Byers looked into pulling plug on Railtrack earlier
Daily Telegraph: 13/06/2005
Alistair Osborne, Associate City Editor -
The Government considered bringing forward its decision to force Railtrack into administration to prevent the rail company paying more than £80m in dividends, official documents reveal.
On September 5 2001, exactly a month before former transport secretary Stephen Byers pulled the plug on Railtrack, Lewis Atter, a Treasury civil servant, sent an email to David Rowlands, the then director of railways.
"A potentially relevant point for this afternoon's meeting," he wrote. "The due date for payment of last year's dividend is October 3, some £84m appears to be involved. If RAO [Railway Administration Order] is the chosen route forward, this provides an argument against waiting until the second week in October. Even on the assumption that delay is possible, it now has a price."
Railtrack's dividend policy had already irked Mr Rowlands, who wrote in a briefing document to Mr Byers on August 31: "Even after the assistance package last April [when Railtrack was advanced £1.5billion], Railtrack declared a dividend. The company has clearly been badly managed since privatisation."
A day after Mr Atter's email, Dan Corry, a special adviser to Mr Byers, sent an email to Mr Rowlands, saying: "We need chapter and verse on the dividend payment issue and what option we are left with." Signalling that administration was now the favoured option, he expressed concerns that the late Sir Alastair Morton, then chairman of the Strategic Rail Authority, could cause problems.
"On worst-case scenario, the day after admin, [former Railtrack chairman John] Robinson goes, [ex-rail regulator Tom] Winsor resigns and we are left with Morton still in post!'' Mr Corry adds: "On communications strategy, can we now get Jo [Moore, the adviser famous for her attempt to bury bad news], No 10 (Phil Bassett?) and someone from HMT to discuss etc?" Mr Bassett was a senior Downing Street spokesman.
Mr Corry chases up these points on September 12 in an email to Bob Linnard, a senior civil servant at the transport department. "Our lawyers worry me," he remarks. "They need to be asking how we can deliver what our SOS [Secretary of State] wants not why it may be difficult. Let's keep them up to the mark."
Mr Linnard replies: "We've found out all we can on the dividend without asking Ariel [the Government's code name for Railtrack]. That wd really set the bells ringing - they'd assume that administration was not merely an option but that we were actively planning for it."
In the event, the dividend was paid, but for some shareholders, such as private investor Geoffrey Weir, it proved worthless. He took his dividend in shares just two days before Mr Byers put Railtrack into administration.
It is in Mr Weir's name that a legal case is being brought on behalf of 55,000 Railtrack shareholders alleging the Government abused its powers to engineer the company's collapse.
The case is scheduled to come to trial on June 27.