THE STOCK market decided yesterday that this was a mishap too far for the accident-prone Jarvis. Whatever the financial merits of the group as a whole, yet another allegation about its rail division was just too much to bear.
Shares in the company fell by more than 16 per cent, wiping almost pounds 67m from its market valuation following news that Network Rail was investigating claims that the firm entered falsified documents over work supposedly undertaken between Macclesfield and Stoke-on-Trent.
It was the latest in a long line of incidents that led the company recently to abandon its rail maintenance contracts. The decision to walk away from day-to day track work was prompted by "reputational" issues, directors said.
Yesterday's news added fuel to the public relations fire. The company has been aware for some time that its exposure to the rail industry was something of a hostage to fortune. That view tragically hit home on 10 May last year when the fourth carriage of four-car express train on its way from London derailed just outside Potters Bar, "flew through the air" and ended up straddling two platforms at the station. The disaster, in which seven people lost their lives, ushered in a period in which the headlines about Jarvis have been unremittingly negative. Rail inspectors blamed management failure for the Potters Bar accident, although the company insists - amid widespread scepticism - that sabotage could have been to blame.
More recently The Independent revealed serious breaches of safety regulations at Milton Keynes. After work to renew the track at the Buckinghamshire station on 20 August, Jarvis left the line in such a state that debris blew on to the platform as a 100mph express passed, injuring two passengers. On the same day in Retford, Nottinghamshire, a Network Rail log disclosed that Jarvis failed to contact a signal box to halt trains after discovering a broken rail.
The incident that put paid to Jarvis's interests in rail maintenance, however, came on 16 October at King's Cross station in London. An express leaving the station with 150 people on board came off the racks because a 5ft length of rail was missing after overnight points repairs by the company. The incident overshadowed the official opening by the Prime Minister of Britain's first high- speed rail link from the Channel Tunnel to North West Kent.
In an attempt to reduce its dependence on the sector, Jarvis entered talks last year about a merger with the support services group W S Atkins. The plan would have been to hive off the Jarvis rail operations or sell them altogether. The merger talks collapsed after a profit warning from W S Atkins hit its share price. Then earlier this year, the Jarvis chairman Duncan McGowan died and Paris Moayedi, its founder and chief executive stepped up to the role, in defiance of good corporate governance standards.
A former Jarvis executive said, in his opinion: "Paris is an inspired businessman but he is also a dictator. He runs the business like his own personal fiefdom, not a publicly-quoted company. Moving him up to the role of chairman was exactly what the company should not have done. Jarvis needs to find a way of separating him from the day-to-day running of the business."
The executive …