AROnline news

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, Shanghai Automotive Industry Corporation

Graeme Brown, Birmingham Post, 13th September, 2009

Chapter 1: Introduction

Longbridge manufacturer MG Rover Group went into administration on April 8, 2005. A statement of affairs sworn by two Directors of the company on May 16, 2005, estimated that it had a deficiency as regards creditors of £1.29 billion when it entered administration.

On May 31, 2005, Gervase MacGregor and Guy Newey, were appointed by the Secretary of State for Trade and Industry as Inspectors to investigate the affairs of Phoenix Venture Holdings.

Chapter 2: Rover at the beginning of 2000

In early 2000, MGRG was producing the old Mini, the Rover 25, the Rover 45, the Rover 75, the MGF and various Land Rover vehicles, under the stewardship of BMW, with plants in Longbridge, Cowley, Solihull, Swindon and Gaydon.

The company had managed to turn a profit twice in the proceeding six years, including an after-tax loss of £2.1 billion in 1999.

Chapter 3: The sale of Rover

This chapter first considers the approach made for MGRG by Jon Moulton’s Alchemy Partners in 1999 even though they were not “car industry people”.

A memorandum of understanding was negotiated between BMW and Alchemy on March 16, 2000, but soon collapsed, after a proposal of a £1 billion loan from BMW was turned down, leaving Phoenix as the only bidder.

On April 14, 2000, John Towers and John Edwards sent BMW a letter setting out an offer for MGRG, and an agreement was thrashed out by May 9 for the nominal sum of £10, with the Phoenix Four investing a combined £240,000. BMW was to lend MGRG £75 million.

It quotes automotive expert Professor Garel Rhys, of Cardiff Business School, who said “… there was a chance that the Phoenix Consortium could ‘hold the line’ for five or six years, and if a joint venture was created it might be possible that the joint venture could have a close relationship with another car firm. However, it would not be possible for a car manufacturer of [MG Rover’s] size to succeed on its own.”

The report also shows that legal firm Eversheds earned £757,904 from the sale, while Deloitte were paid £6 million and stockbroker Albert E Sharp earned £750,000.

Chapter 4: The members of the Phoenix consortium

John Towers – joined Land Rover in 1988 and became a member of the main board of MGRG the following year. He was subsequently promoted to Group Managing Director in 1991.

Nick Stephenson – worked for many years at British Leyland. In 1996, Mr Stephenson became a member of the MGRG board with responsibility for design and engineering, a position he held until he left MGRG in 1999.

John Edwards – from 1987 Mr Edwards owned and managed a Rover dealership in Stratford-upon-Avon named Edwards of Stratford. He was appointed as a Director of Techtronic on April 13, 2000.

Peter Beale – the chartered accountant was appointed as a Director on July 1, 1989, and was appointed as a Director of Techtronic on April 13, 2000.

Chapter 5: Rover under new ownership: events between May 2000 and June 2001

Having been little opportunity for due diligence after the collapse of the negotiations with Alchemy, the members of the Phoenix Consortium had to learn about what they had actually bought.

It quotes Nick Stephenson: “We took over an entity that was not a company … strictly there was this legal entity, Rover Group, but it did not exist on the ground. It was operating out of about eight sites, Longbridge, Bickenhill, Warwick, Gaydon, Cowley, so on – and all the national sales companies in nearly every country in continental Europe. It did not have a secure supply base. Every single supplier that supplied the company turned up on our doorstep wanting to know what the hell was going on.”

Chapter 6: Development agreement with St Modwen

St Modwen made a £100,000 payment to Landcrest, which was owned by former Techtronic Director Brian Parker.

The payment was made to be introduced to MG Rover but was made while Mr Parker was a Director.

The report found that Mr Parker breached his fiduciary duties and while compiling the report investigators said they were “provisionally minded” to describe it as a bribe and when they approached Mr Parker with the allegation he did not dispute it. Later on St Modwen agreed a deal with AWM for the land and paid St Modwen £100,000 to cover the expense.

