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Jonathan Guthrie, Financial Times, 25th September, 2009

Dr. Qu Li says she is being “stoned to death” twice over. First, a report on MG Rover revealed that the car company paid her £1.7m under a contract authorised by a Director who was also briefly her lover. Second, the tabloid media seized on the story, its interest intensified by Dr. Li’s involvement in bidding for assets of LDV, the failed van maker.

“I feel that I was stoned to death for three years by the Government Inspectors,” says the well-groomed woman in pearls and a pink suit in her first newspaper interview. “Now I am being stoned to death again by the press.” She has been having nightmares and is considering quitting the UK, she says.

One question looms large in the mind of Dr. Li following the publication of the report on the 2005 collapse of the carmaker: would her involvement with MG Rover have received such scrutiny had she been a man? The 840-page account of how MG Rover went under with 6,000 job losses is mostly heavy going. Chucking in an oriental femme fatale spiced it up. “If I was male it would have been quite different.”

Dr. Li, 45, has a PhD in Automotive Technology from Leeds University and has worked both as a Chinese Government official and for 16 years as an Automotive Consultant. Recent press coverage has described her as a “Chinese translator”, “petite interpreter” and “mistress”.

When you are working intensively on a deal – and I was in China for 180 days negotiating – all the team members try to support each other. Maybe sometimes the support went slightly beyond the boundaries. But as far as I am concerned this was not a relationship.” Dr. Qu Li

Nick Stephenson, one of four MG Rover Directors whose £42m remuneration was termed “excessive” by the report, hired Dr. Li to help find Chinese industrial partners early in 2004. That led to lengthy but ultimately abortive talks with Shanghai Automotive Industry Corporation (SAIC). The Inspectors, Guy Newey, a Barrister, and Gervase MacGregor, an Accountant, devote about a page to establishing that Mr Stephenson and Dr. Li had a “personal relationship” that year.

Dr. Li says she was “shocked and shaken” by the “inappropriate” interest the Inspectors manifested in her sex life during a two-day evidence session. She says: “Mr Newey was particularly aggressive in his manner. It was disgusting.” He owes her an apology, she believes. Mr Newey was not available for comment yesterday.

Mr Stephenson was divorced and Dr. Li in a long-term relationship with another man. She describes the “very private issue” between herself and Mr Stephenson as follows: “When you are working intensively on a deal – and I was in China for 180 days negotiating – all the team members try to support each other. Maybe sometimes the support went slightly beyond the boundaries. But as far as I am concerned this was not a relationship.”

The result, she says, is that she was “rubbished” in the report. Her professional pride is hurt by the suggestion that she was overpaid for her services through a contract that gave her a 2 per cent fee for successful deals. She says that MG Rover would have collapsed much earlier had she not brokered sales of vehicle technology that brought £120m into its coffers.

Another oddity of the report, according to critics, is its scant scrutiny of the role of senior Labour politicians when MG Rover was teetering on the brink. There are only two references to Gordon Brown, who as Chancellor is thought to have withheld a £110m bridging loan from MG Rover. Dr. Li is mentioned more than 140 times.

Dr.Li says that the report does not acknowledge a scramble in the early part of this decade among western manufacturers to sign up Chinese partners. This increased sharply the value of the services of fixers with good contacts among Chinese manufacturers and in the Chinese Government. A senior British engineering executive unconnected with Dr. Li confirms that. He says: “There was a gold rush. If you had good knowledge or contacts you could charge highly for them.”

Another oddity of the report, according to critics, is its scant scrutiny of the role of senior Labour politicians when MG Rover was teetering on the brink. There are only two references to Gordon Brown, who as Chancellor is thought to have withheld a £110m bridging loan from MG Rover. Dr. Li is mentioned more than 140 times.

Dr. Li is unabashed by her subsequent activities at Longbridge, MG Rover’s former home. Nanjing Automobile, the Chinese vehicle maker that later merged with SAIC, hired her to work there with Mr Stephenson. Their job was to advise Nanjing on the removal to China of production lines bought from the administrators.

