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Last Updated: Monday, 27 June, 2005, 15:10 GMT 16:10 UK
Railtrack case goes to High Court
Maintenance workers on track
Railtrack oversaw rail maintenance
The role played by former Transport Secretary Stephen Byers in the collapse of rail firm Railtrack is under scrutiny in a High Court case.

About 50,000 Railtrack shareholders have launched a claim for 157m in compensation from the government.

They claim the Department of Transport plotted Railtrack's demise in 2001 by refusing it extra money.

"I anticipate Mr Byers' integrity will be at the heart of it," barrister Keith Rowley said on the trial's first day.

Shareholders allege "misfeasance" - that the government acted within the law but in bad faith - and a breach of human rights for confiscation of assets.

The government says it did not engineer the collapse of the company. It has always said the firm was not capable of running the railways and was insolvent without government support.

Key witness

Stephen Byers
Stephen Byers is set to appear in court

Mr Byers, who is scheduled to appear in court, played a key role in the decision to withdraw Railtrack's funding after the fatal Hatfield crash in 2000, ultimately forcing the company into administration.

The critical question is whether the company - since replaced by state-backed Network Rail - simply ran out of money or whether the government plotted its downfall.

"Mr Byers devised a scheme by which he intended to injure the shareholders by impairing the value of their financial interests in the company without paying them compensation and without the approval of Parliament," Mr Rowley, who represents the claimants bringing the case, told the court on Monday.

"The evidence will reveal impropriety at a high level of government in the form of the conduct of Mr Byers," said Mr Rowley.

Mr Justice Lindsay will hear details of e-mails sent by government advisers.

One e-mail referred to shareholders as "grannies" who could be compensated with bus passes.

Anger

The Railtrack Private Shareholders Action Group (RPSAG) has raised 2.4m to take the case to court.

"We took a view on Railtrack and the future of the country's railways, we took a view on the management and we bought shares in the company based on the commercial risks we saw," RPSAG spokesman Geoff Weir said.

"We did not expect hostile government to take action against it, to brief against it, to take every chance it could to impair the efficiency of Railtrack and stop it operating efficiently."

He added that "we certainly didn't expect them, at the last moment, to pull the plug on funding they'd given agreement on".

Damages

If the High Court finds in favour of the shareholders, then there will be a second trial to quantify damages.

The shareholders' group hopes to get the difference between the average price of Railtrack shares and the money they were offered when the government bought the business to pass on to Network Rail.

At one point in its existence Railtrack's shares were trading above 17, but they had fallen to 2.80 when the administration order was made, with shareholders then receiving just 2.50 per share.

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 was floated on the London Stock Exchange in 1996.


BBC NEWS: VIDEO AND AUDIO
See the shareholders' case against Railtrack



SEE ALSO:
Railtrack investors take action
02 Dec 03 |  Business


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