Managers suspended in rail fraud inquiry

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The Independent Online

Transport Correspondent

Four more managers on the London, Tilbury and Southend railway were yesterday suspended by British Rail as a result of the fraud inquiry into misuse of tickets. An employee at another BR subsidiary was also suspended, following the discovery of a similar fraud.

The four, all members of LTS's commercial department, who work at the Southend headquarters and at Fenchurch Street, were "suspended temporarily" in order to allow them to "co-operate fully with the investigation", according to a statement issued last night.

It also emerged last night that the fraud was uncovered after BR auditors were alerted by a member of staff. Previously the Government has maintained that the irregularities were thrown up by a routine audit, which showed that existing management systems were adequate.

Last Saturday, Colin Andrews, the commercial director of the management buyout team, Enterprise Rail - which had been about to take over running the line - resigned after details of the ticketing fraud emerged. On Monday, Ian Burton, the retail manager, was suspended.

The new suspensions raise further doubts about the chances of Enterprise Rail ever taking over the franchise, particularly as headquarters staff are involved. Enterprise Rail's City backers are becoming increasingly concerned at the embarrassing publicity. A source close to 3i, one of the venture capital firms backing the bid, said: "3i want to be involved in other management buyout bids for rail franchises and therefore does not want to be tarnished by any dirt coming out of the investigation."

The letting of the franchise to the management team was halted by Sir George Young, the Secretary of State for Transport, after it was discovered that managers at the company had moved tickets from one station to another in order to boost the share of LTS's income from Travelcard sales, which has to be shared with London Transport.

As a result of BR checking whether similar manipulation of receipts was being carried out by other train operators, a ticket clerk at West Anglia Great Northern has been suspended. It is understood that only about 30 tickets and a very small sum of money were involved.

Two investigations, by BR and the Rail Regulator, are being carried out into the fraud.

The Labour transport spokesman, Brian Wilson, last night called for the complete suspension of the rail franchising process. "Auditors are now crawling over the books of every operator which shares stations with London Underground and where there is potential for the same or similar frauds," he said. "The franchising process should be put on hold until these checks have taken place."