Southeastern rail scandal sends Go-Ahead shares crashing 25% as finance boss is forced to resign
Go-Ahead lost a quarter of its value yesterday after it was stripped of a key train contract in a scandal that triggered a high profile resignation and plunged the transport group into crisis.
The Southeastern railways franchise was nationalised after it emerged owner Go-Ahead and its partner Keolis failed to repay around £25million of UK taxpayer funds in a ‘serious’ breach.
The cash has now been repaid but Go-Ahead has referred itself to the Serious Fraud Office – and its finance boss Elodie Brian stepped down with immediate effect.
Off the rails: Southeastern railways was nationalised after it emerged owner Go-Ahead and its partner Keolis failed to repay around £25m of UK taxpayer funds in a ‘serious’ breach
The bus and rail group has also delayed plans to release its full-year results which were due out tomorrow.
The Department for Transport has threatened to take action against the small-cap company, which could include paying fines, and it is understood that an ongoing Government investigation could uncover even more unpaid cash.
Go-Ahead’s finance boss Elodie Brian (pictured) stepped down with immediate effect
Go-Ahead’s shares tumbled 24.9 per cent, or 255.5p, to 769.5p. The Southeastern franchise runs vital commuter routes connecting London with Kent and East Sussex.
Southeastern is run by Govia, a joint venture that is majority owned by Go-Ahead and minority owned by French group Keolis.
Transport Secretary Grant Shapps slammed Go-Ahead, saying there was ‘clear, compelling and serious evidence that Southeastern railway has breached the trust that is absolutely fundamental to the success of our railways’.
He added: ‘We won’t accept anything less from the private sector than a total commitment to their passengers, and transparency with taxpayers.’
Unions have called for a wider fraud investigation and for Go-Ahead to be stripped of its other train work. From October 17 the Government’s operator of last resort will take over the line.
Ministers insist there will be no disruption for passengers and that services will keep running as normal.
The undeclared sums relate to ‘variable track access charges’, which are fees that Southeastern pays to a group of private investors in return for using the high-speed tracks known as HS1.
Under the terms of the contract, the Government pays Southeastern a fee, which it passes on to HS1.
Any extra cash left over was meant to be returned to the taxman – but this was withheld. Errors have been identified dating back as far as 2014.
Go-Ahead’s chairman Clare Hollingsworth apologised to the Government.