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Failed Railtrack payout bid 'a warning to others'.

Byline: By Rhodri Clark Western Mail

The failed compensation claim by Railtrack shareholders is a warning to staff in other companies who are offered share options by their employers, a Welsh finance expert said yesterday.

Many of the Railtrack shareholders who demanded extra compensation from the Government were ordinary railway employees given shares by their employer.

Yesterday they learned their case at the High Court in London had failed to prove the Government acted wrongly when Railtrack went into administration in 2001.

The case was brought in the name of retired Railtrack engineer Geoffrey Weir, representing almost 49,000 members of the Railtrack Private Shareholders' Action Group.

He said yesterday, 'We are both disappointed and perplexed by today's judgment. Anybody who sat through the trial will find the judge's conclusions bizarre.'

But Tony Bisley, regional investment director at Cardiff-based Gerrard investment managers, said it was always going to be difficult to prove the Government deliberately acted against the shareholders.

'I have sympathy with the shareholders because of how the Government disregarded them, but I have more sympathy with investors in some of the other companies that have gone bust. At least the Railtrack shareholders got some money back.'

Employees of Marconi and Cardiff-based steel firm ASW were given no compensation for the shares they held when their companies went belly-up.

Mr Bisley said many companies were now offering shares to employees. 'You tend to accumulate shareholdings in the company over a period of time. When you're relying on the company to pay you as well, I think it's normally advisable to cash in where you can and diversify your risk,' he said.

Network Rail, which took over from Railtrack as owner and manager of the rail infrastructure, is a not-for-profit company modelled on Glas Cymru, owner of Welsh Water.

Railtrack shares, which were once as high as pounds 17.68, were suspended at 280p in 2001.

Institutional shareholders accepted the Government's eventual offer of about 250p a share, but private shareholders wanted more. They claimed about pounds 9.15 a share, based on an average value over the three years preceding suspension.

They alleged Stephen Byers, transport secretary in 2001, secretly devised a scheme to deprive them of their financial interest in the company without paying compensation. They claimed at least pounds 157m. Mr Byers was accused of lying to cover up his alleged misconduct.

But Mr Justice Lindsay said yesterday the Government had not engineered Railtrack's downfall when it refused emergency payments.

Alastair Darling, the current transport secretary, said the judge had vindicated the Government's actions in the face of growing concern over Railtrack's financial position and management.

'The railway is now in a far better state than in 2001. Costs are being brought under control, maintenance has been brought back in-house and reliability is improving,' he said.

The TSSA union, representing railway administrative and engineering staff, said, 'The judge was right to conclude that there had to be a limit to the Government's funding of Railtrack. Let's hope the Government takes this on board when paying shareholders in other privatised sectors of the rail industry.' Lie or untruth?: The aspect of the Railtrack court case which caused the biggest stir in political circles was an admission by former transport secretary Stephen Byers that he told an untruth to MPs.

In his evidence, the North Tyneside MP agreed that information he gave to a Commons select committee about the timing of discussions on putting Railtrack into administration was wrong.

'It is not a truthful statement and I apologise for that,' he said. 'I cannot remember the motives behind it.'

Yesterday Mr Justice Lindsay said he could not proceed on the basis that Mr Byers was a proven liar because of what he told the select committee.

'He accepted to me that he had told an untruth, but that, of itself, does not brand him a liar if a liar is someone who tells an untruth knowing it is untrue or being reckless as to its truth or falsity.

'Whether he was a liar within that meaning is not for me; I must leave it to the House of Commons.'
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Publication:Western Mail (Cardiff, Wales)
Date:Oct 15, 2005
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