Britain's leading financial watchdog has launched an inquiry into Railtrack's conduct in the weeks leading up to its collapse, Parliament was told yesterday.
Sir Howard Davies, chairman of the Financial Services Authority, told MPs he had asked the company to supply a chronology of events after claims it had misled its shareholders about its cash crisis.
But Sir Howard made clear that he had no authority to investigate the Government's role in the affair and revealed that only the Department for Trade and Industry could do so.
In response to his remarks, the Tories wrote to Patricia Hewitt, the Trade and Industry Secretary, last night to urge an investigation into the role of the Department for Transport in Railtrack's demise.
The move came after Stephen Byers, the Transport Secretary, claimed that the Government's plans to attract private cash to the railways would not be hit by his decision to put it into administration.
In evidence to the Commons Treasury Select Committee yesterday, Sir Howard said there was "sufficient public concern" to justify asking Railtrack to disclose what it knew about its financial position and when.
If the FSA felt that there was any suggestion that stock market rules on disclosure to shareholders had been breached, a full investigation would be launched, he said.
Mr Byers suggested on Monday that Railtrack had known about its precarious position as early as July and implied that the firm failed to reveal this.
But even if directors were found to have wrongly kept back information they could not be fined, only subjected to private and public censure. The FSA will only take on new powers to impose fines after 1 December and they will not be retrospective.
Equally, it was only after that date that the watchdog would take over from the DTI the role of regulation of Government departments and their involvement in any market manipulation, Sir Howard added.
Michael Howard, the shadow Chancellor, said he was "surprised" that it was the DTI's job to investigate. "It is extraordinary that the Government should act as judge and jury on its own actions. Nevertheless, if Sir Howard is right, there is a clear onus on the DTI to launch such an inquiry. We will be writing to Patricia Hewitt, asking her to act accordingly."Reuse content