Press Report : Phoenix Four agree to bans on serving as Directors

BBC News, 8 May 2011

The Directors who ran MG Rover Group Limited when the company collapsed have been disqualified as Directors. Peter Beale, Nick Stephenson, John Edwards and John Towers – known as the Phoenix Four – have voluntarily agreed to individual bans of between three and six years.

The disqualifications by the Department of Business, Innovation and Skills, follow a ‘lengthy and complex investigation’ into MG’s collapse. The men said they do not accept any allegations of wrong-doing.

The Directors of Phoenix Venture Holdings Limited bought MG Rover, in Birmingham, for £10 in 2000 and paid themselves £40m in pay and pensions.

‘Voluntary compromise’

MG Rover collapsed in 2005 with debts of £1.3bn and with the loss of 6,000 jobs. Its then Directors were widely accused of enriching themselves whilst mismanaging the company. This view was supported in an independent report in 2009.

The former Directors of Phoenix Venture Holdings (PVH) and MG Rover Group have now agreed not to hold any company directorships for up to six years. A spokesman for the consortium said the former Directors, who have never faced criminal charges, had done nothing wrong.

He said they had voluntarily agreed to the ban: ‘As they have already made it clear that they have no intention of holding company office in the UK, they have agreed to a voluntary compromise, while emphatically not accepting any allegations or suggestions of wrong-doing.

‘The former Directors point out that they have done nothing which justifies disqualification. All of the many inquiries into the collapse of MG Rover have achieved little other than a series of massive bills.’

The four resigned as Directors of PVH and its associated companies in March.

Analysis

image of Joe Lynam
Joe Lynam BBC News

Six years after MG Rover collapsed into administration, perhaps this voluntary disbarment of its former owners is the best the current Business Secretary could achieve in terms of a public scalping.

His predecessor, Lord Mandelson, was unable even to get a formal apology from the Phoenix Four who took over a dying company but managed to pocket £42m in pay and pension benefits in MG Rover last 5 years.

The Serious Fraud Office dismissed the notion of criminal charges against the quartet in 2009 and the Insolvency Office, which had threatened them with an involuntary ban of being company directors, might well have lost another long and expensive case against the Four.

That’s why a public (and temporary) rap on the knuckles is all they get, which will hardly trouble them in their well remunerated semi-retirement.

[Source: BBC News]

Posted in: AROnline News, MG Rover
Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

12 Comments on "Press Report : Phoenix Four agree to bans on serving as Directors"

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  1. David 3500 says:

    I reckon that, unless there are any remaining legal issues preventing the Phoenix Four from speaking out publicly, they should now gave their side of events concerning the collapse of MG Rover Group in 2005 and the subsequent Government Inquiry.

    The media have actively reported on the views of the Government, Serious Fraud Office and ‘Mr.’ Mandelson, but legal restrictions have prevented the four businessman from speaking out for fear that it might prejudice their legal position.

    I believe that, with this latest news and their recent resignation as Directors of Phoenix Venture Holdings Limited, now is a good opportunity for the Phoenix Four to tell their side of the story and events leading up to the collapse of the company.

    Instead of just relying the Government’s views and what the media decided to print such disclosure would enable everyone with an interest in the former MG Rover Group to arrive at a more satisfactory conclusion over what factors lead to the decline of Britain’s largest car manufacturer.

    Actually, the Phoenix Four might, perhaps, consider writing a book on this very subject and donate all the proceeds from its sale to the MG Rover Trust Fund.

    Hopefully, this news will also see any corporate red tape being removed and enable much needed funds to be paid into that Trust Fund some six years after the event.

  2. Steve says:

    I think there’s every chance that a book has already been written and should be ready for publication soon. At least, I hope so…

  3. Richard says:

    I doubt very much whether the Phoenix Four will ever comment publicly on this. They got lucky in 2000 when the then Government persuaded BMW to talk to them and eventually sell Rover for a nominal tenner.

    They got luckier over the following five years to the tune of £42m and their luck continues to hold with this rap over the knuckles. They will, I feel sure, make the occasional reference to the report and imply that all was not as it seems, that somehow it was different.

    However, that difference will, of course, never be elaborated upon but it will be just enough to convince the conspiracy theorists that MG Rover was done down by a wicked Government*, a hostile media*, British indifference to MG Rover cars*, dastardly Germans*, canny Chinese negotiators* etc. etc. etc.

