Press Report : MG Rover collapse investigated by Serious Fraud Office
The Serious Fraud Office is to investigate the collapse of MG Rover, the Midlands carmaker, after a long-running Government inquiry concluded there were grounds for a criminal investigation.
The involvement of the SFO, expected to be confirmed by Lord Mandelson, the Business Secretary, in a statement to Parliament tomorrow, is the latest twist in one of the biggest corporate failures of recent years.
The Birmingham-based group, which contained much of the former British Leyland’s operations, was one of Britain’s largest private companies when it crashed into administration four years ago. About 6,000 Rover staff were thrown out of work, and an estimated 9,000 other workers at suppliers and dealers lost their jobs.
In the wake of the collapse the owners, the so-called Phoenix Four — businessmen John Towers, Peter Beale, John Edwards and Nick Stephenson — were accused of asset-stripping. They bought the company from BMW for £10 in 2000, a price that included a £427m loan from the German car group and a stock of thousands of unsold cars. In the following years they took out an estimated £40m in salaries, pensions and other assets.
Ministers immediately set up an inquiry, appointing Gervase MacGregor, a senior partner at BDO Stoy Hayward, an accountancy firm, and Guy Newey QC, an insolvency law specialist. While a report was expected within a year, the investigation dragged on for nearly four years and cost £16m. It was delivered to Lord Mandelson three weeks ago.
If the Government has been so concerned to get to the heart of the matter why has it flatly refused more than 30 requests under the Freedom of Information Act which would have revealed correspondence and documents the directors believe would have shed some light on the Government’s role in the affair?” The former Directors of MG Rover Group Limited
Ministers’ decision to call in the SFO, however, means it is unlikely to be published in the near future. Department for Business investigations are normally withheld from publication if there is a criminal investigation under way.
Last night senior motor industry executives familiar with the Rover collapse said the Government might not want the report made public, citing ministers’ public support for the Phoenix Four when they bought the company, and the Government’s ill-fated interventions late on in an attempt to keep the company afloat. A £6m state loan was advanced to Rover while a fruitless effort to resurrect a deal with Chinese company was made.
The Phoenix Four reacted with fury to the news of the SFO’s involvement. “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 company,” the former Directors said.
“Four years on, any suggestion of a further investigation is frankly ridiculous and smacks of kicking this issue into the long grass. If the Government has been so concerned to get to the heart of the matter why has it flatly refused more than 30 requests under the Freedom of Information Act which would have revealed correspondence and documents the directors believe would have shed some light on the Government’s role in the affair?”
MG sports cars are still assembled in small numbers at Longbridge, Rover’s old factory, by a Chinese group, Shanghai Automotive Industry Corporation. It bought most of Rover’s designs and intellectual property, and makes Rover-based saloons in China.
[Source: The Sunday Times/TimesOnline]