Friday, September 11, 2009
Rover bosses attacked over payout
Bosses running carmaker MG Rover - which collapsed with the loss of 6,500 jobs - gave themselves "unreasonably large" payouts, a report has found.
Pay and pensions worth £42m was shared by five executives, which inspectors said was "out of all proportion".
The men face a ban from running other companies, says the government.
The so-called Phoenix Four, plus chief executive Kevin Howe, described the report as a "witchhunt" and a "whitewash for the government".
"Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover," said Mr Howe, chairman John Towers, ex-vice-chairman Nick Stephenson, Peter Beale and John Edwards.
But Business Secretary Lord Mandelson criticised the men for not showing "an ounce of humility" and called on them to apologise.
The demise of MG Rover brought an end to mass production of cars by a UK company.
Data erasing
The Serious Fraud Office (SFO) has said it does not intend to launch a criminal investigation into the collapse, which saw about 6,500 people lose their jobs.
The 830-page report, which took four years to produce and cost about £16m, contains little criticism of the government.
Other findings include:
- Mr Beale bought software to "clean" data from his personal computer, a day after investigators were appointed, "despite being aware that we would want to image and then review the contents of his computer for documents relevant to our investigation"
- Mr Stephenson paid more than £1.6m to a consultant he had a "personal relationship" with
- Executives had exaggerated in statements to MPs the personal financial risks they were taking
- MPs investigating the demise of the firm were given "inaccurate and misleading information" by Mr Beale
- There was evidence of a questionable briefing to the press by an adviser to former Trade Secretary Patricia Hewitt.
The five "obtained large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds" between 2000 and 2005, the report said.
They also "chose to give themselves rewards out of all proportion to the incomes which they had previously commanded, which were also large when compared with remuneration paid in other companies and which were not obviously demanded by their qualifications and experience", it added.
Had the venture succeeded, there would have been little objection to the rewards, the inspectors suggested, but said MG Rover was "in fact very unprofitable and eventually went into administration".
Bridging loan
The four took control of MG Rover in May 2000 after buying it from previous owner BMW for a nominal £10, also getting an interest free 49-year loan of £427m from the German carmaker.
The executives were eventually unable to turn around MG Rover's fortunes and it went into administration under insolvency procedures in April 2005, with debts of more than £1bn.
Its assets were subsequently sold in 2006 to China's Nanjing Automobile, which revived the MG sports car brand, but moved most of the production to China. Before its demise, MG Rover had held talks about a joint venture with the Shanghai Automotive Industrial Corporation (SAIC).
The report said that the government could not be blamed for the collapse of those talks - and that SAIC had lost interest in Rover.
The UK had been "seriously" considering offering a £100m bridging loan to aid the deal - but decided there was little realistic prospect of it being repaid.
"To make a loan in such circumstances could hardly have been a proper use of public funds and would (as we understand it) have been illegal under EU law", the report said.
DATED: 11.09.09
FEED: AW
