A close look at the record does not support that. A key book is "The Wreck of the Penn Central". The authors, two newspaper reporters, took a muckraking approach and clearly felt the bankruptcy was totally management's fault. However, they at least included details of other circumstances that were actually the real reasons for bankruptcy. (The authors chose to emphasize different issues).
Note that:
-- The key PC personnel didn't get rich. The head guy, Saunders, lost a lot of money and prestige.
-- The bankruptcy was aggresively investigated and no criminal wrongdoing was found.
-- As a result of the bankruptcy laws were changed to eliminate the problems the PC had. Passenger service, both local and long distance, was transferred to govt agencies. (PC lost a tremendous amount of money on psgr service). Abandonments of unprofitable segments and better rate making was deregulated by the Staggers Act.
-- Keep in mind there is a big difference between bad decisions and criminal decisions by management. Bad decisions is not "looting".
-- Unlike modern corporations where assets are mostly paper and the guts are hidden, the physical plant of the Penn Central was wide open for everyone to see, and it was obvious it was lousy. Everybody was stuck on the legends of the Pennsylvania Railroad and New York Central and ignored the reality that both railroads were in terrible physical condition and were losing money at the time of the merger. It amazes me how Wall Street ignores--good and bad--the actual condition of a company. (A friend told me a utility was undervalued by Wall Street and to buy it. He was right, the stock doubled soon after I bought it.
Too bad I only bought a little so even though I doubled my money my actual gain wasn't that much.)
As an aside, the Pennsyslvania Railroad had a sophisticated telephone system, with its own toll test switchboards. I believe railroads were one of the types that were allowed to own their own telephone gear and maintain it themselves and still connect to the Bell System. After Amtrak and Conrail came in the system was replaced with modern stuff. Tiny modern brown 2554 Touch Tone wall sets replaced big old style phones and Teletype 40 series CRTs replaced the old green impact printers. Amtrak used Control Data computers and CRT screens.
[TELECOM Digest Editor's Note: Baltimore & Ohio and Santa Fe Railroads each had their own telephone network as well. PAT]