Chapter 7: Project Platinum

This considers how a company owned by the Phoenix Partnership and HBOS came to acquire most of BMW’s Rover loan book, which eventually became MGR Capital.

£22 million is still left over from the collapse of MGR and there have been calls for this cash to be redistributed among former Rover workers who lost their jobs.

The report details how Northfield MP Richard Burden wrote to Mr Towers about stories in the Daily Telegraph arising out of the publication of PVH’s 2002 financial statements.

Mr Burden noted that one of the claims made was that it was not contributing to the survival of the core operations but that it was declaring dividends to the individual and corporate owners. He asked why it was being kept outside the group.

The report disputes explanations advanced by Mr Beale to the Trade and Industry Select Committee and said the Phoenix Partnership was involved in the joint venture because its members (other than Mr Howe) wanted the profits to accrue to them, not because that was the “only option that was left.”

Chapter 8: Group structure after 2000

This chapter outlines the structure of Phoenix Venture Holdings (PVH) and Techtronic, the company vehicle used to buy the Rover Group.

Chapter 9: Property and share transfers at the end of 2001

In December 2001 steps were taken to transfer some companies from MGRG to other companies owned by PVH’s subsidiary firms, of which MGRG had no interest – including the title to MGRG’s Longbridge site to subsidiary firm Property Holdings.

The 228 acres of Longbridge land was later sold on to Advantage West Midlands in 2003. Buildings measuring 651,206 square feet were leased back from AWM for a “peppercorn” rent, and PVH earned a total of £59.96 million to go towards debts.

However, MGRG received only £40.49 million of the proceeds, as that was the book value of the sale to Property Holdings.

The report states: “While MGRG obtained the benefit of the sales to AWM and Redman Heenan in cash terms, the transfer of the Longbridge land to Property Holdings will nonetheless have disadvantaged MGRG and its creditors. Had it remained the owner of the land at the time of the sales to AWM and Redman Heenan, MGRG, would have been entitled to the full proceeds from the sales as of right.”

Chapter 10: Project Lisa

“Project Lisa” was the name given to a scheme to raise money own use vehicles (OUVs) which were used by staff for demonstration purposes and vehicles used for promotional purposes – “leaseplan vehicles” which would generally be leased out through daily rental companies such as Europcar.

Project Lisa involved the transfer of the OUV and leaseplan vehicles to two newly-established companies, a move which was taken at the suggestion of Deloitte.

There was a proposal that this be owned by the Pheonix Partnership, even though it was eventually made a part of MG Rover Group because of a tax problem.

The report’s author’s said: “We conclude that the reason the leaseplan company was to be owned by the Phoenix Partnership (and not MGRG) was that the four members of the Phoenix Consortium saw an opportunity to make money for themselves.”

Chapter 11: Aircraft: Exploiting tax losses

MGRG incurred trading losses from 2000 until 2004.

Under corporation tax legislation, trading losses in one company can be set against profits arising in the same accounting period in another UK group company.

“Project Aircraft” was a scheme under which investments were made in a finance company called MCC Leasing which leased two Boeing 767 aircraft so that the losses in the group could be used to eliminate tax liabilities.

Chapter 12: Project Patto

Project Patto was another scheme from which the members of the Phoenix Consortium could potentially have derived very substantial benefits, based on a £427 million interest-free loan from BMW when Techtronic acquired MGRG in May 2000.

Chapter 13: The transfer, management and sale of the parts business

The Rover parts business became Xpart after it was hived off from the main company as part of talks to sell up to Alchemy, but was later taken on as part of the PVH deal.

This chapter examines the management of Xpart – which had its profits shared between Xpart and MGRG – and the sale for £32 million to Caterpillar Logistics Services in 2004.

Chapter 14 : Edwards Cars Limited: Financial support and acquisition

The report said that “one of the purposes for which PVH used its income was to support Edwards Cars”, which was owned by Mr Edwards and his wife and which was later acquired by Phoenix for a nominal sum.

