Railtrack cash hopes boosted

THE departure of Stephen Byers has increased confidence among Railtrack investors that they can successfully press the Government to grant them compensation over the former Transport Secretary's decision to put the rail network operator into administration nearly eight months ago.

The Railtrack Private Shareholders Action Group is this week expected to publish legal opinion forming the basis of a court case against the Government and which accuses Byers of misfeasance - or misuse of public office - and of breaching human rights law in the way he pulled the plug on Railtrack and its investors.

Byers' departure is seen by some shareholders as a renewed opportunity to press their case as Byers' unequivocal ruling-out of compensation was seen as the major block to their claim.

David Greene of the action group said: 'Our position has not altered. Mr Byers will remain the primary witness in the claim against the Government and will have to account for his and his Government's actions. In his resignation statement Mr Byers admitted making mistakes. In the shareholders' view, the action taken against them was not a mistake but premeditated re-nationalisation.'

Their case against Byers is strengthened by his gaffe at a fringe meeting of the Labour Party conference last year when he admitted a straightforward re-nationalisation of Railtrack would be too expensive. Byers said the Government had taken legal advice which argued that any compensation to shareholders in such an event could not be offered at the level of Railtrack's depressed share rating but rather at a three-year average price. That, admitted Byers, would cost up to £8bn of taxpayers' money. Railtrack shares were suspended four days later at 280p.

A takeover plan last month from Byers' specially-constructed entity Network Rail, along with other residual Railtrack assets, could result in shareholders being offered about 250p a share.