Press Report : Ex-Rover staff windfall is blocked by wrangle
Anna Blackaby, Birmingham Post, 2nd September, 2009
Hopes that former Rover workers could claim a share of the £22 million left over from the collapsed car firm’s leasing arm have been put on ice amid the ongoing wrangle over who owns the money.
Northfield MP Richard Burden called earlier this week for the leftover cash from MGR Capital, Rover’s finance and lease loan book, to find its way back to the 6,000 workers who lost their jobs when the manufacturer went bust. MGR Capital was acquired from BMW by the so-called Phoenix Four along with former Rover Chief Executive Kevin Howe in a joint venture with HBOS in 2001, with the bank also providing millions in funding for the firm.
It had been claimed that HBOS had been handed the remaining funds after the winding up last August of MGR Capital, prompting calls for the bank – now part of state-controlled Lloyds Banking Group – to either redistribute the money among former workers, put it towards regeneration in Longbridge or help the struggling West Midland automotive sector.
However, last night, HBOS said the MGR Capital money – which was boosted by a £16 million VAT refund in 2005 – was not under its control as it was still tied up in the joint venture vehicle. A Lloyds Banking Group spokesman said: “Contrary to a recent media report HBOS does not own the funds in MGR Capital. In fact the money belongs to a joint venture company owned equally by the Phoenix Four and HBOS. We are aware of the sensitivities around this issue and remain in dialogue with the Phoenix Four.”
Contrary to a recent media report HBOS does not own the funds in MGR Capital. In fact the money belongs to a joint venture company owned equally by the Phoenix Four and HBOS. We are aware of the sensitivities around this issue and remain in dialogue with the Phoenix Four.” A Lloyds Banking Group spokesman
A spokesman for the Phoenix Four said that, although HBOS had a claim on the money left over in the joint venture, the technical process of winding up the firm was still ongoing. He said: “HBOS has a claim on all the residual money in MGR Capital and this being dealt with as part of the winding up process. Every effort is being made by the Phoenix Directors to maximise the value of the employee trust fund – that is the process that is ongoing at the moment.”
Ex-Rover workers are still waiting for potential four-figure payouts from the trust fund that was established with the proceeds from the sale of Rover assets including Studley Castle.
The fund has been in limbo until the publication of the official DTI report into the activities of the Phoenix Four – John Towers, Peter Beale, Nick Stephenson and John Edwards – who have been accused of taking millions out of the car maker before it collapsed in 2005. The report is due to be released on September 11.
The publication of the report – which is expected to be highly critical of the Government – was delayed earlier this year due to a Serious Fraud Office investigation into the collapse but it has since stated that no charges would be brought against anybody at the company.
[Source: Birmingham Post]