Posted on 07/23/2003 1:05:48 PM PDT by A. Pole
The main argument for privatising the railways was that stale old bureaucratic monopoly would be whipped into life by a fresh blast of capitalist competition. A good example was in Essex and East Anglia where the British Rail monopoly was replaced by several railway companies. The frantic buying and selling that led to the new franchises shoved grotesque fortunes into the pockets of a few bureaucrats, but none of the new companies worked very well, and the rail service didn't get much better. To solve the growing problems, the thrusting entrepreneurs who run the strategic rail authority (SRA), a wholly appointed quango, had a momentous idea. Why not merge the companies into one, and establish a single monopoly responsible not to parliament, like poor old British Rail, but to shareholders?
The SRA drew up lists of companies that could compete for the new franchises. When the list of three contenders for the new £3.5bn franchise for the whole of East Anglia was published the other day, the name of the most successful of the current operating companies, First Great Eastern, was omitted. On July 11, Bob Russell, the Liberal Democrat MP for Colchester, raised the matter in an adjournment debate in the Commons.
He started by denouncing the privatisation of the railways as "a disaster", and then complained about the SRA's decision to leave First Great Eastern off the shortlist for the new franchise. His speech drew a sharp reply from transport minister Tony McNulty, who denounced Russell for his "childish and tiresome rant" against privatisation.
Perhaps McNulty was forgetting the not-so-childish or tiresome attacks on rail privatisation from his own party leaders (Prescott, Dobson, Meacher, Short, Blair etc) all the way through the 1990s until New Labour was elected. McNulty gave unequivocal support to the SRA. "The authority," he trumpeted in a typical New Labour peroration "will be looking to select the bid that is affordable, deliverable and of most benefit to passengers: in other words the one that offers the best value for money."
The East Anglia shortlist has been drawn up with that noble aim in mind, and First Great Eastern had been left out for that reason. Five days later, a funny thing happened. The First Group, which own First Great Eastern that had been left off the shortlist for the franchise, announced that it was taking over GB Railways, whose subsidiary Anglia Railways was on the shortlist. Thus the firm that was left off the shortlist for the "robust" reasons cited by McNulty was back on the shortlist by the "robust" process of buying up one of the companies that had been preferred to it.
The buy-out will result, once again, in enormous sums of money going into the pockets of the shareholders in the bought company. The co-founders of GB Railways, Max Steinkopf and Michael Schabas, get £3.4m each. Mr Steinkopf was quoted as saying that his windfall "might be enough to buy a house in central London but won't be an enormous amount".
What was the robust reaction of SRA chairman Richard Bowker, a former executive of transport privatisers Stagecoach, to the news of this flouting by chequebook of his own decisions in the interests of the fare-paying public? He decided to do nothing about it. "It's a free market out there," he explained. "Mergers and acquisitions go on all the time."
The same day came news from the free market that Bowker was paid £353,000 - including a £42,000 bonus - for triumphantly achieving performance targets that were not disclosed in the SRA accounts but which are perfectly obvious to everyone who travels on the railways.
The institutions of the EU are constantly plagued by corruption, not because they are European, but because they are so far removed from the democratic process. "Brussels widens fraud probe" was the headline in the Financial Times on July 17 announcing the launch of a "widespread inquiry into secret accounts and fictitious contracts". July 17 was also the 39th birthday of Dougal Watt, a British accountant in the court of auditors that audits the accounts of the European commission. He got a letter that afternoon sacking him from his job for the shocking offence of revealing nepotism and corruption in the court.
The disciplinary board of the court had already decided that downgrading was the appropriate punishment for Watt, but the court's secretary general, Michel Herve, was not satisfied - and sacked him. One sentence in the findings of the disciplinary board beautifully summed up the prevailing EU concern for truth and justice: "The veracity or otherwise of Mr Watt's accusations was not something which the board believed it was called upon to consider".
Free market/privatization bump.
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