Between December 2000 and the end of 2002 Edwards Cars charged PVH sums totalling £3,877,958 (excluding VAT), and between January 2003 (when Edwards Cars became a subsidiary of PVH) and April 2005 PVH paid £1,718,953 to Edwards Cars.”

In addition, Phoenix-owned Techtronic paid £308,000 (excluding VAT) to Edwards Cars during 2000. The report said: “Without the financial support it received, Edwards Cars would have incurred very large losses and been most unlikely to be able to continue trading.

“We can see that there may well have been a commercial justification for giving Edwards Cars some financial support. However, we do not think that support on the very large scale in fact provided can have been commercially justified.”

Chapter 15: The reasons for the group structure

The Phoenix Four changed around the structure of the company and its subsidiaries, creating an enormously complicated structure.

At the time, they claimed this was to create more management focus on individual businesses but the report concluded that this was done to ring-fence parts of the business from MGRG liabilities and ended up reducing transparency, contrary to claims.

Chapter 16: Financial and trading performance of MGRG between 1999 and 2004

This chapter looks at the financial and trading performance of MGRG between 1999 and 2004. The turnover of the group, having fallen dramatically in the year it was sold by BMW, rose until 2002 and then dropped again in the period leading to administration. Losses followed a similar trend, starting at £917 million in 1999 reducing until 2002 but rising again to hit £118 million in 2004.

Chapter 17: Changes in the boards of the main companies between 2000 and 2005

This chapter follows movements of the Directors and Executives on the various companies, including Brian Parker, Richard Ames, David Bowes, John Sanders, Rod Ramsay and Nigel Petrie.

Chapter 18: Powertrain

This looks at how in 2000, shortly before the sale of MGRG to holding company Techtronic, what had been MGRG’s engine and gearbox manufacturing business was transferred to Powertrain, a shell company bought for the purpose.Powertrain was subsequently acquired by Techtronic in 2001.

The report asks why Powertrain was purchased by Techtronic and not MGRG – the report’s authors were told that Powertrain was acquired by Techtronic, rather than by MGRG, partly because Ford wanted to ensure that Powertrain would continue to supply its engines in the event that MGRG failed.

Chapter 19: Joint ventures

While loans from BMW meant there was no prospect of MGRG failing in the short term, longer-term survival depended on it successfully concluding a joint venture arrangement.

This chapter charts MGRG and Powertrain’s attempts to court partners in Eastern Europe, the Middle East and Asia, and China.

Chapter 20: The events leading to administration

A Dr Li provided consultancy services to MGRG during 2004 and 2005 and companies associated with her were paid £1.69 million for her services over a 15-month period. These sums were “much too high” and the man primarily responsible for them was Mr Stephenson “even though he had a personal relationship with Dr Li”. Most of the other Directors of the companies paying the relevant fees “were not consulted” and only one Director – Mr Beale – was told of Mr Stephenson’s relationship.

Chapter 21: Financial rewards

Phoenix obtained “large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds”.

They also undertook transactions to allocate assets to companies in the group other than MG Rover and in which MG Rover had no interest.

Phoenix had known that there was a real risk that MG Rover would fail and that the expenditure and risks that they were to bear in acquiring the company were “relatively insubstantial”.

Chapter 22: Aspects of corporate governance

This chapter refers to minutes of meetings which refer to Directors who were known not to be in attendance and other ad hoc meetings which some Directors of MGRG were given no notice of – they could not contribute to some decisions.

Chapter 23: Financial statement and audit

This chapter looks at Deloitte’s role as auditors of the group.

The report’s authors state: “It is clear that the total fees to be earned from the group as a proportion of Deloitte’s total income were nowhere near the level that would be regarded by the ICAEW as unduly large. Furthermore, it is apparent that Deloitte’s own procedures for safeguarding its independence and objectivity met, or even exceeded the standard required by the ICAEW.

