Forum Archive Index - May 2003

[Robin Benson <rob@hammerheadmedia.co.uk>]

When the rail network in the UK was privatised, the company who was 
handed the monopoly, and a healthy annual handout from the government, 
was called Railtrack. Having let the rail network become completely run 
down since its formation, while paying sizable dividends to 
shareholders and even fatter salaries to the fat cats running the show. 
Following a few high-profile train crashes which highlighted not only 
the poor state of the infrastructure but also a disregard for safety 
[1], Railtrack attempted to extort even more from the government. They 
basically said "if you don't give us more money, we might collapse, and 
that will be hell for you, us, and the voting public". Steven Byers, 
the then minister of transport, called their bluff and basically put 
Railtrack into receivership. Railtrack had made an excellent job of 
complete mismanagement of the network as well as letting it fall into 
dangerously poor condition, which is now costing a huge amount of money 
to get back up to speed.

Amusingly, a day before the government put Railtrack into 
administration, in London, an sports celebrity was apparently running a 
seminar about motivation, success, taking control of one's life, taking 
risk, etc.. During the seminar he pulled out his mobile, called his 
broker and had them buy £30k worth of shares, on the spot, to 
illustrate decisiveness, strength and risk-taking. The next day, 
Railtrack's newest shareholder, a very red-faced sports celebrity, was 
busy giving interviews condemning the government's actions, pointing to 
all the poor shareholders who had bought shares in good faith. I'm sure 
you get the picture ...

So Railtrack had a poison pill: mum and dad shareholders. Of course, 
one could be forgiven for seeing this as part of the Railtrack 
strategy. Since the UK government always has one eye on public opinion, 
and under extreme pressure from the City, they let the side down and 
basically bought out the Railtrack shareholders on very good terms 
where they need not have paid a penny. Then, the press got bored with 
the Railtrack story and moved on/were told to move on. The shareholders 
ran with their cash and stopped being a thorn in the government's side. 
The City calmed their criticism down and people's focus moved to the 
next story. Railtrack shareholders had it both ways. For years they 
sucked the network dry and took the taxpayer for a ride, literally and 
financially, knowing full well that if it came to the crunch, there was 
a good chance that the government would buckle and cave-in as it 
couldn't be seen to be undermining mum and dad.

Robin

[1] One of the more recent crashes was shown to have been caused by 
faulty points (points guide trains from one track to another). 
Railtrack had been using a number of well-connected high-profile 
engineering contractors to do the maintenance, and, surprise surprise, 
the paperwork was lacking to the extent that the identity of the 
individuals involved in maintaining the points in question, either the 
same day or the day before, remains unknown.

On Monday, May 19, 2003, at 02:25 Europe/London, 
tennyson@caverock.net.nz wrote:

> Another way would be to let Tranzrail go bankrupt and nationalize it by
> the method of the government buying shares off the receiver.    This
> way means existing shareholders get nothing.

----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/