Following the release of The Go-Ahead Group’s accounts last week, the company’s alleged fraud on Southeastern has reached a new level of scandal: unprecedented in the history of rail privatisation.
The alleged fraud is over twice the scale and duration than originally thought – totalling at least £51.3 million, with discrepancies going back to the foundation of Southeastern in 2006. At the time of its renationalisation in October 2021, the Department for Transport had believed the duration to be seven years; totalling £25 million between 2014-2019 (plus active deceit when further concealing this activity between 2020 and 2021).
Having now returned most of this money to the taxpayer, The Go-Ahead Group has put aside a further £30 million for an expected fine from the government. However, by the Group’s own admission, this situation is completely unprecedented and under the powers of the Railways Act 1993, the government has the power to impose a much higher penalty. A further amount of £21.3 million is subject to an ongoing ‘commercial dispute’ with the DfT, but there is no transparency about whether this is also suspected to be fraudulent.
Ultimately, it is impossible to confirm whether these figures reflect the true extent of the alleged malpractice. A fraud investigation concluded in December 2021, but has been subject to a severe conflict of interest as it was run by the owning groups themselves. According to statements from Go-Ahead’s Chief Financial Officer last week, the company “doesn’t know” whether they’ve been investigated by the Serious Fraud Office, as originally reported in September.
Not only has the government allowed Go-Ahead to run their own fraud investigation, they are now helping the company cover up its results. Earlier this month, we revealed through Freedom of Information requests that the DfT does not intend to release the report of this investigation, nor even its ‘terms and scope’. We are now challenging their position in our legal correspondence, claiming an ‘obvious, profound and unavoidable conflict of interest’ throughout the inquiry. From what we know so far, the allegations constitute at minimum a fifteen-year knowing breach of contract – and at worst a criminal fraud.
Govia Limited: a history of failure and deceit
In January 2022, we launched a joint legal campaign with Bring Back British Rail, to bring Thameslink, Southern and Great Northern services into public ownership when Govia’s contract expires at the end of March. We believe there is a strong legal argument that evidence of fraud would taint the entirety of Govia’s operations, meaning any decision by the government to award the company with a new six-year contract would be challengeable in court.
In response to our legal case, The Go-Ahead Group has said that the issues on Southeastern were “contained within a separate company – London and Southeastern Railway – and had nothing whatsoever to do with Govia Thameslink Railway.” Their claim is easily disproven.
Govia Limited is owned by The Go-Ahead Group (65%) and Keolis (35%). All of Govia’s directors are also on the boards of its subsidiaries, London and South Eastern Railway (LSER) and Govia Thameslink Railway (GTR). As majority owner, The Go-Ahead Group’s Chief Executive and Chief Financial Officers hold directorship roles across all four companies.
The following table shows the directorship of LSER, GTR and Govia Ltd at the time of the discovery of the alleged fraud in March 2020. CEO David Brown and CFO Elodie Brian have since been replaced by Christian Schreyer and Gordon Boyd, respectively.
Govia Thameslink Railway has held the contract for Britain’s biggest rail franchise, TSGN, since 2014. Its record is a litany of failure, including the ‘Southern Rail Crisis’ of 2016, when it cancelled almost 60,000 trains within a year. In 2018, GTR was found to be one of the main parties responsible for the 2018 timetable collapse, which caused chaos all over the UK. Since 2021, the UK’s ‘least trusted train company’ has been subject to two class action lawsuits, alleging deceit in relation to ticketing and zoning issues. Despite having the most catastrophic history of any rail franchise in the UK, the DfT has continually rewarded GTR for its failures.
Due to life-support public subsidy for GTR and its bus operations, The Go-Ahead Group has reported increased operating profits of £115.5 million for the year; boasting that 90% of its revenue is secured through public contracts. Christian Schreyer, CEO, says The Go-Ahead Group is ‘in good shape’, with ‘constructive talks and collaborative negotiations’ on the new GTR contract currently underway.
URGENT: the GTR contract must be stopped
Since the release of The Go-Ahead Group’s 2021 accounts, the Southeastern fraud scandal has doubled in scale. Pressure on the government is now at its peak, with further decisions on the financial penalty expected any day, and a decision on the GTR contract due before the end of March.
All signs suggest the Department for Transport is attempting to cover up this scandal, and the situation could not be more urgent. Please help us by writing to your MP and the Transport Minister Grant Shapps at email@example.com – to condemn the cover-up, and demand that Thameslink, Southern and Great Northern is brought into public ownership at the end of March.
Our legal campaign with Bring Back British Rail is now well underway, funded entirely by passenger donations. Please donate if you can.