How Rover executives pocketed £42m
Criticism of how five executives extracted £42m in pay and pensions from MG Rover will be made tomorrow in a report by independent inspectors appointed by the Business Department.
The inspectors - Gervase MacGregor of the accountants BDO Stoy Hayward and Guy Newey QC - will not accuse the so-called Phoenix Four and the chief executive they appointed of breaking the law (and the Serious Fraud Office recently concluded that it would not launch a case against them).
But their report is a humiliating 800-page catalogue of how they enriched themselves while the last UK-owned mass market motor manufacturer hurtled towards insolvency.
Each of the Phoenix Four - John Towers, Nick Stephenson, Peter Beale and John Edwards - received around £9m, according to the report. Their chief executive, Kevin Howe, pocketed £5.7m.
I understand that the Business Secretary, Peter Mandelson, will commence proceedings to disqualify the four as directors.
The report contains a mountain of detail of how the quartet profited from a business in dire trouble.
It catalogues how John Towers, Nick Stephenson, Peter Beale and John Edwards made personal fortunes out of MG Rover - in stark contrast to the more than 6,000 MG Rover employees who lost their jobs when the firm collapsed into administration in April 2005 with debts greater than £1bn.
This was a pathetic end for the last British-owned volume car manufacturer.
I am told that what is striking about the report is that there is no serious attempt to place Rover's demise into the context of the woes of the wider industry.
And some may be surprised that a report - which took more than four years to produce and has cost £16m of taxpayers money - contains no serious criticism of government, even though what was then called the Department of Trade and Industry, and is now called the Business Department, was intimately involved in attempts to save MG Rover.
In particular, the circumstances have always been murky surrounding a decision by Shanghai Automotive Industry Corporation of China not to pursue a rescue takeover of MG Rover in the spring of 2005. At the time, SAIC was insisting that the British government provide a temporary £100m loan to MG Rover to guarantee its solvency.
The Phoenix Four took control of the company in May 2000. They bought MG Rover for a nominal £10. The business came with an interest-free loan of £427m from BMW, the previous owner.
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Is anybody shocked by these revelations? It sums Blair-Brown's Britain Does anyone truly believe the government is untainted by this fiasco? So what if these directors are forbidden to practise again - their pillaging of MG Rover ensures they need not work again. How about a confession and an apology?
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This comes as no surprise to anyone within the motor trade, all it's done is made the rumours official...
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Isn't that what elite is all about in the UK? Helping yourself before you help others?
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Yet another tale of how our fabulous "elite" are running the show - lining their pockets, dumping the workers, and getting away with it.
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#1. At 10:04pm on 10 Sep 2009, watriler wrote:
"Does anyone truly believe the government is untainted by this fiasco?"
This rot started back in '94, it's as much the blame of the last Tory government as it is New Labour's since, this ending was the logical conclusion of years of 'asset stripping'.
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Sadly this fits in all too well with the ludicrous salaries that board members of large companies thoughout British industry now pay themselves. Do any of them deserve it? It's impossible to say as there is no objective measure to justify Senior Executive pay (How well did they do compared to if Mr XXX had been in the job during that period? How well did they do compared to if a half-trained chimpanzee had been in the job?).
All we get is the argument that "it's the going rate for top executives" and "that's only comparable to what they pay in the USA". I suspect in most cases you could get someone to do almost all of the job just as well for a tenth of the remuneration (except they might not have the cosy contacts in the City).
Bring back Denis Healey and tax the lot of them until the pips squeak! 98% tax on such salaries would do fine.
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1. Why are these men not being doorstepped as happened when the RBS Fred's pension was exposed. Why don't we know where they live so that we can let them know what we think of them.
2. Not illegal! then the laws need to be changed. No one in any company should be able to over pay themselves compared to other workers in this way.
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Brown's Britain in all its glory...... can we get this money back?
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Yes lets all go tut tut!; this fiasco is insignificant to what has recently happened within the banking sector , you and I now owe £1.4 trillion -- WAKE UP UK we are being systematically being ripped off by venture capitalists and the financial sector with the acquiescence of the government of the day what ever the party. How long must this go on for before our childrens and our childrens children futures are not plundered by these people?
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I'm betting most of it is notional pension value, so not actual money per se. £16m though to work that out? Without even looking at the government role in it? An expensive way to Hutton NuLab's involvement.
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Why is it that the Phoenix four controlled Rover for 2 yrs?, they have pocketed pension funds of £2.25 million pounds each. Sir Fred ran RBS Halifax for 10yrs, got a Pension Pot of £16 million pounds and a yearly pension of £693k for life. I have just served 30yrs as a police officer, I got £122K and £20K per year...
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I've just finished watching Robert Peston posturing on BBC Newsnight. He sounds more like a political editor than a Business Editor. The real crime is not the behaviour of those 4 Midlands chancers, but the behaviour of BMW and how they managed to walk away from Rover smelling of roses.
1, The takeover of Rover by BMW was part of an ultimately failed strategy, for reasons that ultimately had little to do with Rover itself.
2. Before they got out, BMW asset-stripped Rover. They sold off, or walked away with, all the good stuff they didn't want, and took the New Mini with them. All they left behind was a husk, an outdated current model range. They must have laughed so long and loud that they only had to pay that 'dowry' of £427 Million for all that they had ripped out of Rover.
As I said, Peston sounds more like a political journalist, than any kind of Business Editor.
Andrew Preston
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This is a whitewash. The 2000 government could not bear the thought of MG Rover going to a Venture Capital company - John Moulton's Alchemy Partners - who would at least have sustained part of the company and now pays £16m to hide their embarrassment. It is a disgrace. A government paid for report, not criticising the government - surely not!
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Damn, a missed career opportunity - I would have gladly volunteered to mismanage MG Rover towards insolvency for only 2 million plus a seat in the House of Lords. Caledonian Comment
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I have to laugh when you suggest that these former directors have been humiliated by this report. There is absoultely no evidence that this is so. Indeed, why on earth should they feel shame when, as you say, they did not break the law? No the real humiliation is the revelation as to how morally bankrupt our society has become whereby we faciliate pariahs such as these milking the system for their own personal benefit and then merely walking away scott free irrespective of the damage that they do.
The world economy is nothing more than a giant ponzi scheme, which has enabled those with power and control to take us all for a ride and then leave us all to carry the can, thinking, like Madoff that they can get away with it. Unfortunately they can't. It is rather like the man on the boat who drills a hole under his seat arguing that it is his seat and he can do what he wants! Because in spite of all this talk about the economic recovery, there is no such thing. It is all being artifically propped up and as soon as government cash runs out the whole system will collapse and all the money will become valueless.
So my advice to characters such as these is to enjoy your luxury lifestyles whilst it lasts because it won't be for long. See you at the soup kitchens!
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So what are our useless Labour Government and their mendacious leader going to do about it?
Precious little, other than order up yet another tanker load of Labour W H I T E W A S H !
It really is about time we threw this corrupt Labour Government out of power for good. If only I thought the incoming Tories would do anything about this. . . but sadly, I doubt I will be holding my breath over it.
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An extremely expensive whitewash, which once again takes the taxpayer for a ride while bringing undeserved relief to the government.
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Yup, another whitewash.
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As a supplier to Rover at the time of the BMW takeover and after - I really have to agree with "amclpreston" - BMW did a fast exit with all the real assets of the company. However, nothing has been said by Mr. Peston about the real destroyer of Rover - the last British owned volume manufacturer. A certain "lady" called Mrs Thatcher who sold the company to British Aerospace for a pittance. Surprise, surprise, all the assets (mainly land) were stripped - not for the benefits of British workers and taxpayers but for the benefits of wealthy shareholders. The company amazingly managed to limp on for several years but Mrs Thatcher must fairly take the blame for destroying British volume motor manufacture.
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This comment was removed because the moderators found it broke the House Rules.
This is merely the last chapter in the humiliating decline of the British-owned motor industry, where the suicidal tendencies of the unions were matched only by the incompetence and lack of vision of successive managements. Both 'sides' of the industry have been guilty of greed, greed, greed compounded by political motives on the union side in past decades, and management inadequacy throughout. Austin, Morris, then BMC and then all its sorry successors had no global vision - Renault, Volkswagen, Peugeot and all the others have achieved nothing that could not have been achieved had BMC and the people who ran it and worked for it then and later shown more awareness of the world beyond our shores, learned a few foreign languages, and built cars that someone outside Birmingham or Coventry might actually have wanted to buy or drive for more than 20 miles. This latest fiasco is no worse than the destructive greed shown by Red Robbo and the like over decades. But it is depressingly in keeping with want went before.
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Theres no rule against being 'successful' but is this really acting in the best interests of the company and the employees?
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The real problem was the Government decision nine years ago [with an election pending??]to ignore John Moulton's realistic proposal to keep only MG [which is what has now happened!!]in favour of the politically expedient Phoenix offer to keep the whole place going. Anyone with any motor industry knowledge recognised Rover as a volume car maker was dead in the water.
Why pillory the Phoenix Four - they did what any realistic businessman would do and maximised an opportunity. The real culprits are the Government and the Trade Union as both cost the workers very substantial redundancy packages and the taxpayer a lot of money.
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Oops! Thought I'd get bounced at 20!
Really guys-can't a gal vent her spleen once in a while? It was on topic and totally relevant!
Unless, of course, the conspirator in my own situation is on here and doesn't like seeing his deeds in black and white for all to see and consequently referred my post.....?
Maybe it was my query about the loan to BMW? Again, I felt it was a valid point.
Then again, perhaps it was my wish for a change of government?
Was it the mention of diverse money management?
Wish my husband and I had done what they did to MG-£42 million would have been lovely.
So much for freedom of speech-I haven't been on here for a long time and I'd forgotten just how difficult it can be to post a comment from your heart!
