a “nullity”.

Environment Secretary Angela Eagle said: “The public are rightly sick of environmental pollution – and attempting to cover it up is outrageous. Anyone found guilty of this crime will face the full force of the law. This government will always back tough enforcement action to protect our rivers, lakes and seas.

“We have already committed to ending the practice of operator self-monitoring to ensure this cannot happen again in the future.”

On Wednesday, two senior judges dismissed Wright’s claim, and ruled that restrictions previously preventing reporting of the legal challenge should be lifted.

Separate court listings show that the case against 60-year-old Wright, of Haslemere, Surrey, Barker, 57, of Chiltington, West Sussex, 64-year-old Massey, of Brandhill, Shropshire, and 63-year-old Gregory, of Southampton, were scheduled to be heard at Medway Magistrates’ Court on July 14.

The four are accused of conspiring between 2012 and 2017 to “defraud persons performing public duties in respect of environmental and financial regulation” of Southern Water, including the EA and Ofwat, by “the implementation of artificial no-flow events at waste water treatment works”.

The court listings also show that Southern Water has separately been charged with dozens of offences of failing to comply with or contravening an environmental permit condition between 2013 and 2017 at multiple wastewater treatment works.

James Wallace, CEO of River Action, said: “Today’s judgment is a victory for the Environment Agency and a welcome sign that our environmental regulator is beginning to show real teeth. The High Court has confirmed the EA’s power to hold individual executives, as well as water companies, to account for alleged fraud linked to environmental regulation.

“We also pay tribute to Peter Hammond of Windrush Against Sewage Pollution, whose investigation helped expose the alleged manipulation of sewage monitoring data and bring it to the Environment Agency’s attention.

“The allegations at the heart of this case represent an egregious abuse of power. According to the Environment Agency, senior figures at Southern Water deceived regulators, enabling the company to avoid tens of millions of pounds in penalties while securing financial rewards.

“The prospect of executives facing criminal prosecution should send shockwaves through the water industry. But it should not have taken five years to reach this point. We need faster enforcement so that those responsible cannot simply move on before the law catches up with them.”

Wastewater treatment works can only be run with an environmental permit issued by the EA.

Treated effluent discharge from the works is tested under an “operator self-monitoring” (OSM) scheme introduced in 2009, which sees discharges tested annually in unannounced visits.

The tests are carried out by sampling teams, which operate separately from teams that run the works.

The results of the tests are shared with the EA and water regulator Ofwat, and can lead to penalties if the works do not comply with the terms of their permits.

If the discharge flow at the time of the test is insufficient to take a sample, this is not regarded as a fail, and no samples are taken for the rest of the testing period.

Rules around OSM have been tightened in the past year, including that samples must be rescheduled in the event that the flow is insufficient, with the current Labour government pledging to end the practice.

In his ruling issuing the summons against the four men last year, District Judge Stephen Leake said: “The agency alleges, in the present case, that there was a deliberate plan by officers of the company to manipulate the OSM regime by contriving operational circumstances so that there was no flow through the relevant site at times when it was believed that the site would, or might, fail the OSM test, in order to avoid the consequences of the true OSM result being provided to the agency and Ofwat.”

But lawyers for Wright told the High Court that the EA only has the power to bring private prosecutions for environmental offences, not those such as fraud or conspiracy.

Barristers for the EA said that the body had a general power to bring private prosecutions, and alternatively that allegations of conspiracy to defraud were connected to its functions.

Massey, Gregory and Barker did not appear at the hearing in London and were not represented.

Following the judgment, an EA spokesperson said: “We can confirm that we are taking criminal proceedings against Southern Water Services Limited and a number of former employees.

“We take our responsibility to protect the environment very seriously and will always pursue and prosecute those alleged to have committed serious offending against the environment. We welcome this important judgment.”