Conflict erupts at Network Rail after inquiry clears boss of abusing position
The Guardian: 26 August 2010 By Dan Milmo
Senior executives at Network Rail are at loggerheads with the organisation's chairman, despite an internal investigation that has cleared the chief executive, Iain Coucher, of allegations that he abused his position at the expense of taxpayers.
A tumultuous month for the owner of Britain's rail infrastructure has produced tensions between Network Rail's chairman, Rick Haythornthwaite, and senior figures at the company. It is understood that executives were shocked to find their management style questioned by Haythornthwaite in a newspaper interview that also questioned the future of two senior employees via unnamed sources. Haythornthwaite said Network Rail's leadership team had taken a "slightly militaristic approach" and had "put up the barriers a little bit" – comments that have angered some senior employees.
A source familiar with the thinking of Network Rail executives said: "The way in which the chairman so openly criticised some of the senior management is totally unprofessional. It is adding to the growing sense that he is out of his depth." The future of the director of human resources at Network Rail, Peter Bennett, was called into doubt in the Financial Times article, which also stated that Network Rail's director of government and corporate affairs, Victoria Pender, was "unlikely" to return from a long holiday next month. Network Rail declined to comment.
The internal divisions have emerged amid a slew of unsubstantiated allegations against Coucher, who is due to step down later this year after announcing his resignation in June. Coucher said he did not want to steer the company through another five-year funding settlement with the government, having secured a £30bn deal last time round. In an inquiry overseen by the chair of Network Rail's audit committee and vetted by PricewaterhouseCoopers, Coucher and the company were absolved of a number of allegations printed in Private Eye. Those claims, from the TSSA rail union, alleged that:
• Coucher had access to a Coutts card allowing withdrawals of up to £100,000.
• A company founded by Coucher and Victoria Pender received payments of £180,000 every three months for unspecified services.
• Coucher was paid £20,000 a year for renting a central London apartment.
• Aggrieved former staff were paid up to £900,000 in compromise agreements.
In a letter to Network Rail's 100 members sent last week, the chairman of the company's audit committee, Mike Firth, said Coucher's expenses and salary were paid into a different high street bank. In a point-by-point rebuttal of the Private Eye claims, Firth added that Coucher Pender Ltd last received payments from Network Rail in 2003; that Coucher no longer receives an annual housing allowance; and that, while 150 compromise agreements have been struck with former employees, the most expensive settlement was less than £500,000 and the average value was £60,000. Network Rail has also stated that an investigation into allegations of sexual harassment by Bennett found the executive had "no case to answer".
"The internal investigations to date, which have been extensive and have addressed all of the investigations made, have not identified any instances of impropriety," said Firth.
However, the secretary of state for transport, Philip Hammond, has requested another investigation into further allegations by the TSSA, contained in a dossier seen by ministers at the Department for Transport. That probe is at an impasse, because the TSSA has so far declined to hand over the dossier to Network Rail, amid fears that it might expose a company whistleblower who is a key source for the allegations.
Network Rail is a quasi-private company that received a public subsidy of £3.7bn last year. The TSSA has called for an independent inquiry into the allegations but Hammond believes Network Rail must deal with the claims first. He has not ruled out asking Network Rail to bring in an independent outsider to conduct an investigation.
A government source said: "We want to see this matter cleared up as quickly as possible. The TSSA needs to present the allegations to Network Rail so we can get to the bottom of this."
Network Rail is continuing the recruitment process for a new chief executive, but it is understood that internal candidates are not among the frontrunners and Haythornthwaite will appoint an outsider.