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How many of those 6000 people who lost their jobs (and their spouses/children) suffered as a result? How many bills/rents/mortgages went unpaid? How many kids had less food on the table or had to wear less than pristine clothes? How many family vacations were cancelled? How many mums and dads had to turn to other, "less honorable" means to support their families? How many lost their cars thus finding it harder to find replacement jobs and making a bad situation even worse? How many families were torn apart over financial stresses?
If only one then it is one too many while others were "rewarded" with complete financial security for themselves and their children at their expense.
Nothing short of a complete overhaul of political and business stystems throughout the world will stop this. That's never going to happen so we should all just accept that people will be allowed to do this without consequences (save for a "humiliating" "report") while the rest of the population are within reach of the not-so-long-arm-of-the-law for a multitude of lesser sins.
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Of course Fraud and Swindlers have been around through out history Charles Dickens revealed them in his books. This was not so long ago SO WHY ARE WE NOT FOR THE DICKENS DOING THE SAME.IT APPEARS THAT PEOPLE THAT HAVE SOME SOUGHT OF PRIVILEGE CAN DE' BACIE SOCIETY WITH THEIR LOW GREEDY MORAL STANDARDS.I wonder what would happen to somebody shop lifting or stealing a car THE HEAVY HAND OF THE LAW WOULD COME INTO ACTION. The investigation took over 4 years to reveal this outrage and most probably gave the culprits time to get away with it.AND THEY CALL THIS COUNTRY A COUNTRY OF JUSTICE .CERTAINLY NOT FOR THE PEOPLE THAT WORKED THERE OR THE ECONOMY IT WAS BASED IN.HOW FAR WILL THE ROT SET IN{BANKS,TAX FREE HAVENS,LOSS OF MANUFACTURING JOBS i.e REAL JOBS}.THIS COUNTRY SHOULD FEEL ASHAMED OF ITS LEADERS
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This comment was removed because the moderators found it broke the House Rules.
The most telling point of the report is that the actions of the 'Pheonix 4' were not illegal. Yet again directors have looted a company with disastrous consequences for the employees. For Rover you could read Marconi, Courts etc and not forgetting the banks! The directors of the 4 now nationalised banks all walked with away with big pay-offs, funded by the taxpayer, while ordinary staff, those people who actually did their job properly, are lucky to get a redundancy payment above the legal minimum. And all legal. The directors of Channel 4 have imposed a pay freeze on staff yet two directors who've recently quit recieved six figure pay-offs. And again, legal. Company directors, even public sector ones, appear to think that market forces are only for the little people.
This scandal could be rectified by a change in the law but that won't happen, as big business has bought the government. Our whole business/political establishment is rotten to the core.
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Sometimes the criminals are dressed in pin stripe suits not balaclava's.
These men walked away with a fortune in cash some of it taxpayers money or funds. I don`t think they had any intentions of saving it, they sold land and assets to asset strip the business. The land was prime real estate for new housing developments.
Then they set about the workers pension fund and split that between them, directors are in a powerful position. They can buy and sell shares way before the stock market gets to know about events. Share options, golden hello, they work the system for there own ends and then its golden good bye.
You cannot have a conscience when you are ripping off families and leaving them without any pension provision. Another example of the "I" culture, what`s in it for me that prevails in the UK boardrooms.
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Just more proof of the modern day Feudal System we live in. Bring back Oliver Cromwell, but without the religious bent.
Keep the money with the money so the poor have to work to survive.
Arranged marriages within the higher society. Cant have commoners getting rich.
I bet this comment doesn't get aired, being the BBC establishment.
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Anyone who followed this who has any kind of appreciation of business will understand that the Alchemy takeover was usurped by a political move from Byers in the run up to an election. The fee that the Tower executives charged for keeping Labour voters happy for four more years has now been revealed as £42m. Of course there is nothing illegal in their behaviour. If anyone is handed money on a plate they will take it. The real culprit in this is "cheap" electioneering. But there is a major hidden and unexposed cost. If John Moulton and Alchemy had been allowed to complete their deal the Longbridge site would have been re-developed creating new jobs and a small scale car factory would have been preserved. The expenses scandal is but a pimple on the side of this mountainous scandal.
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In the old communist Albania, the differential between the highest paid and the lowest paid was never more than 3:1. I am not suggesting that as a model but we do seem to be currently in an era of the opposite extreme. The 'earnings' of directors of some large companies are totally out of proportion and some seem quite obscene.
Apart from the moral dimension, it must be possible to reduce the differential in pay and still get good quality directors. I am all in favour of increasing income tax on high earners. However, I am more concerned about what such high differentials in income between directors and workers says about our society's attitude to the role of the director.
When did pocketing large sums of money at the company's expense take priority over the best interests of the whole company? Maybe it is time for all employees automatically to be shareholders.
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This comment was removed because the moderators found it broke the House Rules.
Got moderated last post ... the main problem is Peter Mandelson, MP.
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There is a word which describes what we have become:
Kleptocracy, alternatively cleptocracy or kleptarchy, from Greek klepto (theft) and kratos (rule), is a term applied to a government that extends the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats) at the expense of the population, sometimes without even the pretense of honest service.
Funded by the current and future generations of an overtaxed and overworked middle class.
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Absolutely nothing new here we all KNEW these people had made off with the money. The shock is two fold:
it cost £16 MILLION to tell us what we already knew
Peston spent most of his time on BBC News last night bemoaning the lack of the report's attempts at blaming the government for everything
Waste of money and undue political bias by someone who is ostensibly a business reporter.
We don't need any more petty politicking at the BBC or anywhere else.
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Well, you have to admire the man! The Prince of Darkness has done it again - he's completely turned the news away from the real story, and even you Robert, who is usually good at understanding what's really going on has fallen for it. The actual story here is that the Government chose the Pheonix offer when it knew it was flawed because it was politically expedient to do so. It saved jobs temporarily prior to an election, when it knew all along that the only commercially sensible bid was from Alchemy. The Government also quietly helped ferment the campaign against Jon Moulton because it was politically convenient to support the idea of Alchemy being ruthless asset stripping capatilists to garner more votes. Stephen Beyers (and the Cabinet) knew at the time, that they had traded a sustainable smaller long term business with Alchemy for a short term electoral con. It is the fifteen hundred or so people that would have had a job today at MG if the Government had done the right (though unpopular) thing at the time that is the real story. I'm not saying that the Director's remuneration wasn't a story at all, but it was an open goal that Mandelson billowed the journalistic net with.
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I don't know why any of this comes as a surprise, especially to the Labour government who approved the Phoenix consortium's bid. Phoenix never had anything resembling a business plan once the considerable amount of money given to them by BMW ran out. After years of incompetent management and loony union action, Rover was just too inefficient and lacking in new models to compete in the marketplace, and had no money to develop new cars.
The original bidders, Alchemy Partners, realised this and proposed a slimmed down "Rover", using the MG brand, to develop niche performance cars. This would have saved around 20,000 jobs, but the rest would have gone. The unions balked at the idea and, in an amazing display of short-term thinking and inability to see the writing on the wall, forced the Labour government to change the details of the bidding process to effectively exclude Alchemy.
With all realistic options now off the table, Phoenix were hailed as the great saviours. But all Labour and the unions really did was condemn *all* the employees they claimed to represent to eventual unemployment. Incompetence like this takes practice.
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These people were paid a measly £2m a year each to prop up a failed company for the government; they would have made a lot more if they'd been bankers propping up a failed economy for the government.
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How many people took control of what were once public utilities and then became very rich?
How many people bought companies and very quickly, they creamed off millions?
Weren't these four guys doing just exactly what quite a few have over the past couple of decades?
Well done boys - you made yourselves a fortune greater than than a lottery ticket win!
When will be learn? These are the very folk who complain about taxing the rich, about how they make money for us, and if we tax them they will leave. We want folk like these to leave (preferably before they rip off money).
We live in a democracy. Businesses do not get to vote. Will our politicians change the law to ensure there will be no repeat, or will they go out for a nice meal with these kinds of people for a very friendly deal-making chat?
Governments should focus on the long term. Short term successes that in the end are found to be failures should face penalties. Well, if they are sincere about serving their countries and take decisions in the public interest.....
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Hopefully that's the last we'll hear of John Towers as a commentator on the Today Programme.
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I am dismayed there is to be no full criminal investigation of what is clearly serious financial impropriety, affecting thousands of workers and blighting an area for decades to come. Surely there is a case to be investigated,here? Why is the Government so spineless and the legal system so toothless when it comes to these affairs? As a society we are being systematically and ruthlessly abused by this "elite" who seem to be able to get away with blue murder.
Possibly the recent MP expenses revelations have something to do with it: They set a new low in standards and demonstrated to everyone else that fraud isn't really fraud - depending on who you are.
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What is the problem? The phoenix 4 took 9 mil each out of rover over a period of 5 years.Salaries and whatever Bankers have been taking that every one or two years and we will let it continue and the taxpayer owns the majority of them
I have no doubt these guys did try. Look at the financials. BMW gave a 500 Million loan and approx 450 million stock. £45 miilion is a drop in the ocean. Even with 950 million they could not get it to work.. Be honest with your selves offered the deal BMW offered would you not have a go and would you all have paid your selves £50k a year. I dont think so!
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This really must be separated out into 2 big stories. First, of course, is the obscenity of the greed of the executives who have essentially fleeced the senior management, employees and doubtless the suppliers in the Rover supply chain, many of whom will be hard working people in small businesses.
But the second, and in some ways greater obscenity, is the cost of the report itself. We need to know WHO authorised it, WHO set the terms of reference, WHO set the budget for the report and WHOSE backsides are being covered up here. Please, please BBC dig deeper here and don't let the tabloid headline of capitalist greed serve as a smokescreen for the other part of this story.
Nearly everyone who reads this comment has paid for that £16 million document. It's around 25p for every single person in the UK - for a REPORT for goodness sake. The only people who will get good value for that are a) the Consultants who probably wrote it and b) the policitians who are hoping the Directors of the business will take all the flak.
