Press Report : Probe into Rover collapse has cost £14.8m

Jean Eaglesham, Chief Political Correspondent , Financial Times, 15th April, 2009

The nearly four-year inquiry into the collapse of MG Rover has cost taxpayers more than £14.8m with no end in sight, according to official figures released to the Financial Times. Ministers are privately frustrated and embarrassed by the escalating cost of investigating Rover’s demise, at a time when the beleaguered UK car industry is lobbying for taxpayer cash to survive.

MG Rover, Britain’s last independent volume carmaker, went into administration in April 2005 with the loss of about 6,000 jobs. Ministers reacted to the pre-election furore by promising a “speedy” investigation that would include a review of the role of the Directors who had bought the company for £10 from BMW in 2000 – the so-called “Phoenix Four.” A report was expected within 18 months.

The independent investigation under the Companies Act 1985 has proved far more time consuming, complex and costly than Ministers expected. It has been led by Gervase MacGregor, a senior partner at BDO Stoy Hayward, the forensic accountancy firm, and Guy Newey QC, an insolvency law specialist. Fees paid to the Inspectors by the end of February totalled £12.2m, with expenses and value added tax taking the total bill to the state to £14.8m, according to official figures.

Every penny spent on this long-drawn-out inquiry is money that would much better have been spent developing green technology for Britain’s motor manufacturers,” Peter Luff, Conservative Chair of the Business Select Committee, said.

Ministers are concerned by the time the inquiry is taking, and government insiders point out that MG Rover’s ownership by the Phoenix Partnership – the contentious period under investigation – lasted only five years. Ten meetings between the Inspectors and officials have been held in the past year to discuss progress. The Inspectors have yet to enter the final stage of the inquiry by sending draft statements to those who will be criticised in the report, according to people close to the investigation.

The Department for Business, Enterprise and Regulatory Reform said on Tuesday that it would not be “practical or realistic” to set a deadline for the Inspectors’ report. “We know they’re working hard to complete their inquiries,” it said. BDO Stoy Hayward said on Tuesday night that it was unable to comment owing to client confidentiality.

Peter Luff, Conservative Chair of the Business Select Committee, criticised the delay in completing the report. “Every penny spent on this long-drawn-out inquiry is money that would much better have been spent developing green technology for Britain’s motor manufacturers,” he said.

[Source: Financial Times]

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.

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  1. Richard Kilpatrick Richard Kilpatrick says:

    What I don’t understand, really, is the use of this report in the long term? Is it supposed to tell us that the Directors mismanaged funds? Or that the products were doomed to failure? After spending £14.8 million, will this then allow the Government to say “Oh, actually this bit was okay” and suddenly we’ll have MGR back, or perhaps the Directors will be prosecuted and fined for their part in the demise of what was, ultimately, a failing car company anyway…

    It seems utterly pointless.

  2. Merlin Milner says:

    Could someone explain how it can cost £14.m?

  3. Steve McGill says:

    Apart from the fact that the solicitors and legal team employed on this case will be dragging it out because they will have the “its taxpayers cash, who cares” philosophy, its probably also because none of them will actually have any experience or knowledge of the Motor Industry too…

  4. Graham Ariss says:

    Very soon the enquiry will have been in existence longer than MG Rover was under the Phoenix team. As a Chartered Accountant I appreciate the complexity of such an investigation however this cannot be justified. However the Government seems happy to let it run on, their failure to end this farce sooner is all the more shameful given their failure to help LDV and reluctance to help Jaguar Land Rover and Vauxhall.

  5. Russell Jones says:

    I find it so hard to believe that the Government can justify this amount of spend on finding out what went wrong, given the state of the ecconomy. The money would be far better invested in those who need it most – LDV and JLR not to mention the supply chain firms that are on there knees wondering if they will still be in business in the next four weeks let alone the pathetic level of time this study is taking.

    On the day mgrcollapsed I personally had seen it coming for weeks along with the workforce, fortunately I was a contractor based at MGR so I was not directly affected but the build up to the collapse was a ticking time bomb. Maybe an investigation at the time when they were still in business into the way the magical directors managed to extract enormous pensions for themselves would have been more effective and the Governement should have seen this coming as MGR slowly erroded in those last few months rights to engine technology, sold land, sold rights to build the current models overseas – it doesn’t take a genius to figure out the only thing they couldn’t sell was the workforce and huge pension black hole in the workers’ pension scheme.

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