Press Report : Row after criminal probe over MG Rover collapse ruled out
Graeme Brown, Birmingham Post, 12th August, 2009
The Serious Fraud Office has announced it will not begin a criminal investigation into the collapse of car maker MG Rover, paving the way for a four-year-old report into the collapse to be published.
The Department for Business, Innovation and Skills has now promised to publish the long-awaited £16 million Inspectors’ report into the collapse on September 11 after it was confirmed no criminal probe would take place.
In the meantime, the Business Secretary and the men in charge of the firm before it collapsed traded criticisms, with Lord Mandelson questioning whether the Phoenix Four were fit to be Directors and a spokesman for the executives saying they were “flabbergasted” when Lord Mandelson referred the matter to the SFO.
The four – John Towers, Nick Stephenson, Peter Beale and John Edwards, who paid BMW £10 to take Rover off its hands in 2000 – have always denied any wrongdoing. However, they came in for criticism when it was reported they had taken out an estimated £40 million in pay and pensions in the five years they controlled the firm.
In a statement, the four Directors claimed they had been “vindicated” by the announcement. It said: “The Directors were flabbergasted when the Business Secretary, Lord Mandelson, referred the matter to the Serious Fraud Office, and said at the time there was absolutely no basis for a criminal investigation as the question of fraud had never been raised at any point.
The Directors have very little faith in a process that has seen £16 million of taxpayers’ money wasted on an inquiry that was originally defined, funded and then guided by the very Government department that was heavily implicated in the collapse of MG Rover.” The Phoenix Four’s spokesman
“That view has been wholly vindicated by today’s announcement and begs the question why the Government chose to refer the matter to the SFO in the first place. The decision to refer the matter to the SFO was the latest in a long line of bizarre and wholly unnecessary twists in the MG Rover story.
“The Directors have very little faith in a process that has seen £16 million of taxpayers’ money wasted on an inquiry that was originally defined, funded and then guided by the very Government department that was heavily implicated in the collapse of MG Rover.”
In the circumstances, they were sceptical whether the Department for Business, Innovation and Skills would publish a final report “that is properly balanced and objective”, they said.
“At every turn the Government has tried to avoid accounting for its own role in this affair, especially how the £100 million Government bridging loan that could have saved the company was withdrawn at the last minute in 2005.
“There have been more than 30 Freedom of Information requests made to the Government regarding their part in all of this and they have systematically turned every one down. Overall, this has been a very shabby and deeply unsatisfactory process.”
However, Lord Mandelson hit back, saying: “I sense rather a lot of buck passing on the part of the Phoenix Four and I think what people will be asking themselves, in the light of this report, is whether they as individuals are fit to conduct themselves as Directors of companies in the future.
“It took four years, and great public cost, to compile this report. And simply four weeks to consider whether there were criminal implications or proceedings that might be initiated. I don’t think that’s a long time to consider that.
“But now the report will be published, and people can judge in the light of that report, everyone’s responsibility, including the so-called Phoenix Four.”
He said the public would have been “flabbergasted” if the question of whether there should be a criminal inquiry had not been considered.
I sense rather a lot of buck passing on the part of the Phoenix Four and I think what people will be asking themselves, in the light of this report, is whether they as individuals are fit to conduct themselves as Directors of companies in the future.” Lord Mandelson, Business Secretary
Shadow Business Secretary Ken Clarke said: “I always thought the Serious Fraud Office would not allow themselves to be used as an excuse for delay. The Government must now proceed to publish this report as promptly as possible.
“My suspicion has always been that delayed publication of the report was being sought because of criticism of the Government within it – I wait to see if my fears are allayed.”
Lord Mandelson later hit back, saying: “Why the Conservative party should seek to align themselves with what these Directors and their spokesman are saying, and their interests, I really do not know.”
“They certainly profited hugely, many multiples of what they originally invested in the company. Nobody could describe these Directors as poor victims, as blameless people, as Kenneth Clarke clearly seems to think they are.”
MG Rover collapsed in April 2005 with the loss of more than 6,000 jobs after racking up debts of over £1.3 billion. Thousands of former Longbridge workers are now finally in line for payment of four-figure sums pledged by the Phoenix Four to the MG Rover Trust Fund following the sale of conference centre Studley Castle and dealerships.
The Phoenix Four have said that no money could be paid out to workers until the Government report was published, with the possibilities of further liabilities still facing Phoenix Venture Holdings.
Automotive industry expert Howard Wheeldon, Senior Strategist at BGC Partners said workers had been short-changed by how the collapse has been dealt with. He said: “They deserved answers of any potential and perhaps unnecessary failure and yet, the Government has so far deemed that it should not be publically released.
“This is an absolute disgrace and we are left to conclude that, whether or not part of the reason for the MG Rover failure early in 2005 lies outside the Government’s hands, its subsequent handling of attempting to secure a future for the company was an unmitigated disaster.
This is an absolute disgrace and we are left to conclude that, whether or not part of the reason for the MG Rover failure early in 2005 lies outside the Government’s hands, its subsequent handling of attempting to secure a future for the company was an unmitigated disaster.” Howard Wheeldon, Senior Strategist, BGC Partners
“I can have no idea at all whether or not company law had been broken at any stage of the MG Rover process. If it has I and many others look to the Serious Fraud Office to remedy this.
“But it is of course not the SFO’s job to look into how the Government handled this crisis. That work has already been done and, in the wider public interest, it is high time that the Government releases the full BERR report into the MG Rover affair immediately.”
Martin Wassell, Midlands Regional Director for manufacturing lobby group the EEF, said he was relieved the four-year wait for the report into the MG Rover demise would finally end next month. He said: “After the millions of pounds of taxpayer’s money and the lengthy time it took to complete, we obviously welcome the fact this long drawn out and costly report will be published soon.
“Although the report cannot be made public until September 11, I believe former workers at MG Rover and those employers and employees in the supply chain who were badly affected by its demise should be allowed to see the findings of this report before then. I hope Lord Mandelson will make the necessary arrangements for this to happen.”
[Source: Birmingham Post]
Latest posts by Clive Goldthorp (see all)
- History : Brand ownership - 21 November 2016
- Blog : Will MG’s slow boat to Europe hit Hinkley Point or the Brexit rock? - 29 August 2016
- News Analysis : Making the business case for a new UK-built MG sports car… - 28 February 2016