Higher bid for BR freight was rejected Attack on cheap sale of BR freight to US firm

The Government has been accused of favouring a US company to buy three of BR's freight concerns by rejecting a higher bid from a British firm.

Wisconsin Central, which has become the preferred bidder for the three businesses, is to pay pounds 225m while another bid for pounds 240m was rejected by the Government because it was so keen to sell the rail businesses to Wisconsin.

The Government is grateful to Wisconsin for having bought the loss-making Res mail train business last month - expected to lose pounds 10m this year - and was anxious to ensure that the US company won the race for the three profitable railfreight companies, Loadhaul, Mainline and Transrail.

The announcement of the sale is due to be made in two weeks' time, but it emerged earlier this month that Wisconsin is the preferred bidder for the three businesses.

However, another bidder, a management buy-out team from Mainline Freight, one of the three freight companies which linked up with Candover, the City finance firm, and Associated British Ports, put in a bid for pounds 240m.

Mainline was so angered by the refusal of the Government to accept its bid that the company considered seeking a judicial review, accusing the Government of favouring Wisconsin, but refrained because it feared repercussions within the industry.

Mainline's bid was submitted late after the two initial preferred bids, from Wisconsin and Loadhaul, another of the freight companies, had been referred back for reconsideration.

A rail industry source said: "Mainline thought that if Wisconsin and Loadhaul were being allowed to bid again, then their bid should be reconsidered and they resubmitted a new offer."

However, despite British Rail wanting it to be considered by the Government, ministers threw it out."

In an interview to be published tomorrow in Rail magazine, Ed Burkhardt, the head of Wisconsin, admits he was not interested in the British Rail freight business until he was approached in1994 in Chicago by Brian Mawhinney, the then Secretary of State for Transport.

Mr Burkhardt says that Dr Mawhinney told him: "You should still jump into that water, and be a bidder. Maybe you'll get what will turn out to be a bargain."

Dr Mawhinney admitted to Mr Burkhardt that ministers had made mistakes in drawing up the privatisation scheme but said, according to Mr Burkhardt, that "it will all come out in the price, won't it".

Mr Burkhardt admits in the interview that considerable numbers of jobs are likely to be lost.

Out of 8,500 employed by the three businesses, it is thought that more than 3,500 jobs will go and Mr Burkhardt says that compulsory redundancies will be necessary.

Labour last night said the sale should be stopped. Brian Wilson, Labour's transport spokesman, said: "All these bids should be subjected to investigation by the Public Accounts Committee. These sales are politically driven without an iota of regard to the taxpayers' interests."

The sale has already been criticised by opponents of rail privatisation as wasteful because the Government originally created the three railfreight companies in 1994 to stimulate competition in the industry, but then made it clear that the three would be sold together.

Mr Wilson said: "Millions of pounds were spent on creating the three companies and that has now been wasted."