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Sunday, 14 October, 2001, 18:43 GMT 19:43 UK
Pressure grows for Railtrack inquiry
Train crashed into buffers
Railtrack's flow of subsidies ran into the buffers
The Conservatives have stepped up their pressure on the government to hold an inquiry into the collapse of Railtrack.

Shadow transport secretary Theresa May has accused ministers of breaking the bond of trust between the government and the private sector, by refusing to compensate shareholders in the company.

Railtrack chairman John Robinson
Robinson: accused of keep firm's plight from shareholders
Transport Secretary Stephen Byers had dealt "a savage blow to the future of the railways" and jeopordised "the government's second term plans for reforming public services through public private partnerships", she said.

"The government's 10-year plan - looking ahead - required 34bn of investment from the private sector into the railways and that is now under question. Where is that money going to come from?" she added.

The Tories are asking the Financial Services Authority if there should be an inquiry into the affair.

'Mugging'

Mr Byers' department confirmed he will make a statement on Railtrack to the House of Commons on Monday.

He will brief MPs on the events of last weekend, and outline his thinking on the form of the organisation which will replace Railtrack, a spokesman said.

Earlier, Railtrack's outgoing chief executive Steve Marshall told the BBC the government "mugged" Railtrack when it "ambushed" the troubled railway firm into administration.

Mr Marshall conceded that Railtrack had made some mistakes and admitted the privatisation of the company had itself been partly to blame.

But the final responsibility rested with Mr Byers and the government, he said.

There had been no ability to appeal to the rail regulator Tom Winsor, as the government had told him that any attempt to bring forward new funding would trigger legislation to prevent it.

"The company was left with no options at all ... we didn't get the chance to come up with a Plan B," said Mr Marshall.

Complaints

But in reports in The Sunday Times, Mr Marshall's boss, Railtrack chairman John Robinson, is accused of hiding the company's true "precarious financial position" from shareholders.

The paper cites documents from Credit Suisse First Boston, the firm's adviser, saying receivership was being discussed as early as 27 July, while other documents indicate discussions about administration between the company, the government and the bank.

Meanwhile, the London Stock Exchange is looking into Railtrack share dealing in the days before the administrators went in.

Complaints have been made that there was a "false market" in the shares, since the government must have known for some weeks that it would pull out.

Confident

Mr Marshall said that despite being 3bn in debt, Railtrack was nowhere near bankrupt.

And he reiterated the company's position that the government had promised 1.5bn new funding in April and had then refused to stump up the cash.

"It's like a python coiling itself around your windpipe and then - just as it's about to squeeze the last life out of you - it says, 'It's not my fault, guv; you probably would have died anyway'."

But he said he was confident that on Monday Mr Byers would agree to let Railtrack Group - the parent company, which is not in administration - keep hold of the Channel Tunnel Rail Link.

That was worth about 400m, he said, on top of the 370m in cash that the group had already reacquired after it was frozen.

Meanwhile, speculation about what is actually to happen to Railtrack is spreading, with some newspapers calling for the head of Mr Byers, labelled a "national disgrace" in The Sunday Telegraph.

The Telegraph says that the train operating companies (TOCs)- the firms which actually run rail services, buying track and station use rights from Railtrack - are being asked to take over rail and signal maintenance.

And The Times says German bank WestLB has made a formal approach to take over Railtrack, suggesting returning track responsibilities to the TOCs and refinancing the company.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Karen Hoggan
"Whoever is in charge their big problem will be money"

Key stories

Background

Safety crisis
 VOTE RESULTS
Should Railtrack's shareholders be compensated?

Yes
 33.04% 

No
 66.96% 

4719 Votes Cast

Results are indicative and may not reflect public opinion

See also:

16 Oct 01 | Business
Channel Tunnel answer on Monday
11 Oct 01 | Business
German bank 'eyes UK rail network'
11 Oct 01 | Business
Railtrack pushes for rail link deal
09 Oct 01 | Business
Profile: The Railtrack salvage squad
08 Oct 01 | Business
Rail users promised 'fresh start'
08 Oct 01 | Business
Railtrack in administration
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