Politics: Select committee summons `fat cats'

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The Independent Online
THREE directors who made personal fortunes totalling over pounds 60m from the sale of privatised railway leasing companies have been summoned by a Commons select committee for an inquiry into the way the taxpayer was taken for a ride.

John Prideaux joined the ranks of the rail privatisation "fat cats" after making pounds 15m from the sale of Angel Trains to the Royal Bank of Scotland.

Sandy Anderson, a former BR manager, made pounds 36m after leading the buyout of the leasing company, Porterbrook, which the managers sold to Stagecoach for more than pounds 800m. Andrew Jukes made pounds 15.9mfrom a stake of pounds 110,000 in the sale of a third leasing company, Eversholt, to Forward Trust.

All three directors have been called to appear next Wednesday by the public spending watchdog, the Public Accounts Committee, which is investigating the privatisation of the three rolling stock leasing companies.

The Tory chairman of the committee, David Davis, is a former minister and ex-trouble shooter, with a reputation for tough talking. The committee inquiry could cause embarrassment for former Tory transport ministers, Sir George Young and Sir Brian Mawhinney - both now members of William Hague's Shadow Cabinet - who were responsible for the sell-offs.

But the permanent secretary at the Department of Transport, Andrew Turnbull, will be in the line of fire over a damning report by the National Audit Office published in March which said updated valuations were not made "because the then Government's overriding objective was to privatise the rolling stock leasing companies as soon as practicable".

The row over the sale and the creation of three multi-millionaires from taxpayers' assets became an election issue last year, with the "fat cats" controversy contributing to the loss of credibility in John Major's government.

The directors will be questioned about the findings in the NAO report, which estimated that the taxpayer had received pounds 1.8bn for companies which had a value of pounds 2.9bn. It criticised the Department of Transport for failing to include a clawback provision on profits for any resale.

The cross-party committee will also be questioning Hambros who advised the Government on the sale, Brian Souter, the head of Stagecoach Holdings, and others who bought the businesses, including an official of the Royal Bank of Scotland.

The NAO report said the purchasers of Eversholt and Porterbrook were management and employee buy-out teams backed by financial institutions which aimed to realise a significant profit on investments within three to five years.