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Government Compensation

John Simkin

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The present government is one of the most corrupt in our history. Currently there is a case at the High Court that should have resulted in more publicity than it has received so far.

The case involves 50,000 Railtrack shareholders and Blair’s government. Last week Stephen Byers admitted that he had lied to the House of Commons about a Treasury conspiracy called Project Ariel. The plot involved the renationalization of the British Rail infrastructure company, Railtrack. Normally in a democracy, when a government nationalizes a company, it pays shareholders compensation. Experts concluded it would cost the government £4 billion.

However, Gordon Brown decided against paying the 250,000 shareholders this money. Project Ariel involved manoeuvring Railtrack into bankruptcy. Shriti Vadera, on secondment from UBS Warburg, was placed in charge of the project. Byers sent her an email asking her to “engineer the solution through insolvency and therefore avoid compensation under the Human Rights Act”. Vadera replied he could do this but would have to make it “complex enough to lose the tabloids”.

UBS Warburg had originally made £45m floating Railtrack. It also bought 3 million shares in the company. During this period Robert Jennings, another Warburg employee was seconded to the treasury. Not surprisingly Warburg offloaded these shares before Project Ariel was launched. The major American corporations also got rid of their shares at this time. As Vadera pointed out in her email, the Americans would make a fuss if they lost out from Project Ariel.

The railway regulator, Tom Winsor, discovered what Brown/Byers were up to. He suggested that it would be fairer to allow him to restructure Railtrack’s financial situation. Vadera warned Byers that this would “rob us of a cleaner insolvency trigger” Winsor must be silenced, she said or “we are up the creek”. Byers threatened him with the sack if he spoke out on this issue. Winsor backed down but revealed all in the High Court last week.

The main idea of Project Aerial was to allow the big institutions to get out with most of their money. It was the small shareholders who mainly suffered from this strategy. Byers/Brown assumed they would not be able to raise the necessary amount, £3 million, to fight the case in the High Court. That was a miscalculation.

If they lose, and the government almost certainly will, they will have to pay out billions in compensation. This means that more billions vanishing into the great British railway catastrophe.

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