Southeast 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 major train contract in a scandal that led to a high-profile layoff and plunged the transport group into crisis.
The Southeastern Railways concession was nationalized after owner Go-Ahead and his partner Keolis failed to repay around £25million in UK tax money in a ‘serious’ breach.
The money has now been refunded, but Go-Ahead has referred itself to the Serious Fraud Office – and finance boss Elodie Brian has resigned with immediate effect.
Off the rails: South East railways were nationalized after owner Go-Ahead and his partner Keolis failed to repay around £25million in UK taxpayers’ money in a ‘serious’ breach
The bus and train group has also postponed plans to release its annual results tomorrow.
The Department of Transport has threatened to take action against the small-cap company, which could lead to the payment of fines, and it is clear that an ongoing government investigation could reveal even more unpaid cash.
Go-Ahead’s finance boss Elodie Brian (pictured) has resigned with immediate effect
Shares of Go-Ahead fell 24.9 percent, or 255.5 pence, to 769.5 pence. The Southeastern franchise operates vital commuter routes connecting London to Kent and East Sussex.
Southeastern is run by Govia, a joint venture majority owned by Go-Ahead and the minority by French group Keolis.
Transport Secretary Grant Shapps criticized Go-Ahead, saying there was “clear, compelling and serious evidence that the Southeastern Railway has violated trust that is absolutely fundamental to the success of our railways.”
He added: ‘We accept nothing 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 rid of its other train operations. From October 17, the government’s last resort will take over the line.
Ministers insist that there will be no inconvenience to passengers and that services will continue as normal.
The undisclosed amounts relate to “variable rail access charges,” which are fees Southeastern pays to a group of private investors in exchange for using the high-speed rail tracks known as HS1.
Under the terms of the contract, the government pays Zuidoost a fee, which it passes on to HS1.
Any extra cash left over had to be returned to the tax authorities, but this was withheld. Errors have already been identified dating back to 2014.
Go-Ahead’s chairman Clare Hollingsworth apologized to the government.