Dunedin South Labour MP Clare Curran has asked Parliament's public sector watchdog to urgently investigate KiwiRail's buying decisions which have led to the sale of part of its Dunedin workshops and closure of the rest.
Ninety of 115 workers lost their jobs at the 130-year-old Hillside workshops earlier this month when KiwiRail sold the casting shop to Australian company Bradken.
Kiwirail said there was not enough work to keep the workshops going, despite buying locomotives and 500 wagons from overseas in recent years.
Chairman John Spencer has said the decision was entirely the board's and there was no Government pressure. The Government has also rejected interference claims.
On Monday, the same day workers protested Hillside's closure at the TranzAlpine's 25th birthday celebrations in Christchurch, Ms Curran said she had written to the Auditor-General, seeking an investigation into the procurement process for wagons.
She says she does not believe claims the Government did not instruct KiwiRail to go for the lowest-cost bidder or run down the Hillside workshops.
She also says a September meeting between management and the mechanical division was told a competitive tender to build 100 wagons was knocked back by KiwiRail's board.
The Rail and Maritime Transport Union John Kerr, who attended that meeting, told the Otago Daily Times a study was presented looking at producing 100 flat-deck wagons a year from Hillside.
But the meeting was told the decision to can the proposal was made at board level and with the shareholder - the Government.
"We always believed the board and Government wanted to shut the workshops down but we never heard it expressed so clearly before."
Ms Curran said the information showed KiwiRail and its shareholding ministers, Bill English and Tony Ryall, had breached the social responsibility clause of the State Owned Enterprises Act.