Rover bosses paid £42m before collapse
Published 11/09/2009 | 03:51
Five senior executives earned almost £42m in pay and pensions from MG Rover before its eventual collapse with the loss of 6,500 jobs, a damning report will disclose today.
The Birmingham-based car maker was bought by the so-called "Phoenix four" from BMW for the nominal sum of £10 in 2000 in a deal trumpeted as a major boost for the motor industry by ministers.
A report by government-appointed inspectors will today disclose that the quartet – former MG Rover chairman John Towers, ex-vice-chairman Nick Stephenson, Peter Beale and John Edwards – each earned £9m from the ailing business during their time in control. The company's chief executive, Kevin Howe, was paid a further £5.7m.
The men have always denied any wrongdoing and today's report will not accuse them of breaking the law.
Lord Mandelson, the Business Secretary, is expected to announce shortly that they will be disqualified from standing as directors of any other companies.
The report into the demise of Rover has taken four years to complete at a cost of £16m. Opposition politicians have accused the government of delaying its publication for fear it contained embarrassing disclosures over ministers' involvement with the Phoenix takeover.
From the beginning the consortium, which also received an interest-free loan of £427m from BMW, struggled to turn round the ailing firm's fortunes.
During the first four years of their control, Rover lost more than £600m and as the plight of the firm intensified the consortium attempted to broker a takeover by the Shanghai Automotive Industry Corporation. The Chinese group pulled out of negotiations and Rover was placed in administration in April 2005 with debts of more than £1bn.
The collapse of a once iconic British company dealt a heavy blow to industry in the West Midlands as dozens of component manufacturers across the region depended on Rover for contracts. It also threatened to derail Labour's last election campaign, as Rover was placed in insolvency weeks before polling day in 2005.
The Serious Fraud Office has already said it does not intend to launch a criminal investigation into the collapse.
The assets were sold the next year to Nanjing Automobile, which revived the MG sports car brand but moved most of the production to China.
Former MG Rover workers awaiting a payout from a trust fund set up to help them following the company's collapse have been warned it could be several months before they receive their money. Workers were expecting the fund to be distributed following the publication of today's report but trustees of the fund have been told there could be a further wait before any money is distributed.