The Government had been prepared to pay Railtrack shareholders £1bn to "go quietly", a High Court judge has been told. But that had not been necessary because, against the Government's expectations, the company had willingly co-operated in a petition putting it into administration.
The disclosure came in an unchallenged written witness statement by the former Rail Regulator, Tom Winsor, on the second day of a £160m compensation claim against the Government by 50,000 individual shareholders who lost out in the administration.
Mr Winsor stated that he was not shown the documentary evidence which led to the collapse of Railtrack until days after the company was put into administration. "If I had seen the papers in advance, I would certainly have intervened," he said.
He said the Government had successfully petitioned a judge to put Railtrack into administration in 2001, without telling the court that the company still had funding available to it.
Mr Winsor said that the emergency court hearing, on a Sunday night, 7 October 2001, was not told of the regulator's powers to grant Railtrack extra money. The regulator had the ability to shore up its finances by putting through an unscheduled ("interim") review that would have increased Railtrack's funding.
The Government has always argued it was forced to ask the court to put Railtrack into administration because the rail infrastructure company had become insolvent. The shareholders contend it became insolvent as a result of the Government's actions, so the testimony of the then Rail Regulator goes to the heart of the case. The shareholders claim Stephen Byers, the then Transport Secretary who took the decision to put Railtrack into administration, lied about his motives and the sequence of events. Mr Byers will take the stand later in the hearing.
Mr Winsor said he did not attend the 2001 court hearing on whether to put Railtrack into administration because: "I knew that it [the court] would be told of Railtrack's financial position - including my intact jurisdiction to do an interim access charges review." He added: "I also did not expect Railtrack to acquiesce in the [court] petition; rather I thought they would fight," Mr Winsor's testimony said. "The management of the company had thrown in the towel and the Government had got its way." When he was shown the court papers, it become apparent that the regulator's powers to give Railtrack more money were not made clear to the judge, Mr Justice Lightman.
In yesterday's hearing, Keith Rowley QC, for the shareholders, read to the court correspondence and memos of meetings involving officials and ministers that, the shareholders claim, showed there was a plot by Mr Byers for the state to take control of Railtrack. A week after becoming transport secretary in June 2001, Mr Byers told colleagues Railtrack "looks a basket case".
The case continues.