Private shareholders of former rail infrastructure company Railtrack are to take the Government to court, it was announced yesterday.

The 45,000-strong Railtrack Private Shareholders Action Group (RPSAG) today issued a claim in the High Court against the Government in an attempt to seek "fair value" compensation.

The shareholders are angry with the share payout agreed after the then Transport Secretary Stephen Byers took steps to put Railtrack into administration in October 2001.

Through its solicitors, RPSAG has offered the Government, via Transport Secretary Alistair Darling, the opportunity to settle out of court and has outlined the shareholders' claim against the Government for misfeasance - abuse of public power.

Effectively, the case is against Mr Byers and his administration decision. However, the case will be defended by the Department for Transport, although it is possible that Mr Byers could give evidence.

The RPSAG, which has raised about £2 million to fight the court case, said today the Government had refused to meet its representatives in order to achieve a settlement and "accordingly, RPSAG has decided that shareholders have no option but to commence legal proceedings".

RPSAG chairman Andrew Chalklen said: "We are disappointed that the Government has refused to meet us. It seems to hope that we'll just go away and be quiet.

"But we are determined to seek justice for our members. Over 45,000 people have joined the action and support continues to rise on a weekly basis. These are not large institutional shareholders but just ordinary people, many of whom took up the offer of shares by the Government in 1996. Many worked and continue to work in the rail industry."

He went on: "This is not a political argument about whether or not Railtrack or its replacement, Network Rail, should be in private or public hands. What the Government did was to manipulate events unlawfully so that it could take away shareholders' assets without paying for them. That is not how a Government should behave."

The group said its lawsuit alleged misfeasance in public office, or the misuse of official powers by Mr Byers.

Railtrack shares, which had been as high as £17, were suspended at 280p when the administration order was made.

In March 2002, the Government offered shareholders compensation of £500 million (or about £2.50 a share) as part of the arrangement which set up Railtrack's replacement company Network Rail.

Shareholders have so far received £2.00 per share in January this year and 43p per share in August. They are due to receive more shortly.

Wednesday December 03, 2003