Investors pursue compensation: Courts to investigate Lane Cove Tunnel case. Photo: Steven Siewert
The dark art of forecasting how many cars are expected to use toll roads will come under examination in a 10-week trial starting on Monday, as investors pursue compensation over the disastrous Lane Cove Tunnel project.
The Lane Cove Tunnel – which charges motorists $3.10 a trip – was completed in 2009 and almost immediately went bankrupt, to the cost of its original investors.
The tunnel was bought out by another investor, Transurban, but litigation over the original deal to build the tunnel in 2002 will only now face court, after claims and cross-claims that have tied in some of the biggest players in the industry.
In the trial, before Justice Michael Pembroke of the NSW Supreme Court, two investment funds managed by AMP are suing the traffic forecasters that helped put together the original deal to build the tunnel.
The forecasters – Parsons Brinkerhoff and Booz Allen, since purchased by PricewaterhouseCoopers – devised traffic estimates that turned out to be more than double the number of cars using the tunnel.
Both have since gone on to win numerous lucrative consultancy positions with state and federal governments; Parsons Brinkerhoff is advising on the WestConnex motorway and Booz Allen, which at one stage was renamed Booz and Co, has won numerous large contracts from state Coalition governments.
The two funds – the AMP Infrastructure Equity Fund and the Retail Employees Superannuation Fund – are suing over $144 million in damages; $80 million in initial investments and $64 million in interest.
Before the trial Justice Pembroke ordered four international experts to hold a one-week conclave in London to try and narrow the technical issues about traffic forecasting that will be debated.
Since the failure of the Lane Cove tunnel project, governments have attempted to create a new financial model for building toll roads. Under the plan for the WestConnex motorway, for instance, the NSW government will fund the construction of the first part of the motorway and then sell it to a private investor once it is known how many cars will use it.
Booz Allen has also countersued investment bank ABN AMRO – since purchased by RBS – over its role in the project.