Railtrack Shareholders’ Brutal Defeat

Railtrack’s small shareholders were widely expected to lose their court case against the Government - and they did, said Martin Dickson in the FT.

Andrew Van Sickle
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published

Railtrack's small shareholders were widely expected to lose their court case against the Government - and they did, said Martin Dickson in the FT. The shareholders were demanding £157m in compensation, accusing former transport secretary Stephen Byers of deliberately engineering Railtrack's demise in 2001. It was always going to be hard to prove that Byers specifically intended to harm investors - but the defeat was "brutal" as the judge "lined up strongly on the side of the Government".

"Hard as it is to accept", the judge was right to highlight the role of Railtrack's directors, said the FT. They bungled track repairs and when the Government pulled the plug on Railtrack, "meekly" accepted this without demanding an emergency review from the regulator. Still, the Government has hardly been vindicated by the verdict: the case exposed the "overarching, darkly conspiratorial Treasury regime" that may soon move into No. 10, said Patience Wheatcroft in The Times. Shareholders may not have been "targeted for abuse", but they were treated with contempt.

Clearly, the Government's prime concern was keeping Railtrack's debt off the Government's books upon renationalisation. By exposing the workings of a Government willing to "tear up the regulatory process" to suit itself, the case has given other firms doing business with the Government in politically sensitive sectors a reason to be worried, said Simon Nixon on Breakingviews.com. They'll need more than a judge's reassurances that the "word of this Government can be trusted".

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Andrew Van Sickle
Andrew Van Sickle

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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