MG Rover folded in 2005, more than £1bn in debt
The MG Rover saga looks set to run, as Lord Mandelson has asked the Serious Fraud Office (SFO) to begin an investigation into the collapse of the Midlands car company, which happened more than four years ago.
The prospect of the SFO’s inquiry means that the results of the £16 million investigation into the failure of the MG Rover group by accountants BDO Stoy Hayward, which was finally completed last month, won’t yet be made public.
MG Rover folded in 2005, leaving around 6000 line workers jobless and causing approximately 9000 job losses related to parts and tooling suppliers.
The company owners, John Towers, Peter Beale, John Edwards and Nick Stephenson – known as the Pheonix Four – bought the company from BMW for £10, including a £427 million loan. When the company collapsed, they were accused of asset stripping, and are estimated to have drawn around £40 million in pensions and salaries during their five years in charge.
The Phoenix Four suggested that the fraud investigation was a ploy on behalf of Mandelson to delay the publication of the Stoy Hayward report, which is expected to be critical of the government’s part in the affair – especially the £6 million loan advanced to Rover while it tried to save a takeover deal with a Chinese car company.
A spokesperson for the Phoenix Four told the Financial Times: "We suspect that this is a government ruse to conceal its own failings."
The former directors also reacted angrily to the news of a possible criminal investigation, issuing a statement saying: “There has never been any suggestion of improper conduct by the directors and this was confirmed in a report by the administrators six months after they took over the running of the compan. Four years on, any suggestion another further investigation is frankly ridiculous and smacks of kicking this issue into the long grass.”
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