3 We collected evidence from a variety of sources to enable us to answer the questions set out above. We found that the Department's management team which had been in post during our investigations for our previous report (published in 2001) had moved on. The Department's internal knowledge of the project and the backgrounds to key decisions had inevitably been reduced and while we were able to obtain the information we required, this was sometimes not without difficulty. The information sources included:
■ An extensive review of documentation held by the Department. In particular we examined correspondence, minutes, reports and internal papers relating to the financing of Section 2 of the Link, construction progress with Section 1, the negotiation of the Cost Overrun Protection Programme for Section 2, management and performance of Eurostar UK and the Cost Benefit Appraisal of Section 2. This review allowed us to understand the factors the Department took into account when making decisions, how elements of the deal were negotiated, and how the Department monitored progress and risks;
■ Semi-structured interviews with key members of staff within the Department and its financial, legal and technical advisers. We also conducted semi-structured interviews with personnel at LCR, Union Railways (both construction and operations activities), Rail Link Engineering, Network Rail (CTRL) Limited and Eurostar UK. Figure 21 overleaf gives further details about the interviews;
21 | Who we interviewed |
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Interviewees | Issues examined | |
Department for Transport and its advisers | ||
The Department's project team | All aspects of the project | |
The Department's Rail economists | ||
Citigroup (financial advisers) | Financing of Section 2, Cost Overrun Protection Programme, Projected public sector support through the access charge loan facility | |
Mott Parsons Gibb (technical advisers) | Construction of Sections 1 and 2 | |
Cameron McKenna (legal advisers) | ||
London & Continental Railways, its subsidiaries and other key parties involved in: the construction of the Link; its operation; and the operation of Eurostar services. | ||
LCR's Management Board | Construction, operation of Section 1, financing, Eurostar performance | |
Construction of Sections 1 and 2, operation of Section 1 | ||
Construction of Sections 1 and 2, health and safety | ||
Network Rail (CTRL) Ltd | Operation of Section 1 | |
Eurostar UK and ICRR | Eurostar operations | |
Third parties |
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Health & Safety Executive Constuction Division | Health and safety | |
Kent County Council | Parliamentary undertakings, community relations | |
Complaints Commissioner | Parliamentary undertakings, community relations | |
■ Validation of the Department's Cost Benefit Appraisal for Section 2. We examined the assumptions made, and the inputs and methodologies used by the Department; and
■ An investigation of the project's funding structure by RBC Capital Markets. We commissioned RBC Capital Markets to examine whether the funding structure is optimal, whether the funding was achieved at prices consistent with those available in the market and whether LCR had invested the proceeds of bond issues prudently. Further details of RBC Capital Markets' approach to the assignment are at Appendix 3.