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At one end of society we have kids being dragged up on hideous estates in poverty akin to the times of Charles Dickens. And at the other we have people who think they deserve to be multi-millionaires despite being abject failures, and who don't care if they have to take money away from people who are living in relative penury to boost their own bloated bank accounts. It stinks. Read Rhubarb Grumble's view on the rape of MG here.
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I can't understand why we throw good money after bad and pay £16m for this report - after all it's not as if we will learn from past mistakes!
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I agree with OldWykehamist what a waste of public money who authorised the commisioning of this report in the first place should be made to explain how the £16 million was spent as it equates to £20,000 per page!!!
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If the company had debts of £1bn pounds and not enough income to keep going, clearly the whole thing had been a charade for years and the government were well aware of this.
How much public money did Labour give to Rover in the week prior to the 2005 election, to stop them going public about the imminent collapse of the firm at such an inconvenient time?
And shouldn't that money (given where it has obviously ended up) be viewed as essentially a bribe?
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Well, I guess that if they weren't allowed to plunder that's English talent that would flee abroad ...
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Strange coincidence that this report has been released after four years in the making, on the same day of the Vauxhall announcement. Case of burying bad news ? Or if their is no bad news around then some can be made . Same manipulative manouvering by a discredited government and a BBC more than willing to help out.
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It would be helpful and responsible journalism if Mr Peston could shed some light on the amount of salary and annual pension that the directors of Rover were paid. The headline grabbing numbers include the capital value of the pension, an amount that these people will not receive.
A police officer above says that he recived an a lump sum of £122k and has an annual pension of £20k pa: Depending on what assumptions you make, this probably has a capital value of somewhere between £0.5m and £4.0m: However, I'm sure the officer doesn't feel like a millionaire.
Come on Peston, let's try and explain the numbers, not just stoke up indignation.
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Blair/Brown- MG Rover. What a debacle. Worse that watching 'Britain Does the Apprentice whilst skating on ice with no Z factor'.
Systemic regulation failure. Was this not a warning sign for the wider economy, or rather- had the report not taken quite as long, would it not have been?
600pages cost £16million? Thats £27,000 per page, and for what pearls of wisdom? The executive took out a lot of money?! Please, did they also instruct and prepare the report? The £16million would have been better spent on providing jobs and retraining and/or more university places.
It also amounts to over 16% of the money that SAIC requested at the time, which would have saved the jobs in the first place.
Is this reporting malarky a closed shop? Can I pitch/tender for the work? I'm fully literat and I promise i'll take my time and do a good job of it if you've got any others you want knocking up...come on Mandy, hook me up?
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I think that there is a real need for a 'deterrent'.
This in my humble opinion should be in the form of a new law - a Criminal Negligence and Asset Reclamation Act or similar whereby the likes of these Directors, Goodwin and other bent banksters, vultures, spivs and politicians who defraud and cause mayhem should have all of their assets including historic assets seized and sold off to recompense their victims with no hiding place.
Only when there is such a law in place will these criminals and sleazesters think twice before they wreck our inglorious nation's economy, innocent employees and citizens.
The problem is, of course, that it takes honest politicians to do this without having any skeletons in the cupboard and when you have politicians like Mandelson involved - Well, Turkey's don't vote for Christmas (sorry ... Winter festival) - Do They?
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Just because it's legal doesn't make it alright; laws change but morality doesn't.
It sounds like Rover was a sinking ship, not sure what difference £42m would've made. They could've given each employee £7000 after it went under I suppose. I'd like to think if was already wealthy, I'd choose the latter option rather than lining my pockets further.
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Whilst not wishing in any way to condone the activities of these 5 chaps:
1 They took on average 1.6m pounds per annum each, compared to J Ross of the BBC who is taking 6m pounds per annum on his own
2 They employed 6,000 people for 5 years who would all have lost their jobs 5 years earlier had BMW closed the business in 2000. That's an awful lot of wages (on which the government collected taxes). Not to mention the money spent with suppliers in the UK etc etc
3 I'm looking forward to the day when similar reports are published into the activities of those bankers in the UK who took massive pay packets (many bigger than these) and who ran their banks into the ground and nearly caused a global financial collapse. Preferably not at a cost of 16m pounds a go.
Perhaps Lord Mandelson (or hopefully his replacement) will consider banning those bankers from being directors.
Or perhaps the banking issue will be swept under the carpet because there are too many political skeletons in that particular cupboard.
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I really don't see what the Govt has to be upset about. After all, these four chaps have helped deindustrialise the UK which has been Government policy since the early 80s.
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It appears these four acted like MPs over the expenses scandal, within the law but morally corrupt.
It mattered not a jot to them that MG Rover went under they had already lined their pockets to an extent whereby they never need to work again. Their actions were a ruddy disgrace!!
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I'll bet the government are now looking through Vauxhall / GM / Omega files and are wondering who they can blame when it all goes pear shaped as well. If Derispaska's actions with LDV are anything to go by, it won't be long before the government is held to ransom over Ellesmere Port jobs....
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37. At 07:43am on 11 Sep 2009, Roberto1966 wrote:
'The actual story here is that the Government chose the Pheonix offer when it knew it was flawed because it was politically expedient to do so.'
Quite! And Rover wrokers (and ex Rover workers) I knew in Birmingham at the time thought this was the wrong decision right from the off. So this was pretty basic and broad-brush expediency.
The only viable option was to reduce the size of the business as Alchemy said repeatedly to the media at the time. XX% of something is better than nothing. Not a tough calculation!
I'm not sure what appalls me more... The millions pocketed by the opportunist lightweights that were gifted Rover or the millions wasted writing a toothless report with self-evident 'conclusions' that has side-stepped the manifest culpability of the Government in this.
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Robert,
You say that "the inspectors ... will not accuse the so-called Phoenix Four and the chief executive they appointed of breaking the law" and yet "they enriched themselves while the [company they were responsible for running] hurtled towards insolvency".
What a sham this makes of our current legal system!
They may have a "right" to be rewarded for their work and efforts, but they have a "duty" of care to the governance of their company. If their duty is shown to be negligent, their rights should surely be forfeited!
It is becoming increasingly clear that even if our politicians and corporate elite can be found scoffing at the trough, our legal system itself is also powerless to stop a great crime against society.
Lest we forget the interelationship between rights & duties:
"The fulfillment of duty by each individual is a prerequisite to the rights of all. Rights and duties are interrelated in every social and political activity of man. While rights exalt individual liberty, duties express the dignity of that liberty."
American Declaration of the Rights and Duties of Man
Those that have taken from society without consideration of duty have both lost their dignity and levelled great damage to us all.
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I kind a agree with management and also directors to make money.People forget in pass 1980 etc. all the employee use to walk out for just 1% of wages to be increase.So now Directors and company bosses get they back by closing doors.One day royal mail will be closed as well.People do not want to work and people who want to work employer do not give them jobs.
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Where has my comment gone?
It was no 50 now its disappeared
I'm not a "new member", Mr Peston simply hasn't covered anything worth commenting on for ages.
I hope it's not the fact that I compared the 1.6m pounds paid per annum to each of the Rover 5 to the 6m pounds per annum paid to J Ross of the BBC that has caused its demise.
Or that I'm waiting for the day when we get similar reports (but not at 16m a go) into the activities of much more highly paid bankers who ran their banks into the ground and nearly caused a global financial collapse.
Or that I'm also looking forward to the day when Lord Mandelson considers banning such bankers from being directors. Although I state this is highly unlikely because of the political skeletons in that particular cupboard.
Please advise !
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Some interesting points above,
#19, Yes BAe are the villians who tend to escape serious criticism in this whole sorry saga. To be fair to Thatcher, she had got fed up with BL after the Maestro and Montego, which BL had claimed would turn the company around bombed on the market, even managing to sell far less than the widely derided Allegro and Marina. BAe had serious plans for Rover but they were caught out by the end of the Cold War and the consequent run down in defence spending which nearly bankrupted them.
Likewise I believe BMW were genuine in their aims for Rover but they were in for 2 nasty shocks. First BAe had asset stripped the company by selling off large amounts of land at former site in Oxford and Coventry, instead of investing it back into Rover to fund the much needed modernisation of Longbridge, BAe snaffled that money to address it's cash shortages. The other nasty shock was about the cars we know today as the 25 and 45 which replaced the highly popular 200/400 Series. Rover's management, (led at the time by George later Lord Simpson who went on to turn solid, cash rich GEC into bankrupt dot com failure Marconi) completely misread the market and pitched the cars into the wrong market segments where they subsequently bombed and caused huge losses.
BMW's strategy for Rover depended on 3 cars, the Rover 75, the Mini and a new car codenamed R35 which would replace the 25 and 45. For the later 2 to go into production Longbridge needed to be expensively upgraded so in 1998, BMW approached the government for a £300 million loan to fund it. Apparently Blair was in favour of BMW but the request ran into fierce opposition from The Treasury (I wonder who could have been behind that?!) and they received only about a quarter of what they needed.
The 75 was launched and received glowing reports from the press but potential buyers were put off by the speculation over Rover's future so the car never lived up to it's potential. By now Rover's losses were seriously threatening BMW's commercial future and it had to take action, so they agreed to sell Rover to Alcheny who planned to go into niche sports car production. This panicked the government who were terrified about thousands of job losses in the marginals rich Midlands just a year before the 2001 GE, so Stephen Byers favoured the sale to Phoenix. Yes BMW took the Mini and the R35 prototypes with them (the latter is rumoured to have been reworked into the 1-Series) but as it was BMW's cash that funded the development of both of those cars then can you blame them? "Nothing personal, just business!") I've always thought that if they'd got that loan then Rover could have been set for a secure future primarily given how successful the Mini has been. Even the much derided Alcheny plan would have meant that there would still be a substantial car making operation at Longbridge today.
