CITY AND SUBURBAN
Sir Alastair gets himself out of a hole it wouldn't have happened without him
CHR ISTOPH ER FILDES
H is last week at Eurotunnel finds Sir Alastair Morton in Tokyo. He is saying say- onara to the bankers who poured so many trillions of yen into the hole he dug, and is cheering them up with a progress report. `The thing is on a roll now,' he says. He has come a long way from the Screen on Isling- ton Green, where it all started.
In those days — it was ten years ago he was sorting out Guinness Mahon, the merchant bank, Sir Kit McMahon was chairman of the Midland, and the McMa- hons and the Mortons gave themselves an evening at the cinema. They cannot now remember what the film was (Twenty Thou- sand Leagues Under the Sea?) but over kitchen supper afterward Sir Kit asked: `What do you think about this Channel tun- nel, then?' He got a straight answer: 'It's not going to happen, is it?' The next morn- ing brought a summons to the Bank of England. 'Alastair,' the Governor mur- mured, 'there's something we want you to do for us. . . . '
When Eurotunnel's chairman-designate recovered from the shock, he remembered that his new company banked with the Midland, or rather that the Midland banked with Eurotunnel. He rang up Sir Kit, called him a rude name and told him to come on the board.
To City eyes Eurotunnel then looked like a non-starter. Time was running out on it. The British and French governments had signed a treaty which committed them to not putting any money up. For this £6 bil- lion project barely £200 million of capital had been scraped together, and the two biggest shareholders were a brace of Japan- ese stockbrokers who had hoped in this way to butter up the Governor. The departing chairman was a genial chap in a retirement job. Sir Alastair changed all that.
`Most of the problems', he now says, `were built in at the beginning.' This project had been brought forward by a team of ten contractors and five banks and they had, quite understandably, set it up to suit them. It would, they thought, keep their men and money gainfully employed for years. It was not designed to suit the owners, which is why so few investors had volunteered for that job. 'I used to call it the Polo mint,' Sir Alastair recalls. 'You had a triangle banks, contractors, governments — with a gap in the middle. Later the governments brought the railways in as an appendage.' In the centre of the triangle, or the hole in the Polo mint, Sir Alastair popped up.
He and his co-chairman, Andre Benard, took on every corner. They made new deals with the banks and the railways. They put the contractors on to bonuses and penal- ties, and abolished a management structure which allowed for independent digging from both ends and might have given them two tunnels. Then they went back and raised their £6 billion. In the middle of their efforts the world's stock markets col- lapsed. Perfect timing, they pretended we can build the tunnel in the slump that must be coming, and operate it in the boom that follows. It was not as simple as that.
The tunnelling crashed onward, to the sound of thumping, crashing, bumping and boring. Detonations undersea were echoed by explosions on dry land, where Sir Alas- tair was at war with the contractors. One of them protested that a free fight was not needed for every decision. Finally the day came when the royal Rolls-Royce was con- veyed through the completed tunnel with its owner in the back seat. That, to a Victo- rian engineer, would have been the all-clear to start running the trains that would pay for the digging. No such luck for Sir Alas- tair. There were no trains.
By now Eurotunnel was caught in the mill of compound interest. The first projec- tions were that towards the end of this decade, the tunnel would have earned enough money to pay the banks off. Then the owners would have a clear run until the concession ran out. That date drifted off into the next millennium, as the interest piled up, growing faster that the earnings could.
`We had a very harsh time of it for 18 months,' he says. The rolling-stock wasn't ready or wasn't working properly. There was never-ending difficulty in getting highly complex stock together with the clever stuff of signalling and communications. There's 20 kilometers of wiring in each wagon.' The safety regulators, as their habit is, changed the rules in the middle of the game: 'The immense emphasis on safety made commis- sioning doubly difficult.' At one point the company's most hopeful assets seemed to be its lawsuits — with the train-builders, the railways, the governments, the Euro- pean Commission. . . .
Still fighting the owners' battle, Sir Alas- tair had in the end to make the best deal he could with the banks. When that was done he could stand down. He took that deci- sion, so he now says, two months ago on a summer afternoon at Folkestone. Every- thing was going smoothly, as 60,000 people and 30,000 tons of freight came through the tunnel in one day — 10,000 cars, 40 Eurostar trains . . . . But for the interest bill the business would be in profit: 'I could go!'
He plans a pause for regrouping and then, in the new year, a pause for travel, with gxtensive plans that seem to me a little short on trains. Then his impatience will drive him back to work. He might by then find work under a government more sym- pathetic to his thinking. He is, as I said when he started, a big-project man, a believer in making things happen and an intervener. The mistake with Eurotunnel, he now says, was to treat it as a showcase of what the private sector could do. Since then we have learned more about marrying pri- vate management to public projects. A little more forward thinking — planning, even might have caught the mistakes that were built into Eurotunnel.
One of his (French) contractors said that the French worked wonderfully to a plan, but if the plan collapsed, the British were the world's best at sorting out the chaos. In the event, that was his own gift to Eurotun- nel. Combative, difficult, committed, Sir Alastair was just the man for it. Channel tunnels have been proposed and even start- ed before now, and none of then have got beyond low water mark at Dover. He drove his through and it will be his monument.
He quotes Brunel's prescient words to the surveyor who was laying out Prince Albert's military railway, straight as a plumbline from Tonbridge to Ashford: `Survey it well, my friend, for one day it will link my railway '— the Great Western 'with the Channel tunnel which must be built.' As Daniel Gooch, his right-hand man, was to say of Brunel: 'The commercial world thought him extravagant, but although he was so, great things are not done by those who sit down and count the cost of every thought and act.'
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