Rover: we’re still in the dark
7 Jul 09
The inspectors’ report into the demise of MG Rover has been referred to the Serious Fraud Office, but the report is still unpublished and the latest announcement poses more questions than it answers
Last month the inspectors appointed by the Government to look into the collapse of MG Rover finally presented their report to the Business Secretary, Lord Mandelson.
The report presumably sheds some light on how the carmaker, bought for £10 from BMW by a consortium of businessmen known as the “Phoenix Four”, collapsed in 2005, and hopefully also provides some clues as to what happened to the company’s assets over that period.
Unfortunately the public has not yet had a chance to find out, because the report remains unpublished. The Phoenix Four – John Towers, Nick Stephenson, Peter Beale and John Edwards – have described the launch of yet another investigation as “frankly ridiculous”.
That may be so, but there are some questions that a lot of people, including the 6,000 MG Rover employees who lost their jobs, would like to see answered.
First, how did the Phoenix Four manage to extract a reported £40m or so in salaries, fees and other benefits from a business that ended up in 2005 with more than £1bn in debts, even after starting with a £427m interest-free loan from its former owners?
Second, what was the UK Government doing? Although some very short-term financial help was extended to MG Rover while talks were going on with China’s Shanghai Automotive Industry Corporation, it was not enough to reassure the Chinese. After the collapse, the Government was criticised for not getting closely enough involved to keep the talks alive.
Finally, why did the inspectors, while their investigation was going on (at a cost of £16m to the taxpayer) not alert the police sooner if they had discovered prima facie evidence of fraud?
Until the report sees the light of day, all we are left with is speculation.