I'm not surprised there's so little criticism of the government in this report, Hutton should let people know that when a potentially embarrassing issue comes to light the government frames the scpoe of the report so narrowly that it produces the result they want. I guess we will have to wait until the 2020's and 2030's when all the cabinet papers relating to this saga to be released so we can finally see what really happened, I suspect that Messers Blair, Brown and Byers will not come out of it looking too good!
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ah, so this is that "Private Equity" thing I keep hearing about - company goes bust, thousands of workers thrown on the dole, and the PE guys make a few million quid each in very short order - is that the point of Private Equity, then?
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#52 wrote:
'I'm fully literat and I promise i'll take my time'
Hmm..for £16m I think we'd expect at least an 'e' on 'literate' and an upper-case 'I' on 'I'm'.
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As grubby and distasteful as the antics of the Phoenix Four have been shown to be, the real fault here lies in 2000, when the Government prevented Rover from being sold to Alchemy Partners.
That deal would have slimmed the company down to a size where it might have become profitable again and kept 2-3,000 people employed, plus supply chain.
This report is, frankly, a smokescreen to stop people loking back at the real source of Rover's woes - the Labour Government!
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Just found posted on a USA U-Tube....
"The Uk Govt. has just published a £16M report about the MG car bankruptcy wherebys 5 executives walked away with £millions and thousands lost their jobs...All legally apparently...This is an example of what happens when the government throws money at a failing company....the money disappears into the pockets of a few...Now look at GM and the banks/ Wall St...etc...same thing...the government are propping up dinosaur organisations which are "too big to fail", rather than let the free market run "
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16 million Quid for a report!!
Which cretin in Government signed off that largesse? As for the directors over rewarding themselves, a certain Mandelson is a bit of an expert in that field, hmmm?
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According to "breaking news" on the BBC it seems Mandy has already had these guys barred from ever running another company.
Would anyone like to bet how many bank directors get the same sort of treatment?
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£1.5 trillion pumped into the UK economy - 94.4% of GDP - and the UK economy has only grown by how much?
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I have become complacent in my outrage at the repetative nature of these 'fraud through the back door' cases and in this respect I am ashamed.
I am also disappointed that we always get the comments that one 'outrageous scandal' somehow minimises another.
All of this is systematic of the dilution of what is moral and what is entreprenerial?!! It is of course individual immorality as well as collective. One Government is no more to blame than another we are all responsible for being so fickle in our condemnation.
Of course I like many others am shocked to know that any human moral being could feel that he could sign such a contract at the outset leading to acceptance of such large sums in failure at the obvious expense of the 'whole'. We do, however, allow ourselves the initial outrage and then feel all we can do is wait for others to change the rules that will always allow it. What can we do collectively, a change of Government is not the answer. This is down to society collectively over years accepting materialism and greed to overtake totally a wish to improve our society as a whole with a more long term philosophy.
I have no answer as I feel I have no real control. This is not Party Political it is human failure on all levels.
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"At 10:15pm on 10 Sep 2009, markus_uk wrote:
Isn't that what elite is all about in the UK? Helping yourself before you help others?"
I couldn't agree more and parasites on society fits the bill for the majority of them as they selfishly accumulate obscene fortunes.
But this does smell of a whitewash as far as the government is concerned and especially with he who is on everyone's lips.
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WOW,
NuLabour got away with promising 100 million in the run up to the general election granteeing to save the company, then having re-gained power canceled the deal forcing the company to close.
Whatch out Vaxuhall workers, beware of Lords bearing the promise of any gifts as we have an election a comming!
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This country is bizarre.
We have a society which shuns corruption at the lowest level, so that you wouldn't be able to pay off a ticket inspector on a train due to his moral fortitude.
Yet in the upper echelons, corruption is rife - this was not an error of regulation, this was a case of knowingly turning a blind eye. You scratch my back and I'll scratch yours, and the public can go -scratch- themselves.
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If the Rover guys put in 3 times the Report guys hours then they have given value for money as 42/16 is less than 3
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12#
Exactly. All BMW wanted was the Mini and a line in on 4WD technology.
Isnt it kind of funny that the BMW X3 and X5 only appeared after the acquisition of Rover?
What they paid for it probably was probably significantly less than the R&D costs of developing their own.
Odious maybe, but thats business. Alls fair in love and war.
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The Mafia in the US were brought down, not for fraud, extortion, etc, but for tax fraud.
The Government (i.e. we the taxpayers) must have lost a large amount of VAT in the Rover/MG fiasco. Now the original VAT Act was written with nebulous fraud in mind and, in defining a VAT offence, it introduced a new concept, that an offence is committed when the circumstances are such that a VAT fraud must have been committed, even if the details of the fraud are not known. In other words, if the situation smells, it is up to the Directors to prove that a fraud did not take place, a stunning reversal of the usual "innocent until proved guilty" concept. This could be a powerful tool in the current spate of mega-pound corporate cases.
The problem is that the SFO and HMRC investigation units have become too large and unwieldy and, rather than investigation by a cost effective investigator, it has become investigation by a slow and expensive committee and the cutting edge is blunted. The date on which the fraud was first known also becomes blurred, statutory time limitations on prosecution apply and so the investigators become just as interested in a whitewash solution as are the offenders.
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Nice to see the_fatcat proving that old internet rule - 'any pedant criticising another's grammar or spelling will make at least one error themselves.'
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#69 Damgerous move by Mandy. I suspect the Phoenix Four know a lot of things that could seriously embarras the governemnt!
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64#
About the long and short of it Saga, ask Gordon.
He's been cosying up to them for 12 years. Ask Robert, read his book "Who Really Runs Britain", one of the central planks of it being how the tax regime has been so curiously benign to these organisations, whereas historically, a Labour government would rather peel off its skin and bathe in rocksalt before contemplating such a thing.
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55#
Hear hear. Very very well said.
63#
Interesting analysis, especially about the 75, a future classic, probably one of the best cars Rover ever made. I've still got one!
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#15 wrote - "No the real humiliation is the revelation as to how morally bankrupt our society has become whereby we faciliate pariahs such as these milking the system for their own personal benefit and then merely walking away scott free irrespective of the damage that they do."
Spookily enough a line which has been used to damn the people milking benefits as well. It seems to me that if you work hard to be in the middle you are taken for a ride at both ends.
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No 24 Tigerjayj - Welcome back !! Long time, no see !! The BBC uses an automatic "profanity filter" now. It even considers the word "H*n" a profanity despite the fact that Attila, a historic figure, was one of them !! I presume that now we must say "a person or persons from the area that is currently Hungary" !!
Ah !! The joys of state censorship !!
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Whilst £42m for five men is indeed excessive greed, they did at least keep many people employed for a while longer than might otherwise have been the case - but surely you are missing the point here.....
The bigger issue for me is the astonishing figure of £16m - for a Report!!!
That's £16m of Taxpayers' money, that kept no-one except the report's authors employed - now that really IS a Scandal!.... yet within the vast sums wasted by this government, the media clearly do not see it as even worth a mention...
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what about the buying of the votes just before the election with the payement of wages and redundancy money when they went bust.
And allowing BMW to walk away with the 4x4xfar the best 4wd techo in the world ?
Similar to Honda and there 4x4 that looks much like a freelander too
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Does the government think that preventing these executives from "running companies" is going to cause any inconvenience to Phoenix Four and the CEO?
If I had the opportunity to turn £10 into £42million legally, would I care if I was banned from running companies?
As they say "I don't think so".
They are laughing all the way to the bank with a very nice, relaxed comfortable retirement.
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Respect to #63 (JPSLotus75)
exactly the kind of on-the-ground, informed points needed to be told to London journalists.
Seems to me there were at least 4 crimes (in the court of public opinion)
The Phoenix 4 theft of the moolah
The £16 million price-tag for a sanitised report
The government shenanigans at the time of Alchemy's putative bid
BMW's midnight flit with all the design and R+D (they can be excused)
Does anyone look abroad to see how other countries keep such entrenched pinstripe-collar corruption in check? Obviously we don't.
Where is Papa-Doc when we need him most?
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So the bosses took this much
How much money was spent on the rest of the Payroll?
What happened to the money put in by the Government?
Why did it cost £16 million to write?
Are we to be treated to similar for RBS, HBOS and Northern Rock?
Surely anyone could have picked up the accounts, viewed the P&L and pulled these figures out. Why did it take this group 4 years?
What have we learnt? I venture "nothing"
Smoke and mirrors from our government I fear, and poor journalism from Peston who doesn't look below the surface to check the facts
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Surely you would be better employed investigating the destruction of wealth within the country?
http://news.bbc.co.uk/1/hi/business/8248645.stm
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The Government plans to ban the Phoenix Four from holding Company Office - why was this measure not taken against the bankers who nearly brought the country to it's knees?
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The government is planning to prevent the P4 and CEO from running companies.
I'm sure the P4 and CEO are shaking in their boots, contemplating the hardship that will inevitably come with banning order!
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Ok, so the directors of the company paid themselves £42m. Given that the company failed with "debts greater than £1bn", why is this significant? If the directors had worked for nothing, would that have stopped the company from failing? I think not.
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Snuffle! Grunt! Squeal!
Oink! Oink! Oink!
Just doing what our disgusting MPs have been doing, only on a larger scale.
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There seem to be 2 possibilities. Either the responsible ministers and supervisory bodies were negligent in overseeing the original deal, in which case ministerial heads should roll or this is a whitewash designed to hide the fact that the 4 did nothing different to many other businessmen. If the latter is the case then Mandelson is clearly guilty of malfeasance in public office. I do not know which is the truth (although I instinctively distrust anyone called Gervase) but either way ministerial heads should roll.
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Like the Bankers these executives obviously gave more time to how they could enrich themselves than the financial wellbeing of the organisations they managed. All governments since 1979 have turned a blind eye to the absence of business integrity provided they saw a good "tax take" .
