“The federal government and DB have missed the core objectives of the railway reform initiated 25 years ago,” says Mr Kay Scheller, president of the Federal Court of Auditors. “Especially in relation to road, there is hardly any more traffic on the rails. In freight transport, the proportion of rail traffic is even lower than in 1990.” The court says when DB was formed in 1990 following the merger of the two separate state-owned railways in East Germany and West Germany, it was debt free. Despite continuing government support, DB’s long-term debt is now almost €20bn and rising, and DB is not earning enough to fund capital investment in the next few years. The court says the federal government is partly to blame for the current situation as it has largely left DB to regulate itself. “As the sole owner, the federal government has made a significant contribution to putting rail transport and DB in a difficult situation through its own decisions and omissions,” says the court. “The framework conditions set by the various modes of transport make it difficult for the railways to compete.” “It is incomprehensible that even 10 years after DB's cancelled IPO, the federal government has no concept of what kind of railway and how much railway it wants,” Scheller says. The court points out that the federal government has allowed DB to pursue an international expansion policy so that DB is now active in around 140 countries. “73% of the subsidiaries of the DB Group are domiciled abroad - 513 out of 700 companies,” says the court. “Outside Germany, the DB Group generates more than 43% of its sales - €18.6bn out of €42.7bn. “DB has not yet used internationally-generated profits to finance railways in Germany, but has reinvested them internationally. At the same time, the economic risks of DB’s global business may be detrimental to the railways in Germany or the federal government.” The court wants the government to sell unnecessary parts of the business including DB’s two largest subsidiaries, Arriva and Schenker. The court says this would raise “several billion euros” which DB could use to fund investment. It also wants the government to study different organisation models for DB including separating train operation from infrastructure. “The current model of the integrated DB Group has to be questioned,” the court says. “This includes answering the business policy question as to which of the two goals, profit orientation or public service obligations, should primarily be pursued by the federal railways in the future.” The court also wants the government to define its objectives for DB, and to develop a national intermodal strategy.