“While the ratio of Deloitte’s non-audit fees to audit fees since their appointment as auditors to the Group might be perceived as having been a threat to their independence and objectivity, we have found no evidence.”

Chapter 24: Evidence Eliminator

The report said Phoenix Four member Peter Beale installed Evidence Eliminator on his computer the day after the inquiry was announced in 2005 so he could delete material before it could be assessed by the inspectors.

Mr Beale ran the software programme despite being aware the inspectors intended to review contents of his computer as part of the investigation, it said.

Evidence Eliminator is a software programme which claims it “deep cleans” a computer’s disk of any sensitive material, the report said. “Evidence found on the image taken of Mr Beale’s computer indicates that Mr Beale deleted a sub-folder called MG Rover from his hard disk between 2 and 20 June, being the period after our appointment but before Mr Beale’s computer was imaged.”

Chapter 25: Conclusions

The report said that “inaccurate and misleading explanations” were given about the state of the MGRG business… “For example, MPs and others were led to believe in 2003 to 2004 that the members of the Phoenix Consortium had invested considerable sums and taken substantial financial risks when MGRG was acquired and that the sums which had been reported as paid to them did not come from MGRG but from separate Phoenix sources. In reality, the relevant payments to or for the benefit of the members of the Phoenix Consortium can for the most part be traced back to interest paid by MGRG and the exploitation of MGRG’s tax losses, and the members of the Phoenix Consortium had invested relatively little in the group and undertaken only limited risks”.

The Phoenix Four had transferred various properties and subsidiaries of MG Rover “at less than full market value”. One deal led to MG Rover incurring liabilities of £16 million.

During negotiations with Chinese company SAIC there was an attempt to insist on Phoenix rather than MG Rover Group holding shares in the joint ventures which were envisaged.

The reason that Mr Beale, Mr Towers and – to a lesser extent – Mr Stephenson wanted Phoenix to be the shareholder “was probably to ensure that the value of the shares would accrue to that company (and, hence, themselves as its Directors) regardless of what became of MG Rover Group”.

The report said that Directors of companies within the group were not always invited to board meetings, often being given no notice of “ad hoc” meetings.

[Source: Birmingham Post]

MG Rover Advantage West Midlands, Gervase MacGregor, Guy Newey QC, John Edwards, John Towers, Nick Stephenson, Peter Beale, Phoenix Four, Richard Burden MP

Birmingham Post, 11th September, 2009

The Rover report runs to more than 830 pages and details restructuring changes within MG Rover Group under the “Phoenix Four” which led to the creation of 33 companies.

An inquiry was set up by the Government after MG Rover went into administration on April 8 2005 owing creditors nearly £1.3 billion.

Gervase MacGregor and Guy Newey QC were appointed as Inspectors under Section 432 of the Companies Act 1985 and instructed to investigate the affairs of MG Rover Group, its parent company Phoenix Venture Holdings (PVH) and MGR Capital Limited between the purchase of MG Rover from BMW in May 2000 and the date of it entering administration.

The Inspectors investigated the actions of the Directors of PVH throughout their five-year ownership – particularly Peter Beale, John Edwards, Nick Stephenson and John Towers, known as the Phoenix Consortium.

As well as looking at the creation of the 33 separate companies throughout that period, the Inspectors looked at the scale of financial rewards made to the Directors and the events which led to administration itself.

This included the role of Government to secure bridging finance while take-over discussions took place with Chinese car manufacturers Shanghai Automotive (SAIC Group).

The inquiry studied the role played by professional advisers including auditors and corporate finance advisers Deloitte and lawyers Eversheds; aspects of corporate governance; and financial statements and audit arrangements including the transfer of assets.

> Download “Report on the affairs of Phoenix Venture Holdings Limited, MG Rover Group Limited and 33 other companies” here:
Part I +  Part II
(Right click and ‘Save As’)

[Source: Birmingham Post]

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

Jon Griffin, Birmingham Post, 8th July, 2009

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

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"