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88 - BDO were employed in the capacity of forensic accountants. So effectively they were required to go through all of the financial records of the company and, in effect, chase the money and ensure that there were no fraudulent activities and that all the transactions were above board (on a legalistic view rather than a moral view). I can't remember who the auditors were but the viewpoint was that more information was needed than a simple audit (which goes into very little detail) would have picked out therefore the audited financial figures would not have given anywhere near the detail that this report would have gone into.
Remember that when the report was produced this was given to the SFO (by guess who...) who pretty much through it straight out (basically if they were involved they would have appointed forensic accountants to do the same thing...hence why it was purely a political move to throw it across to them).
In terms of the report not criticsing various elements of government etc, I am guessing that this is because this was not in the scope of the report. BDO would have been given strict guidelines on the report (and I know that the scope of their work was changed during the time hence racking up increased fees) and there report would have returned the information that was requested. I am not entirely surprised that it wasn't critical of government given that it was the government who commissioned the report and hence gave it its guidelines.
Lets not blow the cost of this piece of work out of proportion given the costs of other government reports (think of the recent McKinsey report commissioned on the NHS - the findings were then ignored by the government despite paying substantial amounts to commission it!)
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I'm not a Rover employee nor a supporter of the actions of Phoenix Venture Holdings but I have been affected by this issue. My Government has spent £16m of OUR money on an inquiry specifically designed to deflect the blame for this ill handled affair away from them and onto a 'soft' target. Kicking fat cats is child’s play at the moment – ‘The Phoenix Four’ (intentionally) makes them sound like pub bombers. The Government should have been more imaginative in their attempt to deceive the public. Unfortunately, it seems that Robert Peston’ has again been hoodwinked by Labour spin and once again feels that he has some kind of moral authority to represent the silent majority. If he wishes to continue with his tabloid journalism he should join The Sun rather than allowing himself to be little more than an ill disguised Mandleson puppet at the licence payers expense.
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People seems scandalized by the 42M figure "while 6000 workers lost their jobs" as if the directors not taking it would have saved the company/the 6000 jobs. But that's 7000 pounds per worker. That would run a car plant for an additional 3 months, if there were no costs except workers' pay. In reality it would run the company for maybe ONE MONTH. No more. It made no difference at all to the eventual fate of Rover.
That was sealed by successive governments' lack of commitment.
I must agree, the 16M for a report on the bleedin' obvious is more of a scandal.
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78#.
Nice to see the_fatcat proving that old internet rule - 'any pedant criticising another's grammar or spelling will make at least one error themselves.'
We are both correct in our respective usage. See: Fowler's Modern English Usage, 3rd edition - entry for "quotation marks".
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Every day, with each new story of corruption, greed and graft, it becomes increasingly obvious who really runs this country. The government exists merely to smooth the path for the conquering masters on their road to their next billion. The rest of us come way down in the pecking order. Sadly the next government will be the same or worse.
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What was already known is now official. It took 4 years to reach this conclusion and at a cost to the taxpayer of £16 Million. It was obvious to Mr Average what went on 4 years ago without the need for an enquiry !
This kind of thing is happening across all industry in the UK. The bosses
are raping each and every company dry whilst cutting pay and jobs for the workers. In my view this is immoral, fraudalent and corrupt. Why has it taken me so long to realise I was born and bred in a bannana republic.
I cannnot understand why people in the UK put up with it all, are we spineless ?
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#16. SilentHunter2 wrote:
"So what are our useless Labour Government and their mendacious leader going to do about it?"
Criticise. Perhaps SEVERELY!
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So, the fabulous elite and the good old Greedy British Director has been caught out lining his pockets again! People must, (SURELY?) be getting sick-to-death of this type of "business" activity surfacing again and again and being told, "IT'S WITHIN THE RULES."
How can we seriously demand of one country, say Democratic Republic of Congo, that it's state sponsored Conflict Diamond Trade will NOT be tolerated, yet some parallel style asset-stripping activity in Britain is OK? (Of all parties,) all Labour wants to do is disqualify these people from being Directors? Big Deal!
Ordinary Joe public MUST stand up and start taking responsibility for the way things are run in this country. One of the only peaceful ways of doing this is through the ballot-box. (You know, when good men do nothing, evil prevails and all that!)Unless we decide to bring the "house" down this will go on and on. It could be your daughter or grandson who loses his (or her) home, career, family, next and you did nothing?! Get real, please!!
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42 million between 5 over 6 years - how many footballers or bankers would accept such very low rewards. We need to target our indignation in the right direction! This is a diversion. The bankers and footballers do far far less and expect and get far far higher rewards.
The does not justify what was done - but we need not to be diverted from the right targets.
We have regulators (The Bank of England the FSA etc) (and a government of sorts) that is supposed to react to, or pre-empt our, justifiable indignation but they have failed - but we are still paying them!
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@96. At 10:28am on 11 Sep 2009, Horned_Devil wrote
I agree about the political posturing
The fact remains, however, that £16 million was spent on a company that was insolvent when Phoenix bought the company, but managed to keep going for sometime before it crashed with debts of over £1 billion, and the auditors passed the company for future trading, and it's bankers carried on too
The money that these directors removed is relatively insignificant and I'm sure the IoD rep will be along shortly to say remuneration is low in the UK for big bosses
It is unfortunate that the report seems to find no actual wrong doing to deflect the attention away from the government involvement...or at least Peston does not go into that. (I presume the rest wasn't in the briefing)
I wonder if the remit of the report actually went into the standards set by UK accountancy bodies? That may say more about the potential for Fraud
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£16 million paid by the tax payer for a report into this clear cut case of criminal behaviour. Is this not another flagrant abuse of public money. As a recent bankrupt, now discharged, I have no doubt that the office of the official receiver would have prosecuted me if I had been seen to have milked the business and then demanded the return of all the money.
Is there any way we can view the details of how the people who wrote the report actually managed to spend such an outrageous amount of OUR money?
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Shame on them, I would feel very aggrieved if it was my pension they had raided.
I assume pension fund regulations have moved on in the last few years to prevent similar withdrawal's, although after Robert Maxwell, you would of thought ALL pension funds would of already been safe.
Time after time our regulation systems fail,who employ's these bone heads ??
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Can anyone explain why I am still working for a living? (along with millions of others)
If anything this crisis has taught me that the 'moral way' is no longer the 'right way' and that I should act as my 'social betters' do.
Sure no law was broken - but wasn't it the same argument for MP's expenses?
As Robert said on the news last night (bless him) - why isn't the Government implicated in this as they introduced Pheonix.
I'm going to quit my job, set up a ltd company, borrow as much aas I possibly can and then default - walking away with the money.
It's technically legal (as long as I don't reveal it was done on purpose) - I'll get struck off as a director (big wow) but I can get my wife to be the next director of my next rip off - sorry I mean company.
LEGALISED THIEVERY.
This is an insult to all working people - not just those at Rover.
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REVOLT!
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Ishkandar-thanks for the welcome and info-not sure why my comment at #20 broke house rules though! I'll email back and see if they tell me, but I won't hold my breath!
Been away because my group of companies has been decimated by our FD who tried to destroy my husband and myself financially, personally and businesswise-the stress over the betrayal by him and 7 staff across our group has given me a breakdown and made me physically very ill.
My husband and I always paid our staff ahead of ourselves (modest salary), and put our own money into the group when needed. Never had an overdraft or loan-the greed of others took away 2 of our companies and they tried to take all our clients as they set up their own business. This hostile take over has been in the making since March-very clever as we had no idea what was going on. We are honest, hard working people, but they wanted all the profit for themselves, not the good of the company. The worst is of it is, we trusted these people, and some of them we'd known for years. The betrayal was worst.
We had survived the credit crunch-it was avarice in others that caused this.
My point is, it's not just big, high profile companies which have this happen. We were an SME-we know personally of 2 other companies where this has happened. The law states that nothing illegal has occurred, but morality just seems to be disregarded.
With MG and other companies in similar situations, the trust placed in directors to manage the finances is betrayed. I was under the impression that if a liquidator found that directors took money from their company at its expense, they could be held liable to repay it. However, there must be a loophole somewhere -betrayal of trust is a moral issue I guess, and where money is concerned morality seems to go out of the window.
There was some publicity at the height of the credit crunch about some football clubs being way behind on their tax and NI obligations. How do we know that MG were up to date with theirs? I have been told that in cases of liquidation, HMRC are at the bottom of the list for settlement.
What of the loan from BMW?
Both staff and trusting directors are at the mercy of others' greed and lack of moral compass.
The law needs changing to ensure directors in these situations cannot do this anymore. This should be applied to all companies, irrespective of size. Can't imagine such a law being passed though.
As for banning people as directors-not exactly a deterrent or punishmentwhen the money's already been taken, is it?
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In abstract terms, I guess this sort of behaviour constitutes financial piracy! Just thought I'd give it a colourful term!
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I miss Alex C-his sharp dry wit and block caps one liners were priceless! He's been blocked completely apparently!
I also agree with the poster that this blog has been a little lacking in recent weeks-glad to see something more spicy to discuss!
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There is really very little point in government departments which have responsibility to oversee issues such as Rover by the old DTI, if they allow the destruction and plunder of an impotant corporation, vital to employment and commerce for a whole region. It is one thing to spend a vast amount of taxpayers' money on government, but another if it does not function properly. The taxpayer loses twice. The loyal employees lose everything.
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No reasoning could be given when the SFO pulled back from launching a criminal investigation, because BDO’s report was at the time confidential. Presumably now the reasoning was as you stated Robert, the inspectors do not accuse the so-called Phoenix Four and the chief executive they appointed of breaking the law. It remains to be seen however when and if the civil cases get under way whether or not criminal wrongdoing will be uncovered and referred to prosecutors. Given the willful blindness demonstrated by the auditor and adviser to the parent company Phoenix Venture Holdings, the other two firms involved with MG Rover before during and after its failure, and the fraud watchdogs and the government, it should be expected.