Such “lift and shift” operations are highly contentious in the Midlands, where they symbolise industrial decline. Dr. Li is now understood to be advising SAIC on buying the assets of LDV, which collapsed in June, in what could also turn into a “lift and shift”. Confidentiality agreements prevent her from discussing this, she says. But Dr. Li is determined not to be cast as the enemy. “I can still deliver a lot for this country,” she says. “There is a great need for the UK and China to collaborate.”

Fees were ‘much too high’

The Government-sponsored report about the collapse of MG Rover, published earlier this month, included these findings concerning Qu Li, an industrial consultant employed by the car company:

* Dr. Li was paid a retainer of £1,000 a week, plus £1,000 for every day spent supporting overseas negotiations and £750 a day for British negotiations. This arrangement cost MG Rover £352,794

* MG Rover also paid Dr. Li £1.34m in success fees for her involvement in the sale of intellectual property rights to a Chinese company

* The fees were “in aggregate much too high”. The success fees, in particular, were “plainly excessive” compared with the remuneration Dr. Li had received previously

* Dr. Li had “a personal relationship” with Nick Stephenson, the Director of MG Rover responsible for hiring her, during 2004

* An Eversheds lawyer reported that Dr. Li “did not add much” to negotiations.

[Source: Financial Times]

MG Rover Dr. Qu Li, Gervase MacGregor, Guy Newey QC, Nanjing Automobile Corporation, SAIC Group

Jon Griffin, Birmingham Post, 8th July, 2009

Phoenix Four claim Gordon Brown vetoed £120m loan for MGR

Tony Blair wanted to save Longbridge with a £120 million Government loan but was thwarted at the eleventh hour by then Chancellor Gordon Brown, claim the Phoenix Four. The allegation that Brown “pulled the plug” on the Birmingham car firm in spring 2005 is one of a series of criticisms levelled at the Government and the Department of Trade and Industry in the MG Rover Dossier.

The Dossier, issued by PR advisers Media House International, points the finger of blame for the closure of Longbridge, with the loss of more than 6,000 jobs, directly at Gordon Brown. The document says: “The Directors firmly believe one vital fact – Prime Minister Tony Blair wanted to save MG Rover. It was then Chancellor Gordon Brown who pulled the plug on advice from his special adviser Shriti (now Baroness) Vadera.”

It continues: “Having made the offer of a £120 million bridging loan, subject to PVH [Phoenix Venture Holdings] Directors’ agreed contribution of £10 million, the offer was suddenly and mysteriously withdrawn. MG Rover closed in April 2005. Four years later the workforce and the public deserve to be given the full reasons for its demise.

“Various Government departments have refused all requests for information and are treating FOI with contempt. The inquiry has cost the taxpayer more than £16 million. PVH provided five years of high quality jobs for 6,000 people, not to mention between 20,000 and 30,000 supply chain jobs. Unlike the recent banking bail-outs, the Phoenix Directors pledged substantial personal sums in support of the offered and then withdrawn short-term Government loan.

“The DTI not only failed to support MG Rover but they poured millions into rival foreign manufacturers such as Ford, Nissan, BMW, Vauxhall and Peugeot. The DTI’s dealing with China was amateurish at best and malicious at worst. The Nanjing Automobile Corporation was appalled by the behaviour of the DTI under the then Secretary of State, Alan Johnson.”

The dying days of the company were painful and the negotiations tortuous and the dealings with the Labour Government were characterised by leaks, lies, disinformation and double dealing. Since then the Directors suffered a torrent of media abuse fuelled by the No.10 spin machine and designed to distance the closure of MG Rover as far away as possible from the door of Brown and Vadera.” The Phoenix Four’s PR Advisers, Media House International

The report says former Longbridge workers “still deserve to be given the full story behind the closure of the last independent volume car maker in Britain. All they have is an unfathomable referral to the Serious Fraud Office and yet more delay and obfuscation. The Department for Business, Enterprise and Regulatory Reform (BERR) gave several reasons as to why the inquiry into the closure took such an interminable time.

