Network Rail to pay for fraud inquiry
By Jim Pickard, Political Correspondent
Published: December 20 2010 23:34 | Last updated: December 20 2010 23:34
Network Rail will pay for an independent inquiry into allegations of misuse of public funds that have dogged the publicly funded company for months, the Financial Times has learnt.
Rick Haythornthwaite, chairman of the company, and Gerry Doherty, head of the Transport Salaried Staffs Association rail union, will announce the inquiry within days.
Chaired by QC Antony White, the inquiry will begin at an undisclosed London location by February. In a letter to Network Rails 100 members, Mr Haythornthwaite said the inquiry would focus on allegations against Iain Coucher, former chief executive.
He told members he wanted a focused and effective gathering of hard evidence that would establish the truth around specific allegations of fraud.
Network Rail was formed in 2002 to take over the network from Railtrack and is a private company in spite of receiving £4bn a year of state funds. The group has denied a series of allegations in Private Eye magazine.
However, Mr Haythornthwaite believes he needs to close this chapter by examining any allegations thoroughly, Network Rail said.
From 2007 to 2009 an estimated 155 staff left with pay-offs after signing secrecy agreements, the group has confirmed. The TSSA has sought to find out more about these settlements, including one involving a sexual harassment case against Peter Bennett, head of human resources. It hopes that the inquiry will cover these agreements because they involve public funds.
However, Network Rail, which said an internal investigation into Mr Bennett found no case to answer, believes the allegations against him are not covered by the inquirys remit.
Allegations that will be addressed include Private Eyes claim that Mr Coucher was paid to maintain a London flat and sports car.
Network Rail said the car perk was not unusual and has since said Mr Coucher no longer receives a housing allowance.
Mr Coucher separately denied a report he had used a Coutts gold card or that he was ever paid beyond the salary and bonuses published in the annual report.
These allegations were dismissed in an internal inquiry by the chair of Network Rails audit committee and vetted by PwC.
But Network Rail has agreed to give the inquiry all the information from internal investigations as well as other requested documents.
Mr Haythornthwaite has given an absolute commitment that the company will offer full protection beyond Network Rails formal whistle-blowing procedures.
Mr White will issue a statement of full exoneration if the allegations prove to be groundless.