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Like I keep saying, the message from the elites and politicians is LOAD and CLEAR.
'FILL YOUR BOOTS, you have x% of getting away with it!!!'
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Many of the posts on this get steamed up (quite rightly in my opinion) about the £16,000,000 (looks so much more when written like this than £16 million) that BDO Stoy Hayward charged us, the tax payers. Isn't this just another small example of the government's love-in with the big consulting firms?
If any of us was having a job done at home, we would get several firms to quote against a defined job spec and pick the one that we felt gave best value taking into account how long we felt the job would take and the rate per hour of the labour. As the majority of the cost of this report must have been labour (apart from a few 1st class rail fares and 4* hotels) what were the hourly rates to get to £16,000,000? You can bet that a lot of the actual hours were clocked up, not by the senior highly qualified chaps but by the little people dragging through the paper trail. Maybe the government in spending our money should publish as an appendix to all such reports showing what the other bids were, and the successful bidder's hours and hourly rates.
Of course this couldn't happen because a) this would introduce a level of transparency that could show up the government's procurement weaknesses and b) these firms don't actually comptete on price with each other -- another closed shop.
You would think that with all the layoffs of supposedly qualified people from the financial and consulting fraternity, that the government, who are by far the biggest user of this type of service, would take the opportunity to both squeeze the inflated rates and encourage the formation of new businesses that would compete on price and give the PWCs, BDO Stoy Haywards and all the rest a run for their money. Does no-one up there ask the question "If this was my money would I spend it that way"? Obviously not...
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Why is it that the Phoenix four controlled Rover for 2 yrs?, they have pocketed pension funds of £2.25 million pounds each. Sir Fred ran RBS Halifax for 10yrs, got a Pension Pot of £16 million pounds and a yearly pension of £693k for life. I have just served 30yrs as a police officer, I got £122K and £20K per year...
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You did not put in the hard work to get to their level though did you?
All this nonsense about people being overpaid is just that, nonsense. I'm not saying that executives deserve their massive salaries, but they got where they were through hard work and being exellent at what they do, otherwise they would never have got the jobs in the first place. Someone has to run companies like this and they will be getting paid these sums. These people all started as Juniors, they worked their way up and got pay rises with each promotion (you would not take more responsibility for the same pay would you?) with each step up being a bigger rise.
Also on the scale of the money lost by Rover through sheer poor performance in quality (believe me, shoddy workmanship throughout the company was as much to blame as anythign else) the £50m or so they were paid makes absolutely no difference.
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Oops, sorry for being honest and saying it as it is, will try again.
Mr Peston indicates that the Pheonix Four pocketed £42million, but that was surely mearly the remuneration not the asset stripping. As has been pointed out in other bloggs these (this bit has been self withdrawn for the sake of propriety) split Rover into profitable and unprofitable, needless to say they put the profitable into their sole control while leaving the rest for spectacular demise. They, as mentioned by others, sold off large blocks of real estate, again not putting the money into the parent company but into their profitable parcels. Can Mr Peston get his calculator out and tell us the full extent of (again comment withdrawn to protect the guilty)?
At the next General Election we should all indicate "none of the above", as indicated elsewhere politicians of whatever party are interested in one thing only - their self-perpetuation - the political mantra of "re-election, re-election and re-election" pervades the corridors of power, and as pointed out by Mr Portillo on the Daily Politics Show the function of an MP is to try and become the Prime Minister. Doh, I think maybe it is to insure the best interests of their constituents in the decision making process, no wonder you got out of electral politics and became a TV celebrity (the reverse it could be said of dear old Boris).
Whoops, I may be straying into dangerous commentary, enough to say we all seem to agree that the corporate institution is rotten to the core and a workers revolution is more than overdue. But then we would upset our close American "special relationship" by demonstrating the true meaning of the "Land of the Free", maybe it should be the peoples' time, as Marx indicated eventually capitalism will demonstrate its corruption and implode in disarray - anyone for anarchy?
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i do not understand how bonuses can be made without making a profit.
these guys were either clever or bmw was very gullible. clearly these guys were in a win win situation. they were loaned a huge amount of money (interest free). they new that if the company succeeded, then great. if it did not, then make sure they go out with a portion of loan. this is not robbery, but very stupid from bmw. the government - well too busy thinking of how to invade iraq and afghanistan at the time to get the oil and gas.
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23. At 01:06am on 11 Sep 2009, kalangwa wrote:
"Why pillory the Phoenix Four - they did what any realistic businessman would do and maximised an opportunity. The real culprits are the Government and the Trade Union as both cost the workers very substantial redundancy packages and the taxpayer a lot of money."
You have a FUNNY WAY of looking at the world - where are your morals?
In 2 years they pocketed £42m between the 5 of them, after they finished the company was dead - so bad even the Government couldn't afford to bail it out.
I suppose if I come round to your house, let myself in through an open window and steal everything while you're out then I've simply "maximised an opportunity"
Morals are no good when you simply subject them onto everyone else and yet don't live by them yourself.
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BNP
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28. At 01:46am on 11 Sep 2009, mNonpayer wrote:
"The most telling point of the report is that the actions of the 'Pheonix 4' were not illegal. Yet again directors have looted a company with disastrous consequences for the employees."
Once again, pleasse take note - this is further evidence of the law working for the rich minority and not protecting the poor majority.
So why do we bother to abide by it? - someone remind me
REVOLT!
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Until it is generally accepted in Britain that integrity is the most important characteristic of any person then we will continue to have these problems.
As it stands you can't trust anyone: so is there any wonder that the place is breaking down? All those who argue that society is about every man for himself is a fool. We all need each other and redevelop those essential social solidarities that lead to a more egalitarian society.
This is what the management elites know all too well. They stick together and collect the rewards as to whatever is going. It is the general public who allow themselves to be manipulated as part of that process who are gulled. This will go on only for as long as you permit it.
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37. At 07:43am on 11 Sep 2009, Roberto1966
You make no sense, you want to blame the Government solely for the "theft" of the money?
The Government may have introduced the thieves, but they didn't do the stealing.
They should all hang, Government, Pheonix 4 and BMW for that matter.
By your argument if I bring a burgalar around to your house and he later steals everything from you - then I should carry the blame and not him for the act he did?
Surely you must be mixed up.
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I would love to see a Peston blog on this.........
http://news.bbc.co.uk/1/hi/business/8246449.stm
Coming to a Bank near you soon!
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A basket case of a company, a basket case decision to pick the management team (remember the other bids not selected) made by a basket case of a government desperate for a third term.
Result: Directors reward themselves in an extremely high risk scenario, delaying the inevitable to keep people in jobs in an extremely high risk political scenario to keep a government in power.
A number of contributors have already made very good points. But others please remember this is not remotely like normal business in a properly functioning marketplace. This has been pure political theatre for about 20 years (or 40 years depending on your viewpoint) costing the taxpayer a very large sum of money with the sad inevitable ending costing yet more taxpayer's money.
How does a once-great country like ours descend into a banana republic?
The evidence is quite stark...........
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Hi,
If they took £40,000,000 then the Government has had back the £16,000,000 in tax, or am I dreaming.
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With this news surely the people realise that WE ARE AT WAR WITH OUR GOVERNMENT.
They are systematically selling off everything we own, or produce to the private sector sending us into poverty and deprivation for generations to come.
Meanwhile the Pheonix 4 will be relaxing by the pool, chatting with SIR Fred Goodwin and the other disgraced CEO's.
I'm sure they will be very remorseful - as they sip champange which was bought with the shortfall of wages that we were all paid.
REVOLT AGANST THE REVOLTING!
I'm calling it now - this has surely got to be the last straw in the corrupt and dispicable society.
I am so angry my hands are shaking as I type - anyone else feeling that?
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118. honestgeraldinho "Anyone for anarchy?"
Yep, I'm in. Might not be pretty but at least it would make a change.
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Any idea why my posting name has suddenly become "you", when you acknowledge my posts with the correct name of "noninflatable"?
See message #93
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well it was a labour government that oversaw the death of the british motorcycle industry and a labour government that has watched as our motor car industry was destroyed, what else can you expect from greedy management who are allowed to do whatever they want from a government that is in reality just not interested or honestly that inept.
this country is a consumer but we no longer build our own and thus prices will continue to rise and lesser well off people will struggle to cope.
nothing new there then.
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55. At 08:51am on 11 Sep 2009, mibren
Trying to justify the behaviour of the pheonix 4 by slinging mud elsewhere is a politicans trick - please don't do it unless you are one.
I'm sure the head of the BBC has his nose inthe trough as much as anyone else - but this is the real problem isn't it.
By pointing out who else is bad you merely deflect the anger from the matter in hand and seem to justify it by 'everyone else is doing it'
...by that argument I can carry a knife, speed, park where I like, fiddle expenses etc - simply because 'everyone else is doing it'
....and that's exactly why the Economy of the world will eventually fail as the greed strangles us all.
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I hope you all remember this the next time the media is trying to get you to moan about a strike on the rails, mail or any other public service.
THEY ARE TRYING TO PREVENT FURTHER THEFT OF NATIONAL ASSETS.
For god's sake people - learn your lesson. This Rover situation was already tested with previous privatisations (like the railways) which have not got better and have got relatively more expensive and the only winners are the CEO's of the franchises.
The same game is being started in the Royal mail - make it look bad and then sell it to some corrupt rich man.
Is this how you want your nation to go? A place where we are all enslaved by a small minority?
Watch T-Orange manipulate their monopolistic position in the UK. Yet another allowance made during this recession which is going to be very bad for the consumer.
When did a merger ever produce lower prices? lower costs for the company maybe, but never lower prices.
WE ARE ALL BEING FLEECED - REVOLT!
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64. At 09:18am on 11 Sep 2009, sagamix
Very good point.
Where are the defenders of P.E.?