“These reasons included: ‘the inquiry is extremely detailed and needs proper time to draw the right conclusions’ or ‘the Directors are having their legal advisors hamper the progress.’ Neither of these reasons were justifiable or true and the Directors said so for some considerable time.

“The inquiry was led by Mr Gervase McGregor of accountants BDO Stoy Hayward and barrister Guy Newey, QC. The total cost attributable to the inspectors is over £16 million. However, this figure is only the tip of the iceberg. In fact the collapse of MG Rover has cost the British taxpayer hundreds of millions. Certainly the taxpayer could have avoided a further £150 million if the original joint venture with SAIC was still in place at Longbridge.

“It is not too difficult to quantify the above losses to the taxpayer. However what remains a major difficulty is why the 6,000 former MG Rover employees have been kept in the dark over the final days of their company. The four Directors of Phoenix Venture Holdings – John Towers, Nick Stephenson, Peter Beale and John Edwards – are in a not dissimilar position and still have no idea of what they are supposed to be accused.

“The dying days of the company were painful and the negotiations tortuous and the dealings with the Labour Government were characterised by leaks, lies, disinformation and double dealing. Since then the Directors suffered a torrent of media abuse fuelled by the No.10 spin machine and designed to distance the closure of MG Rover as far away as possible from the door of Brown and Vadera.”

The report says that, following MG Rover’s collapse, then Trade and Industry Secretary Patricia Hewitt asked the regulatory Financial Reporting Council (FRC) to conduct a review of the accounts of MG Rover and its associated companies for the past five years. “The FRC report has never been made public after being suppressed by the Government. Lawyers acting for Phoenix Venture Holdings and Media House associates submitted more than 30 separate questions to various Government departments under the Freedom of Information Act.

“However, all requests for information that could shed light on Government thinking and decision-making during the crucial period before the £120 million short-term loan to save the company was suddenly abandoned have been denied. Yet none of the information requested could be judged to be commercially sensitive since MG Rover is now extinct.”

It is clear that, since the demise of MG Rover, there was a concerted campaign to lay the blame at the door of the Directors of Phoenix Venture Holdings. Despite Gordon Brown and Shriti Vadera’s lack of conviction about the ultimate Joint Venture process that the £120 million loan was meant to facilitate, the essential elements of that JV have now been put in place, independently by the now merged Nanjing and SAIC, but at an enormous and unnecessary cost in terms of jobs and taxpayers’ money.” The Phoenix Four’s PR Advisers, Media House International

The report claims the Phoenix Consortium saved MG Rover from closure “at the eleventh hour. When the deal was signed, BMW’s liquidation team from Munich was already on the Lufthansa flight heading for Birmingham. In its five-year tenure the Consortium invested £1.3 billion in the company, raised from negotiated sources.

“Phoenix significantly reduced the huge losses being made by the company under BMW ownership. Losses in excess of £700 million under BMW stewardship were reduced to below £100 million under Phoenix. In its negotiations with SAIC/Nanjing, Phoenix negotiated a value for the company of £400 million.

“Phoenix was in the process of developing electric hybrid versions of the Rover 25, the Rover 75 and the MG TF. When the Government precipitated MG Rover’s collapse, this vital technology, and the opportunity for a lead on electric vehicles, was lost to the UK.”

The report concludes: “It is clear that, since the demise of MG Rover, there was a concerted campaign to lay the blame at the door of the Directors of Phoenix Venture Holdings. Despite Gordon Brown and Shriti Vadera’s lack of conviction about the ultimate Joint Venture process that the £120 million loan was meant to facilitate, the essential elements of that JV have now been put in place, independently by the now merged Nanjing and SAIC, but at an enormous and unnecessary cost in terms of jobs and taxpayers’ money.

“The conclusion that we have reached is that the Government is doing and will do anything to disguise the role played by senior political figures in the closure of MG Rover. And, as in the recent revelations over MPs’ expenses, it is clear that adherence to Freedom of Information means nothing to this Government.”

