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Rover bosses attacked over payout Rover bosses attacked over payout
(10 minutes later)
Bosses running carmaker MG Rover - which collapsed with the loss of 6,500 jobs - gave themselves "unreasonably large" payouts, a report has found.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".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 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".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."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.
FINANCIAL REWARD Mr Beale £8.981mMr Edwards £9.024mMr Stephenson £8.976m Mr Towers £8.958mMr Howe £5.708m Source: MG Rover report
But Business Secretary Lord Mandelson criticised the men for not showing "an ounce of humility" and called on them to apologise.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.The demise of MG Rover brought an end to mass production of cars by a UK company.
MG ROVER'S DEMISE 2000: Sold by BMW to the Phoenix Four for £102000-2004: Made losses of £611m in the first four years2004: Started talks with Shanghai Automotive Industry Corporation (SAIC)2005: SAIC pulled out of a deal to save the whole company and MG Rover goes into administration2006: MG Rover's assets sold to Nanjing Automobile2007: Nanjing resumes MG production at the Longbridge plant2009: Serious Fraud Office investigates circumstances of collapse but says no plans for criminal charges2009: Long-awaited report, which has cost more than £16m, is released Timeline: MG collapse Rover report: At a glance In pictures: Rover's history Robert Peston on Rover
Data erasingData 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 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.The 830-page report, which took four years to produce and cost about £16m, contains little criticism of the government.
Other findings include: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.
  • 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 issue of remuneration attracted most criticism in the government-commissioned report by Gervase MacGregor of accountants BDO Stoy Hayward and Guy Newey QC.The issue of remuneration attracted most criticism in the government-commissioned report by Gervase MacGregor of accountants BDO Stoy Hayward and Guy Newey QC.
The five "obtained large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds", the report said.The five "obtained large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds", the report said.
Bosses 'not to blame for MG Rover' MG ROVER'S DEMISE 2000: Sold by BMW to the Phoenix Four for £102000-2004: Made losses of £611m in the first four years2004: Started talks with Shanghai Automotive Industry Corporation (SAIC)2005: SAIC pulled out of a deal to save the whole company and MG Rover goes into administration2006: MG Rover's assets sold to Nanjing Automobile2007: Nanjing resumes MG production at the Longbridge plant2009: Serious Fraud Office investigates circumstances of collapse but says no plans for criminal charges2009: Long-awaited report, which has cost more than £16m, is released class="" href="/2/hi/business/8244497.stm">Timeline: MG collapse class="" href="/2/hi/business/8250252.stm">Rover report: At a glance class="" href="/2/hi/in_pictures/8135875.stm">In pictures: Rover's history class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/09/how_phoenix_four_extracted_40m.html">Robert Peston on Rover
The men 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.The men 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".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 loanBridging loan
FINANCIAL REWARD Mr Beale £8.981mMr Edwards £9.024mMr Stephenson £8.976m Mr Towers £8.958mMr Howe £5.708m Source: MG Rover report
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 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.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).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 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.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."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.
Have you been affected by the issues in this story? Are you a current or former MG Rover employee? Send us your views.Have you been affected by the issues in this story? Are you a current or former MG Rover employee? Send us your views.
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