People who act as hangers on to SCUM are seriously worthless in the world. P.E. has NEVER been about saving jobs or mproving companies - it's all about EXTRACTING WEALTH WITHOUT ANYONE NOTICING.
Case in point, Rover - money taken but by the time we all found out it was too late and they're all in Bermuda.
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If they took £40,000,000 then the government has the £16,000,000 loan back in taxes ???
Or am I dreaming
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69. At 09:32am on 11 Sep 2009, Wee-Scamp wrote:
"According to "breaking news" on the BBC it seems Mandy has already had these guys barred from ever running another company."
Yes, but as I pointed out it doesn't stop their wives, sons, brothers etc.
this has to stop - REVOLT is the only answer.
No system is better than this system. I would rather live in a cave filled with honesty than this fake charlatan world.
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121#
"I suppose if I come round to your house, let myself in through an open window and steal everything while you're out then I've simply "maximised an opportunity""
Er... yes. Thats why the criminal fraternity who specialise in this MO are called "Opportunist Burglars". What else would you call it?
"Morals are no good when you simply subject them onto everyone else and yet don't live by them yourself."
And who said Business has morals?
What the original poster said has some bearing. The unions and the government were involved in the decision making process to accept the Phoenix bid. Alchemy's bid would have reduced the size of the business to just concentrating on the MGF. Lots of redundancies, but better long term prospects. The MGF was a relative success and would still be in demand.
Phoenix on the other hand, advocated more of the same, no change, no immediate redundancies. The fact they bled the thing dry and did nothing to warrant their remuneration over the 5 years they ran it was neither here nor there.
So far as labour were concerned, they had done the right things by British Jobs for British workers - until the election was over. After that, they couldnt give a stuff.
The Union? Their leaders still got paid. They've still got influence over Labour because of their donations and block votes... do you think they had the morals to look after their members interests by taking such a short term populist view, rather than one that would have sustained a British owned volume car manufacturing facility in the heart of the west midlands rather than going for their usual, entrenched, dogmatic short term myopic solution?
Phoenix may have let MG Rover down. The Labour Government and the Unions most certainly did, because they sold themselves as being for and of the workers, which they plainly were not.
And isnt it funny how either of them, despite the part they played get no criticism in a report that cost the best part of 20,000 per page?
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BAN MANDY
How much did Mandy earn during the same period?
Mandy was disgraced and forced to leave office. Why is he sitting in judgement on others!
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This story is an insult to all those true SME's out there who work hard and honestly.
Why are you bothering? - surely you must be asking yourself today
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This is probably going to get me into trouble but here goes. I have never worked for either MG Rover or any of it's predecessors nor the UK government but have been an interested and involved participant in the demise of the West midlands automotive industry and engineering generally.
I grew up in a family dominated by the automotive industry. Both of my parents worked for companies in the trade as did several relatives. In Coventry in the 1970's most people did in one form or another.
Both my parents and at least one uncle worked for companies sold down the river by labour governments. My parents still live in the same house they bought when they got married and both have recently retired.
Let us not deny the fact that many thousands of workers in the West Midlands not just six thousand at MG Rover have had jobs, careers and job prospects for them and their children decimated over the last twenty five years. Unlike the coal miners and the huge publicity they got the West Midlands automotive industry suffered the death of a thousand cuts and probably as many if not more lost jobs in the car industry as did in the mines.
I grew up in an era of wildcat strikes, of union power and a final realisation that there really was no future in the West Midlands automotive industry as it stood.
After ten years working in the City I came back to Birmingham about a year before the BMW walk away. Most people in the know in Birmingham knew that without serious financial investment Rover was finished. Even the workers knew it.
Many people have often maligned the average UK worker but in my experience they are far from stupid and generally as honest as the day is long. With hindsight the smart ones got out when BMW was looking for volunteers to go. They got good redundancy payments and a good confirmed pension both of which the 6,000 left at the end missed out on.
The astute ones even walked out of Longbridge and within a month walked into a similar job with better terms are Ryton working the third shift on the Peugeot 206.
The time leading up to the Phoenix Four takeover was almost unreal in Birmingham in that the full power of the unions, the Labour controlled city council and even the Roman Catholic church and C of E came behind the Phoenix Four.
People didn't drive BMW cars for fear of vandalism and several BMW dealerships were attacked. The Alchemy Group was denounced and roundly criticised.
In a way I don't blame the labour government for supporting the Phoenix Four because if the press and public opinion was anything to go by locally they were portrayed as saviours and Alchemy almost as agents of the devil.
Anyone unaware of the power that the unions held over the Labour Party in the Midlands should merely type in the words Labour Party and Unite into Google. The position of Unite and the current Labour Party has been discussed in depth elsewhere.
MG Rover was effectively bankrupt. Without the GBP 427 million loans from BMW it would have had to cease trading.
I won't deny that both BMW and Honda before it had ruthlessly purged Rover of anything of value but they had paid a very considerable price for this in the past.
Without the mini and the 25/45 replacement Rover was selling unwanted out of date cars. Imagine a UK car manufacturer today making the current mini and the BMW 1 series.
It was a recipe for disaster as was shown by the effective GBP 2 billion it burnt through in five years. The number of other companies who were approached to partner or take over Rover whilst the Phoenix Four were in charge was wide ranging and all of them walked away.
Money was wasted on vanity projects like the MG rally, touring car and Le Mans teams and yes I don't doubt the Phoenix Four lived the high life off it and yes they creamed off a huge amount of money whilst Longbridge burned as it were. However as we have seen with certain people at certain banks they were far from unique in Gordon's false boom in the earlier part of this decade.
The report is a whitewash as New Labour and the Unions were very involved in all this but this isn't the story the current government want to see.
The Phoenix Four will no doubt join Adam Applegarth and Fred Goodwin on a list of shame but I imagine they have broad shoulders and their pain will be assuaged by the money and pensions they have built up.
After GBP 16 million who honestly believes that this won't happen again in a different city and a different industry?
For the people of the West Midlands a golden opportunity to establish the truth and really apportion blame has been lost. We are all a little poorer for this.
Apologies for the length of the post but the decline of manufacturing in the West Midlands and the car industry in particular has made me the person I am today as it has for virtually everyone I went to school with.
I'm alright,at least at the moment, but tens of thousands of families in the West Midlands have been decimated by this.
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BAN THE BANKERS!!!
If these guys should be banned, then surely the bank managers who have brought the country to the brink of collapse should have been banned, not given Hundreds of Billions more! Also the politicians who let it happen!
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Yet another victory for this government's news management. The politicians' biggest error was when these business charlatans were encouraged to buy Rover from BMW. At the time, there was a proper commercial bid from Alchemy Partners to take Rover off BMW's hands, slim it down to a sportscar manufacturer, and make it into a successful business. This was politically unacceptable, so instead these four muppets were encouraged to intervene. Skip forward a few years and their business plan becomes obviously flawed and what happens next ? A Chinese manufacturer steps in, buys the assets, and turns it into a sportscar manufacturer !
Imagine how much better things might have been if the government hadn't messed up the original sale to Alchemy...
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It's quite breathtaking to hear that Peter Mandelson thinks it right that directors of failed companies should be struck off and never be allowed to be directors ever again if their companies failed and they paid themselves too much.
What a bonanza that will be for the lawyers. Where would they start?
Seeing as many businesses are failing because of governments policies the numbers could go into thousands.
Perhaps some of the directors of the failed banks will be first on his list. Then of course there will be many MP's in the same boat.
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#55. mibren wrote:
"They took on average 1.6m pounds per annum each, compared to J Ross of the BBC who is taking 6m pounds per annum on his own"
Apart from being irrelevant, this is incorrect.
The BBC pays £6m per year to Jonathan Ross's production company, in return for which they provide the BBC with many hours of television and radio programming. And I presume - although I do not know the facts - that the production company is responsible for paying the salaries of all the people involved in the making of those programmes and not just that of Mr Ross.
#62. mibren wrote:
"Where has my comment gone?
I hope it's not the fact that I compared the 1.6m pounds paid per annum to each of the Rover 5 to the 6m pounds per annum paid to J Ross of the BBC that has caused its demise."
Your comment is still there. You just need to look more carefully.
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130, Mad, ******* Mad!!!
FILL YOUR BOOTS I'M TELLING YOU, you know what I mean ;-)
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Personal integrity is not an attribute I would identify with these 5 individuals.
Nor the government members involved in this "whitewash" of a report.
Bah.
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please don't forget that another large accounting firm (deloitte)received income of 1.9million in audit feesm 3 million in "other fees" and 9 million advice on three transactions for the period between 2000 and 2003. Something that does not seem to overly headlined in a report costing 16 million by BDO. What a delicious irony. May be this answers the question of why regulators seem to be in effective in so many examples . This unfotunately is another example of a few owners and the professions getting rich at the expense of its workforce, the british public, all that loyaly supplied and supported the company
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Writingsonthewall
With you all the way mate. Radical change required and NOW
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i've just seen 'lord?' Mandelsons comments about the MG Rover fiasco, frankly i dont think the government should be allowed or even trusted to investigate this situation considering their own THEFT of public money what an absolute hypocrite!!!
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So where does this leave the communities in Birmingham reeling from the double whammy of the closure of Longbridge and the credit crunch. Pretty damn teed off I imagine.
These people should be ashamed of themselves. I don't think I could look myself in the mirror knowing I got paid and kept 9 million despite the fact my company went to the wall.
I don't suppose they will have this problem as I don't believe you get to be a director of a large company these days without a certain moral flexibility.
For these people to blame it on the government is completely fraudulent -at the end of the day the government can't continually bale out companies and these people were in charge when this happened.
It is people like this who represent the dark side of the New Labour dream for me - overpaid egomaniacs who supposedly deserve their higher salaries due to "market conditions". If these people feel they can earn better money abroad let them go - lets have some people in these positions who are happy to earn 2m a year instead on 9m and understand the moral responsibility that comes with a multi-million salary.
