Slasher Steve, the man who made a mess of a popular execution

The Prudential connection: Well done, Steve. You've managed to snatch defeat from the jaws of victory.
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In the end, the demise of Railtrack was like the killing of Colonel Kurtz in Apocalypse Now. As Major Willard said, the military wanted him dead, the jungle wanted him dead and even he wanted a way out. With Railtrack, the customers wanted it nationalised, the City wanted it nationalised and, while John Robinson and Steve Marshall have thrashed like landed salmon since last weekend, you get the sense they're quite glad to have this burden lifted.

But the execution was as inept as anything Bozo Byers has done in his time at the DTI and (Lord help us) DTLR. It also betrays a naivety on the part of John Robinson, who clearly has no idea how to negotiate with the Government.

From the moment the Railtrack chairman stepped into Byers' office on 25 July, with his hand out and nothing to offer, Railtrack was dead in the water. Byers could see an opportunity to do something Old Labour that still played well with New Labour. Here was a company that needed government cash to throw down a black hole. That's the job of civil servants, thank you very much.

The form of execution was then batted around from Euston to Whitehall until 10 days ago. It was executed poorly – Ts were not crossed, Is were not dotted. The Channel Tunnel Rail Link project was left in limbo, the property side in no man's land. Bank accounts got frozen that shouldn't have been. The dividend was paid when it needn't have been. The structure of the new entity to take over Railtrack's operating business was not determined.

A move that should have brought joy to passengers from Fort William to Penzance ended up with lawsuits threatened, shareholders angry and Byers in trouble.

So where do we go from here?

Well, Byers seems keen on using the company limited by guarantee, which has worked so well with Welsh Water. In Whitehall this appears to be a case of a Glas Cymru half full rather than half empty. Only a year ago the regulators were set to block this structure before Lord Burns, the former Treasury mandarin, persuaded them otherwise. For Railtrack, this will mean it is intentionally run on a "not for profit" basis. The capital markets will lend to this business, as they will stump up for the Tube PPP, and if Byers can persuade some of the train operating companies to take some of the track off his hands, he will create mini-British Rails all over again.

And what of Railtrack Group? Byers needs a deal to move the CTRL out of the way, leaving what is essentially a property company. This could be run as such, wound down or merely sold, giving money back to Railtrack shareholders.

Such an elegant solution. Its chances of happening with Byers still involved are zero.


The two biggest corporate snafus of this year have a few things in common. Both Marconi and Railtrack have clearly destroyed shareholder value, both have had problems with directors' remuneration not tallying with what is considered best practice, and both are now in hot water over not communicating properly with their shareholders. And both have rather close connections with the largest shareholder in the UK – the Prudential.

Marconi had Sir Roger Hurn, chairman of the Pru, as its chairman. Railtrack has Jonathan Bloomer, the insurance giant's chief executive, as a non-executive director. I asked Mr Bloomer to comment on the Railtrack situation and was told there was a Chinese Wall between him and the Pru's investment side, M&G, and that I should talk to M&G's boss, Michael McLintock (who wasn't available).

Well, I've been to the Great Wall of China. You can climb on it, and see the other side. Presumably the Pru's chairman and chief executive can see what is in the best interests of shareholders. Their three-monkeys act as non-executives of these two disaster areas does not instil confidence in the organisation they run.