Downer facing class action over Waratah train project

Downer Group executives have been subpoenaed to appear in a shareholder class action in connection with the writedown of its problem-plagued Waratah train project.

As the Australian reports, those to be questioned under oath include CEO Grant Fenn, former CEO Geoff Knox, former chairman Peter Jollie, who is now a director of biotech Clinical Genomics, and directors Annabelle Chaplain and Michael Harding.

The class action in the Victorian Supreme Court, is on behalf of investors who bought Downer stock after January 12, 2010 and held it until the company wrote down the project by $190 million on June 1 2010. The case will be run by entrepreneurial lawyer Mark Elliott.

The $3.6 billion Waratah train project was beset by problems.

The cars of the trains were built in China by Changchun Railway Vehicles Co Ltd (CRC), while the driver's and guard's cabins were manufactured at Cardiff in Newcastle by Downer EDI.

Problems that led to the writedown included poor production rate, quality and safety issues, software integration problems and general cost escalation issues. They resulted in the first of the 78 trains being accepted for commissioning more than 15 months late.

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