Fears that British Rail managers failed to handle the sale efficiently and did not secure the best price are confirmed in the report, the first into any aspect of BR's privatisation.
In February this year, the Independent published a leaked Department of Transport secret memo, showing how senior railway executives effectively used British Rail money to buy a maintenance and engineering depot at Eastleigh, near Southampton.
The management buy-out team, Wessex Traincare, paid pounds 7m for the depot, whose accounts showed pounds 5.4m reserves. However, the financial calculations of rival bidders may have been hindered by their not knowing about the reserve.
The National Audit Office today criticises the practice and argues that bidders for industries being privatised are buying only the assets. Any cash reserves are taxpayers' money, which ought to be returned.
It also criticises the procedures for the sell-off and argues that the original timetable was too ambitious. A target date for completion by the end of December 1994 was missed by six months, prompting complaints by some bidders.
A further problem was caused because not all potential bidders were offered the same information in relation to the businesses.
The NAO observes that there was little competition in the later stages of the process, partly because of British Rail's desire to sell the depots to a number of parties. If the sales had been better structured, BR might have been able to obtain a higher price.
The National Audit Office is also critical of the way documents relating to the sale were withheld from its investigating officers by the Department of Transport.
In one case, it notes: "Not seeing the document classified as 'Not for NAO eyes' ... did not hamper the National Audit Office's study of the sales at that stage because the National Audit Office had already asked about the position of cash balances. But most of the subject matter would have been relevant to the study."
The NAO accuses the department of "confusion" over which files had been legitimately barred from its sight under a code of practice used for some years.
An internal audit division check in 1994 found that it had 684 files classified "Not for NAO eyes". But this number was reduced to 86 under review.
Recommendations to prevent a reoccurrence were not implemented. The report states: "There remains a risk that files are not being made available to the National Audit Office."Reuse content