    Sadly, because of the ageing model range and declining market share, MG Rover was a ticking timebomb from the minute the company was formed. The only things that were going to defuse the bomb were a 45 replacement (probably as a result of linking up with another manufacturer) which would sell in decent numbers and a cheap and cheerful city car retailing at about £5000 which would squirt cash onto the balance sheet.

    The Phoenix Four failed to come up with either of these new models though they had time to mess around with the MG SV, talk about entering Le Mans and renumerate themselves in line with managements of successful motor companies.

    *Delete as applicable.

  4. Two R8s says:

    The Phoenix Four couldn’t even wait until MG Rover Group Limited was in a better position before taking all that money out of the company. They obviously knew that things weren’t going well. They should have been arrested. Some people have no shame…

  5. Simon Woodward says:

    @David 3500
    I recall that, just after the collapse of MGR, John Towers did a lengthy ‘full and frank’ radio interview with Ed Doolan on BBC Radio West Midlands in which he explained his regrets regarding the collapse of MGR. I wonder if it is available from the BBC Archives Dept.?

    Anyway, without getting to political because which ever party was in power I am pretty certain the outcome would have been the same, there are still a lot of questions to be answered about the role which the DTI played in the months leading up to the collapse and during the final days which, if people remember, was just two weeks before the General Election.

    It would be far too easy to blame the politicians but, at the end of the day, the DTI has a lot to answer for especially as it created huge unnecessary unemployment in the region not just at MGR but across the supply chain and the local economy.

    Surely, it was the DTI’s role to support industry – if not, then why does the taxpayer need such a costly department? Actually, why stop there? What about the very quiet but sudden demise of the extremely productive Peugeot factory at Ryton or the Cadbury’s debacle.

    MGR was born out the ashes after BMW’s fire sale and was a private concern run by the Phoenix Four. Despite the two brands’ history, MGR was essentailly a new fledgling business which should have had greater support from the Government of the day. Its demise was no great secret – the writing had been on the wall since the collapse of TWR and the development of the new mid-range hatchback so badly needed to retain their customer base.

    However, intervention at that point by the DTI, not necessarily financially, but through its huge resources providing support would have provided for the British taxpayer with a far better return than the huge amount of money spent on investigating why MGR collapsed and the vast cost of unemployment in the region.

    MGR was an opportunity to maintain continued mass employment in the region and so contribute to the nation’s wealth rather than be a drain on the public purse.

  6. Paul Taylor Paul T says:

    Actually, in addition to the DTI costing money, the ‘bridging loan’ provided to keep MGR ticking over until the JV with NAC/SAIC was agreed was another sum of money lost by the British taxpayer.

    It really annoys me that a country like France seems to ride rough-shod over EU rules around Government support (subsidy) for their industries yet we Brits recoil in horror at such notions for the risk of being slapped on the wrist.

    I understand banks have a far greater impact on the world’s financial health than the motor industry so are different from the motor industry, yet the taxpayer was expected to pump billions of £££s in to stop them going under.

    Now, as a result, they have to divest assets to meet EU rules regarding Government ownership and support. Why can’t this be done with other industries which are so important to a nation’s wealth?

    I strongly suspect that neither Peugeot nor Renault would be allowed to go the same way if they found themselves in a similar position to MG Rover…

  7. Richard says:

    There can be no doubt that Peugeot or Renault would not be allowed to go to the wall in France like MGR was here, but let’s not forget that MGR was the last in a long line of companies at Longbridge/Cowley et al that had failed miserably. Okay, there were the occasional bright spots when it looked as though things might just turn for the best but, by and large, we’re talking about nearly forty years of corporate failure here.

    This fantastic website bears witness to the countless wrong decisions taken and the poor or underwhelming products that resulted from them, as well as the cars that were successful.

    The DTI could possibly have done better in 2005. There again it was thanks to them, those pesky politicians and the unions, that Phoenix ended up buying Rover five years earlier. Remember BMW didn’t want to talk to them, preferring to negotiate with Alchemy in the belief that John Moulton’s plan gave Longbridge some sort of viable future.

    I think we have to acknowledge that the track record of successive managements, from BMC to MGR, did not inspire confidence and that the Government probably felt that this time it really was the end of the road for British owned volume motor manufacturing. That decision would have been no different under any other Government.

    Could they have pumped more money in during those last months while negotiations were continuing with SAIC? Maybe, but then they’d have been faced with throwing money at a fast-sinking and badly managed company with little chance of ever seeing it back.

    MGR’s demise was a great shame and sad for all those people who worked for it either directly or indirectly. What it really needed was someone with money and real expertise to take it over but, as the DTI found in 2000, nobody wanted the company. After the decades long debacle (and vast sums of public money consumed therein) of BLMC/BL, the agony had to end some time.

