Former MG Rover workers are to be rewarded with compensation of just £3 each following a seven-year battle for redundancy payments in the wake of the collapse of Britain’s last major carmaker.
News of the tiny payouts was announced to campaigners at a meeting on Monday and has led to calls for personal donations to the workers’ compensation fund from the so-called Phoenix Four – John Towers, Nick Stephenson, John Edwards and Peter Beale – the businessmen who bought the company for £10 in 2000 and then paid themselves and managing director Kevin Howe a total of £42m.
Carl Chinn, a trustee of the former employees’ fund, said: “I hope they will search their conscience to see if they can find the goodwill to help those who have lost so much. But as they have been ignoring my calls for four or five years, I’m not holding out much hope.”
Chinn said a request for contributions had been put to representatives of the quartet, who last May were disqualified from working as company directors in Britain for a total of 19 years.
A spokesman for the four said: “All we would want to say is that the request has been noted.”
Former Longbridge employee Oliver Thomas, of the Justice for Rover Workers group, said: “[The Phoenix Four and Howe] have ignored pleas from Carl Chinn, numerous MPs, the archbishop of York and myself to end this matter with a contribution already, so I’ve limited hope this time around.”
MG Rover workers and campaigners had been hoping for £10m-30m to be paid into the trust fund following the liquidation of assets from within the Phoenix group of companies that owned MG Rover and its businesses.
Shortly after Rover’s 2005 collapse, Towers said: “What we are trying to do is place a fortune into the benefit of all of the employees. We’ve launched the employee trust …
“That’s got gross assets in excess of £50m. There are clearly creditors to pay … but I’m very confident it will have millions of pounds available for those employees.”
However, the fund has ended up with just over £22,000 in its coffers, which it needs to share among approximately 6,500 workers who lost their jobs.
Hopes of securing a further £12.5m have just been dashed in the high court, which ruled that MG Rover’s former parent Phoenix Venture Holdings was not entitled to more information about monies paid to creditor HBOS by administrators PricewaterhouseCoopers in 2005.
A spokesman for Lloyds Banking Group, the part-taxpayer-owned bank that now owns HBOS, said: “As a major lender to MG Rover we made losses from its collapse. We therefore have a duty to our shareholders, including the taxpayer, to try to minimise these losses. Along with other creditors, we are seeking to do this through the normal recoveries process.”
A final pot of cash containing £23m from within a company called MG Rover Capital is currently frozen by the pensions regulator, which has until the end of this year to state whether it will make a claim. Should the funds be released, the money will be split between shareholders of the company, which is 51% owned by HBOS and 49% by Phoenix Venture Holdings directors.
A spokesman for the Phoenix Four declined to say if the businessmen would give the windfall to former workers, should they receive their £11m share.
Campaigners said that Howe, who has not faced official sanction, should also contribute to the compensation fund.
While his old colleagues were being barred from acting as company directors last year, the carmaker’s former managing director was being registered as a member of a limited liability partnership called The Exit Partnership – a role that encompasses almost identical responsibilities and restrictions to a director of a company. He is now understood to be working in the US.
When Phoenix acquired Rover in May 2000, they did so with the enthusiastic backing of the then Labour government as well as jubilant Rover workers who hailed Towers as he arrived at the Longbridge plant in a Rover 75, chanting: “There’s only one John Towers”.
The then industry secretary Stephen Byers was also cheered by MPs when he announced the deal.
[Source: The Guardian]