Press Report : SFO to reveal decision on MG Rover investigation
Graham Ruddick, Sunday Telegraph, 9th August, 2009
Photo: Daniel Jones
The SFO, led by Director Richard Alderman, has been reviewing the case for the last month after Lord Mandelson told Parliament that he had asked the organisation to investigate whether there were “grounds for prosecution”.
It is believed that the SFO is considering options beyond whether to simply investigate the case or not, such as recommending that another authority looks into the demise of the Midlands-based manufacturer.
MG Rover collapsed into administration on the eve of the 2005 General Election with the direct loss of 6,000 jobs. The introduction of the SFO brought particular focus upon the owners of the company, the so-called “Phoenix Four”.
Lord Mandelson, the Business Secretary, called on the SFO after the completion of a four-year report by inspectors appointed by the Department for Business, Innovation and Skills, which cost the taxpayer £15m. However, following legal advice, the publishing of the report has now been indefinitely delayed while the SFO considers the case.
The delay engendered a furious reaction from opposition politicians, who suspect the report could include embarrassing details about the Government’s handling of MG Rover, and that they are trying to delay the report until after next year’s General Election.
Kenneth Clarke, the Shadow Business Secretary, said it was “quite inadequate” to defer the report and accused the Government of kicking the issue into the “long grass”.
At no stage during the last four years has there had been any suggestion of fraud or illegal activity whatsoever. Therefore, the Directors can see no basis for an SFO investigation. The Directors have at all times willingly accounted for their actions, not just in the latest inquiry but with the Financial Reporting Review Panel, and the inquiry by PricewaterhouseCoopers, the Administrators.” The Phoenix Four’s spokesman
The Phoenix Four – John Towers, Nick Stephenson, Peter Beale and John Edwards – bought MG Rover from BMW in May 2000 for a nominal fee of £10. They received an interest-free loan of £427m from BMW, the previous owner, but MG Rover collapsed just five years later with debts of more than £1bn. In between times, the Phoenix Four are estimated to have made £30m-£40m through pay, pensions and the sale of a 60pc stake to dealers and employees.
A spokesman for the Phoenix Four said: “At no stage during the last four years has there had been any suggestion of fraud or illegal activity whatsoever. Therefore, the Directors can see no basis for an SFO investigation. The Directors have at all times willingly accounted for their actions, not just in the latest inquiry but with the Financial Reporting Review Panel, and the inquiry by PricewaterhouseCoopers, the Administrators.”
The Phoenix Four claim that Gordon Brown, as Chancellor, blocked a key £120m bridging loan to MG Rover on the advice of Baroness Vadera, at the time a key Treasury adviser. The loan could have helped to secure a rescue deal with Chinese car maker Shanghai Automotive Industry Corporation. They claim that Tony Blair, then Prime Minister, wanted to save the company and that numerous Freedom of Information requests have since been rejected.
The original Government inquiry was ordered by Alan Johnson, Lord Mandelson’s predecessor at what was then the Department of Trade and Industry, following an investigation into MG Rover’s collapse by the Financial Reporting Review Panel.
[Source: Sunday Telegraph]