    It’s too easy to blame governments and civil servants for what went wrong. I’m sure they made mistakes and, given a second chance, they’d probably do things differently, but MGR’s failure ulitmately was down to the management.

    However, now the future looks bright. MG under SAIC Motor ownership has a plan and, I think, the product(s) to succeed. Some car assembly is back at Longbridge, 400 people are employed there and we are about to see new MGs on the road with more models to come. Maybe we’ll see more UK production (and increased employment) in the next few years. I hope so.

  8. Simon Woodward says:

    @Paul T
    Good point Paul T about France which has, along with Germany, reported economic growth today due to, amongst other things, their car industries. ‘One rule for one’ and all that!!!

  9. Simon Woodward says:

    @Richard
    You’ve hit the nail on the head there, Richard. I agree with all of that.

  10. Paul Taylor Paul T says:

    @Richard
    That’s an excellent summary of the situation.

    I suppose a ‘dark’ example of UK Government ‘support’ going horribly wrong is something that ended up as a prop in the Back To The Future trilogy… That is, of course, in no way suggesting the moral standings of the respective company custodians/owners were on any sort of parallel.

  11. Jemma says:

    Well, if anyone is to blame in all of this it’s Mandy – a more self-serving little rat it would be hard, if not impossible, to find.

    MGR was very close to launching a new model range when the rug was pulled out from under them by the Government and, as we have seen, it would have done fairly well, bar the odd winge and caravan-drop from Clarkson et al.

    Anyway, as to the Phoenix Four, I wonder if anyone remembers a TV show called Charmed. I think it was around the time they were going to start filming Series 5 when the four lead actresses went on strike for a massive payrise because Charmed was so successful that the programme was going to end their careers and they therefore wanted decent money to continue with it. They got the money, they did the rest of the series and, as expected, their careers went down in flames faster than a TVR with bad wiring.

    I suspect that was part of the reason why the Phoenix Four took the money they took out of the company – to make sure they and their families didn’t end up taking a massive hit if things went wrong. By that time MGR was the Charmed of the car industry, albeit for the opposite reasons, it was nothing more or less than a career killer either way it panned out.

    However, if you think about it realistically, the Phoenix Four didn’t take out a massive amount when compared to the actual size of the company – and you can bet that they were entitled to the monies they did get under their contracts with MGR so quite why all the P4 bashing is going on confuses me.

    I think what has happened here is fairly simple. The Government knows full well the british public isn’t impressed with what happened – although most don’t really care either way unless, of course, they live in the West Midlands – so there needs to be a scapegoat. Mandy has wriggled out of it so many times he’s untouchable so it has to be the Four.

    This is nothing more than a governmental rap on the knuckles so show that the Government are ‘good people really who have the population’s best interests at heart’ as opposed to the small-minded’ greedy cynical theiving sods that we know they really are. We should know – after all, we elected them…

    MGR’s management team was always going to be pilloried whatever happened to the company. However, I suspect that, if the men concerned knew quite what they, their reputations and families were going to go through over this, they would have walked away and let MGR wither on the vine… and where would your MG ZT or 75 V8 be now?

  12. @Jemma
    A point of information: Gervase MacGregor FCA and Guy Newey QC were appointed as Inspectors by the then Secretary of State for Trade and Industry under Section 432(2) of the Companies Act 1985 on 31 May 2005.

    However, Lord Mandelson was Secretary of State for Business, Enterprise and Regulatory Reform from 3 October 2008 to 5 June 2009 and then Secretary of State for Business, Innovation and Skills from 5 June 2009 to 11 May 2010. The Inspectors’ Report was dated 11 June 2009 and so, while Lord Mandelson initiated proceedings under the Company Directors Disqualification Act 1986 against the Phoenix Four on 11 September 2009, he had no direct involvement in the events which occurred before MG Rover Group Limited went into administration on 8 April 2005.

    Indeed, given the contents of the Inspectors’ Report (See, in particular, Chapter XXII – Aspects of Corporate Governance and Chapter XXV – Conclusion), any Secretary of State for Business, Innovation and Skills would have had little option other than to make the same decision as Lord Mandelson did back in September 2009 and to leave a High Court Judge to determine whether or not the Phoenix Four were fit to serve as Company Directors in future…

    However, that said, there are generally two sides to every story and, now that the Phoenix Four have agreed to the Disqualification Orders being made against them, John Towers’ rumoured book about the demise of MG Rover might finally be published.

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