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Rover bosses' pay 'unreasonable' Rover bosses' pay 'unreasonable'
(10 minutes later)
The executives running carmaker MG Rover when it collapsed gave themselves "unreasonably large" payments, an independent report has said.The executives running carmaker MG Rover when it collapsed gave themselves "unreasonably large" payments, an independent report has said.
The five bosses took about £42m in pay and pensions from the troubled Birmingham-based firm, it has emerged.The five bosses took about £42m in pay and pensions from the troubled Birmingham-based firm, it has emerged.
The men will be banned from running other companies, the government says.The men will be banned from running other companies, the government says.
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," they added."Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover," they added.
The demise of MG Rover, in 2005, brought an end to mass production of cars by a UK company.The demise of MG Rover, in 2005, 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 £10 2000-2004: Made losses of £611m in the first four years 2004: 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 administration 2006: MG Rover's assets sold to Nanjing Automobile 2007: 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 In pictures: Rover's history Robert Peston on RoverMG ROVER'S DEMISE 2000: Sold by BMW to the Phoenix Four for £10 2000-2004: Made losses of £611m in the first four years 2004: 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 administration 2006: MG Rover's assets sold to Nanjing Automobile 2007: 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 In pictures: Rover's history Robert Peston on Rover
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 850-page report took four years to produce and cost about £16m. The 830-page report, which took four years to produce and cost about £16m, contains no criticism of the government.
'Misleading information''Misleading information'
The Phoenix Four were chairman John Towers, ex-vice-chairman Nick Stephenson, Peter Beale and John Edwards.The Phoenix Four were chairman John Towers, ex-vice-chairman Nick Stephenson, Peter Beale and John Edwards.
Along with Mr Howe, they "obtained large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds", it said. The four took control of MG Rover in May 2000 after buying it from previous owner BMW for a nominal £10 - beating off an approach from venture capitalists Alchemy Partners. They also gained an interest-free loan of £427m from the German carmaker.
Along with Mr Howe, they "obtained large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds", the report said.
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", the report 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", the report added.
Had the venture succeeded, there would have been little objection to the rewards, the investigators 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 investigators suggested, but said MG Rover was "in fact very unprofitable and eventually went into administration".
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"
  • MPs investigating the demise of the firm were given "inaccurate and misleading information" by one of the four directors
  • There was evidence of questionable briefings to the press by government officials.
  • 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"
  • MPs investigating the demise of the firm were given "inaccurate and misleading information" by one of the four directors
  • There was evidence of questionable briefings to the press by government officials.
Talks breakdownTalks breakdown
The four took control of MG Rover in May 2000 after buying it from previous owner BMW for a nominal £10 - beating off an approach from venture capitalists Alchemy Partners. They also gained an interest-free loan of £427m from the German carmaker.
FINANCIAL REWARD Mr Beale £8.981mMr Edwards £9.024mMr Stephenson £8.976m Mr Towers £8.958mMr Howe £5.708m Source: MG Rover reportFINANCIAL REWARD Mr Beale £8.981mMr Edwards £9.024mMr Stephenson £8.976m Mr Towers £8.958mMr Howe £5.708m Source: MG Rover report
They 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.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).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, despite the UK "seriously" considering offering bridging finance.The report said that the government could not be blamed for the collapse of those talks - and that SAIC had lost interest in Rover, despite the UK "seriously" considering offering bridging finance.
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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