Railtrack shareholders have lost their High Court case for £157m in compensation from the government.
Railtrack was in charge of the UK's rail infrastructure
They failed to persuade a judge that former Transport Secretary Stephen Byers acted maliciously and actively sought the firm's collapse.
Both Mr Byers and the government had always denied any wrongdoing.
Railtrack went into administration in October 2001 after the government withdrew funding in the aftermath of the fatal Hatfield crash in 2000.
Mr Byers described the verdict as "a great victory".
"The Railtrack shareholders put my honesty and integrity at the heart of their case and the court has found in my favour," he said in a statement after the court ruling.
"This legal action was a political attack on my decision to deny Railtrack yet more taxpayers' money. Throughout this whole affair I have put the public interest first."
Interviewed later on BBC Radio 4's PM programme, Mr Byers said: "I am very happy to have this cloud lifted over me as a result of today's vindication of my conduct and my decision in relation to Railtrack."
"Railtrack was failing as a company. We need to remind ourselves of the total mess that Railtrack were making of the railway system," he said.
Stephen Byers has described the verdict as 'a great victory'
The civil lawsuit was brought by the 49,000-strong Railtrack Private Shareholders Action Group, in the name of retired Railtrack engineer Geoffrey Weir.
Mr Weir said the shareholders were now considering whether they had grounds for appeal.
"We are both disappointed and perplexed by today's judgement," said Mr Weir.
"Anybody who sat through this trial would have found the judge's decision bizarre."
Mr Byers could yet face censure from the House of Commons. During the trial it was revealed that he had earlier misled a Commons sub-committee.
Under cross examination by MPs, Mr Byers was asked if he had begun discussing the demise of Railtrack before a key meeting in July 2001, at which the company's chairman warned Mr Byers of the financial difficulties.
Mr Byers told MPs that he had not, but during the High Court case he admitted "it is true to say there was work going on, so yes that was untrue".
Geoffrey Weir said the shareholder group may now appeal
Speaking at the High Court on Friday, Mr Justice Lindsay said that it was for Parliament, and not him, to decide whether Mr Byers was a liar or not.
"His explanation as then given seems to me little above gibberish, but it will be for parliament to assess what he meant," said the judge.
"I do not find Mr Byers generally to have been an untruthful witness."
The Conservatives said the government should have been "honest" with Parliament about its intentions regarding Railtrack.
Shadow transport minister Alan Duncan said there had been a "secret plan for six months to renationalise" the business.
Collapsed share price
Railtrack was replaced by not-for-profit company Network Rail in 2002.
Railtrack was formed in April 1994 after the privatisation of the UK railway network by the then Conservative government of John Major.
Many small investors snapped up shares when it floated on the London Stock Exchange in 1996.
The group's shares climbed as high as 1768 pence each, but were eventually suspended at 280p each when it went into administration in 2001.
Institutional shareholders accepted the government's eventual compensation offer of around 250p a share, but the private shareholders wanted much more.