James may take management role at Railtrack's new owners

David James, the company doctor, is poised to take a management role at Network Rail, the not-for-profit company which is taking over the business formerly known as Railtrack.

Mr James whose long career in company rescues most recently took in Wembley Stadium and the Millennium Dome, has been behind Swiftrail, a consortium which has been putting together a bid to buy Railtrack. This would embarrass Whitehall and Stephen Byers, the Transport Secretary, as it would top the government's own bid.

Swiftrail was formed because its members were convinced they could offer Railtrack's long-suffering shareholders a better deal than the government, after Mr Byers put Railtrack into administration last October. In March Network Rail said it would make a bid worth £1.3bn to buy Railtrack out of administration. Those close to the situation were unable for comment yesterday, but Mr James and his consortium met the administrators and the Strategic Rail Authority last week to decide whether to proceed with a bid. It is understood that the prospect of Mr James working for Network Rail was discussed.

The government appears to want to buy off Swiftrail. WestLB, the German banking group and Swiftrail's main financial backer, has been offered the prospect of becoming lead arranger for a £9bn bond issue to refinance Network Rail. Such an issue will generate millions of pounds in arrangement fees.

There is little doubt the government would like to have Mr James on their side. Apart from his proven expertise, he recently condemned Mr Byers's attempts to save the ailing rail network as a "fragmented disaster" that could damage Labour's entire fiscal policy for the remainder of its term in Parliament.

Trading in Railtrack shares was suspended at 280p last October, but the Network Rail offer is worth about 250p.