Network Rail boss knighted as his company is fined £14m

The penalty is the biggest ever handed out by the industry's watchdog, the Office of Rail Regulation.

Hours later, Network Rail chairman Ian McAllister was knighted at Buckingham Palace. During the disastrous overrun of engineering work at Liverpool Street and Rugby at New Year, he had stayed at home, saying he would only "get in the way" if he went into work.

Chris Bolt, chairman of the Office of Rail Regulation, said the size of the fine sent a "very clear signal" to the company, which is responsible for track maintenance. In its report, the watchdog said passengers suffered "serious and unacceptable disruption" because of the late work. Two of Britain's busiest routes, the West Coast mainline and the line to Essex and East Anglia, were effectively closed for the first week of January.

The regulator accuses Network Rail of losing control of its engineering contractors. Some operators said they only heard about the problems at Rugby and Liverpool Street through the industry grapevine, not officially from managers.

Night after night staff failed to turn up. Many who did arrive did not show "drive and urgency" to get the work done.

Network Rail will have to pay millions of pounds in compensation to Virgin Trains and One railway.

Sir Ian, a former managing director and chairman of Ford Britain, became Network Rail chairman in 2002, the year after the collapse of Railtrack. He said at the time: "I do not underestimate the challenge. My experience at Ford has shown that with the right management, investment and planning, companies can be transformed." Born in Glasgow, he is married with three sons and a daughter and lives in Essex.

Mr Bolt said the chaos was a breach of Network Rail's licence conditions - a factor taken into account when bonuses are set for directors. Critics said the fine was at the lower end of what was expected. Liberal Democrat transport spokesman Norman Baker said: "The only sensible leverage is to penalise directors through bonuses."

Last year Network Rail chief executive Iain Coucher got a £79,000 bonus and a £100,000 long-term incentive payment. Engineering director Peter Henderson and finance director Ron Henderson each got a £59,000 bonus and £75,000 incentive payment.