[Source: Birmingham Post]

MG Rover Gervase MacGregor, Gordon Brown, Guy Newey QC, John Edwards, John Towers, Nick Stephenson, Peter Beale, Phoenix Four, Phoenix Venture Holdings Limited, PVH

Isabel Oakeshott and Dominic O’Connell, The Sunday Times, 5th July, 2009

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]

MG Rover Gervase MacGregor, Guy Newey QC, John Edwards, John Towers, Lord Mandelson, Nick Stephenson, Peter Beale, Phoenix Four

Jonathan Walker, Political Editor, Birmingham Post, 26th June, 2009

MG Rover enquiry complete... what will come of it?

The inquiry into the collapse of MG Rover has completed its work – but we may still have to wait to discover what it says.

My colleagues on the business desk are working on a story reporting that the inquiry into the collapse of MG Rover has been completed, at a cost of almost £16 million, four years after it began.

The collapse of the Birmingham carmaker in 2005 directly cost around 5200 jobs according to the National Audit Office, which measured the number of former MG Rover staff who signed on for Jobseekers Allowance. Their 2006 report (a 1.38mb PDF download) is here.

The Government has revealed that a new report setting out the findings of an official inquiry into MG Rover is now in the hands of Lord Mandelson, the Business Secretary, in a Parliamentary written answer to Richard Burden (Lab), the Northfield MP who has been increasingly vocal in demanding its publication.

Business Minister Ian Lucas said in the written answer: “The inspectors delivered their report on 11 June 2009. It will be for my noble Friend the Secretary of State to consider its findings and next steps.”

The steps Lord Mandelson will take obviously depend on what the report says.

The Government has revealed that a new report setting out the findings of an official inquiry into MG Rover is now in the hands of Lord Mandelson

I say there could be a delay before it is published because the report’s findings will determine whether any further action is needed. If it is needed, then the publication of the report could be considered prejudicial to that action.

[Source: Birmingham Post.net]

MG Rover Gervase MacGregor, Guy Newey QC, Lord Mandelson, Richard Burden MP

 Jim Pickard, Political Correspondent, Financial Times, 27th June, 2009

The long-awaited inquiry into the collapse of MG Rover has finally been completed* after four years and nearly £16m of taxpayers’ money.

The Business Department confirmed Friday night that it had received the findings of the investigation into the demise of the carmaker and said the report was in the hands of Lord Mandelson, Business Secretary.

However, a spokeswoman refused to comment on the details of the report, which has been superseded by immediate concerns about the fate of other car plants in the UK. The process has cost £15.9m, she admitted.

Ian Lucas, Business Minister, said in an answer to a private question by Richard Burden, a local MP, that the Government would carefully consider any similar exercises in the future to “minimise” the costs.

I have found it incredibly frustrating that we have had to wait so long for this report. The escalating cost of the inquiry has been a matter of real concern to so many people, including me.” Richard Burden MP

“I have found it incredibly frustrating that we have had to wait so long for this report,” said Mr Burden. “The escalating cost of the inquiry has been a matter of real concern to so many people, including me.”

MG Rover, Britain’s last independent volume carmaker, went into administration in April 2005 with the loss of about 6,000 jobs.

Ministers then offered a “speedy” investigation, including 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 lengthy investigation was led by Gervase MacGregor, a senior partner at BDO Stoy Hayward, an accountancy firm, and Guy Newey QC, an insolvency law specialist.

[Source: Financial Times]

[*Editor's Note: The Financial Times' report actually uses the word "published" here and in the headline. However, the use of that word may, in fact, be premature. See the News Blog by Jonathan Walker, the Political Editor of the Birmingham Post dated 26th June, 2009.] 

MG Rover Gervase MacGregor, Guy Newey QC, Lord Mandelson, Richard Burden MP

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]

MG Rover Department for Business Enterprise and Regulatory Reform, Gervase MacGregor, Guy Newey QC, Peter Luff, The "Phoenix Four"