What business needs now is moral leadership but this will all be forgotten when the recession is over and we will be back to "greed is good".....
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74. At 09:43am on 11 Sep 2009, roy
Excellent comparison - one rule for the rich and another rule for the taxpaying mug (that's you and me BTW)
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Dear oh dear Mr Mandelson...Yet another stable door being closed after the horse has bolted! Labour seemed more than happy to allow these deals to happen and let them take their course! Now like some patriarchal figure the head is bowed in disappointmnet and the finger is pointed in accusatory disapproval..tut..tut..tut.
Come on! We are exhausted with the news that yet another scheme has been shown to be a get rich one for a few and never intended to deliver geuine wealth.How many times can a government abdicate responsibility or plead ignorance. Labour ministers take a good long hard look. Did you "fiddle" while Rover burned?
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People who "rip off" other people may appear to enjoy the trappings of wealth, but they will either have a miserable life or will rot in hell. Not a lot of consolation for those who have sufferd as a result of the actions of these 4 very greedy people. BLMC / Rover or whatever was, and had been for a long time, a complete basket-case with probably the world's worst management and the world's worst unions : they deserved each other. This should be a lesson to the rest of us, both management and unions.
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144 - BAN THE BANKERS?
From what exactly? Banking? How would you define that? Working? So we should let the welfare state pick up the tab? Who do you define as a "banker"?
Easy to say isn't it? Lets all have a mob mentality and burn the witch (sorry banker or executive).
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As a footnote to this collected tyraid, I note that the government is planning to have every parent/volunteer associated with child and youth activity vetted by a private organisation, at a cost of £64 per head, to ensure that no individual (as with Mr Huntley) can come into contact with youngsters.
At last a solution to our woes, cannot the same organisation do the same with the wonderkind of the business world, associated in whatever capacity with a failed business - banned from ever having control of the same; associated with any business giving excessive bonuses - banned from ever having control of the same; utilisation of offshore banking facilities, or partner, to evade appropriate taxation - banned from ever having control of the same. Let us put the social back into society, if needed put a charge on amoral practices - not to the institution but to the individual (again to our American friends for introducing that little chestnut) no more PLC back to LTD with individuals responsible for their actions.
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Just a note to all those who are concentrating on the 16m report.
Who do you think icked up the tab for the 42m in wages???
The money extracted from Rover essentially came from the tax payer and the consequences of the removal was also covered by us.
What do you think the 6000 Rover employees are doing now? The majority are living on benefits unable to get a job - and who's paying them?
I don't agree with 16m for a report - but it's in line with the other public enquiry costs we've seen. The paying yoursef 42million for 2 years work (even if it's for 5 of you) it's blatant theft.
To suggest this was not taxpayer money is ludicrous.
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What I find most horrifying about this saga is the report itself.
£16 million and 4 years to produce an 800 page report?!!!! Someone's having a laugh.
This equates to a cost of £20,000 per page, each of which took approximately 1 day and 20 hours to produce. I'd like to recive that sort of daily rate for such diabolical productivity.
Who paid for this, surely only the public sector is so wasteful? So perhaps the ommission of criticism of the government is understandable after all.
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What would happen if everyone in the UK was SINGLE?
FILL YOUR BOOTS FOLKS!
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92. At 10:16am on 11 Sep 2009, Prozac1000 wrote:
"Ok, so the directors of the company paid themselves £42m. Given that the company failed with "debts greater than £1bn", why is this significant? If the directors had worked for nothing, would that have stopped the company from failing? I think not."
...and with that logic you sign off all the bonuses paid to failing bank staff because lets face it - not paying them wouldn't have saved the bank(s).
Are you for real?
When someone royally fubars a company you DO NOT REWARD THEM.
I must have slept through and woken up in a time when logic has been reversed.
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101. At 10:36am on 11 Sep 2009, gjones15
One answer ......... REVOLT!
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I completely agree that what these 4 did was completely wrong - but at £20,000 per page - did we really get "value for money" from this report? I'm not a QC (although I do financial investigations) and I have to say what the hell have they been doing for the last 4 years? What took so long? How did it cost that much to carry out the investigation? It would seem that even after the collapse of Rover, there was still good money to be made out of flogging this dead horse!!
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I work in the motor industry in the Midlands. In 2002 I remember a visit to a Chinese restaurant in Leamington Spa. A couple at an adjacent table were deep in conversation. The man - "sotto voce" but full of slick and patronising reassurance - was explaining to his adoring yet uncertain female companion the one way ticket to unimaginable wealth that was provided for him by the potential tie-up with Brilliance, at the time the hoped for Chinese suitor of MG Rover. It was difficult to listen in on the fascinating conversation without giving myself away as an eavesdropper but I managed it. I had recognised the man as one of the Phoenix Four and knew from that moment on that his interest in being part of MG Rover was in feathering his own nest – not in building a viable business for the long term.
There is not now and will never be any successful commercial partnership where the intentions of the partners are not at least mutually compatible. No "get rich quick" scheme can build a successful enduring company. It was clear that MG Rover's management intended a different outcome to the deal to that understood by Brilliance – and the same attitude would have underpinned their dealings with SAIC.
From that moment, in my mind, MG Rover's fate was sealed.
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110. At 11:06am on 11 Sep 2009, Tigerjayj
A very poignant story - and a very good explanation of why liberalism in Economics cannot work.
The lawlessness of business practice is evident for all to see - and yet the liberals want to reduce restrictions yet further.
I could live in a world without (business) laws but only when we all start on a equal footing. To implement a regulation free economy in a world where this is already disadvantage is merely handing yet more wealth to those who already have it.
Are the liberals out there to defend their position?
Maybe there is a shift to say that equality needs to come before Liberty - which allows the two to work in harmony (as opposed to current liberalism which believes the two are mutually exclusive)
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112. At 11:11am on 11 Sep 2009, Tigerjayj wrote:
"I miss Alex C-his sharp dry wit and block caps one liners were priceless! He's been blocked completely apparently!"
Sadly not - Mr Curzon is too busy battling insolvency like most other SME's are at the moment....
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117. At 11:20am on 11 Sep 2009, hackerjack
I ahve never read such complete tosh.
Have you ever met a 'highly paid executive'? I have met several and far from 'being good at what they do' most of them achieved their posts either through a 'friend' or more commonly by 'Nero style'.
They are not skilled, and generally they are not clever. Look up most CEO's and they barely have a qualification between them (and I don't just mean degrees)
It's people like you that keep the system afloat - by assuming that someone above you got there because they are special or clever.
I presume you think MP's are a clever bunch too do you? After all they have 'managed to get to the heights they have achieved'
Sadly the system we operate under does not promote the exceptional, but the opportunistic and those prepared to take risks. Not really the basis for a stable and competent society now is it?
You make me very sad - I can't believe there are people like you out there.
My faith in the human race has been battered by some of the tripe I have seen written on this blog today in support of the Pheonix 4
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118. honestgeraldinho "Anyone for anarchy?"
131. At 11:48am on 11 Sep 2009, ButterMoose
Me too - no system is better than a corrupt one.
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140. At 12:05pm on 11 Sep 2009, Fubar_Saunders wrote:
"And who said Business has morals?"
...the law is supposed to - or are you admitting that laws are not for business but are simply to keep us all in line?
It's no good trying to engineer the story to be about the Unions and the Government. True the Government are in up to their necks, but the Unions are usually fighting a lost cause which started long before that (when Thatcher sold it off originally).
I'm sure you'll blame the Unions for the impending sale of the Royal mail, despite the fact it will be the purchaser who benefits most from the sale and not the workers or the Unions.
I love the way everyone keeps referring to the Alchemy bid as though it was some form of saviour - the end result would have been the same, however possibly Moulton and his crew may have had marginally more morals than the Pheonix 4 and therefore taken less in salary.
Obviously you don't know anyone who was directly affected by this collapse. I knew many people in rover who said this was happening but BBC blogs preferred to moderate out my comments in light of the impending investigation.
This was robbery by private equity - to say it was anything (or anyone) else is a joke.
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122. At 11:39am on 11 Sep 2009, JavaMan1984 wrote:
BNP
- - - - - - - - - - - - - - - - - - -
See
My faith in the human race has been battered by some of the tripe I have seen written on this blog today
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Response to COLLIERBJC #138
Well, doh, if they actually payed British taxes and had not put the money offshore!! How many company directors pay full British taxes, rather than the 10% to some backroom accountant to evade/avoid paying their full requirement.
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175,
You just don’t get it I’m afraid. It’s highly likely you never will.
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#65/70 FatCat
Uh oh! Fink I mite av tuched a roor nurv.
T'was a joke squire...don't live up to your name!
With such an uncanny eye for detail, (!) [grammatically enhanced to emphasise sarcasm] you should go into report writing...
Back to the point- this all fundamentally comes about due to politicians meddling with an economic decision. The purchaser should have been considered by an independent body-auditors/accountants etc though I'm loathe to admit it. The fee would most likely be less than £16million to prepare the 'report' which reports nothing, to put it in context.
As for the Directors being prevented from holding office again...what another completely toothless and pointless exercise conducted by an unelected member of the executive supporting our longest unelected Prime Minister in history, merely for show to try to curry favour. The equivalent of installing a CCTV camera to the stable door after the horse has bolted and the gate has been demolished...and streaming the video live on you tube. Jokers this lot.
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#143 ian_the_chopper
Interesting post, particularly from the point of view of telling us how these events shaped your life. At least you were prepared to admit how such events, which you seemed to benefit from (almost by accident?) "Decimated the lives of so many others."
Plain fact is people are not being given a chance to re-build their lives, before being ripped off again.
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Writings
Since you've been focusing on morals today - here's an interesting one for all those 'poor workers' and union-types.
All the employees knew that they were receiving money from the Government (well taxpayer).
Where were the basic morals to say as an employee - sorry no we are not feeding off other workers - if we want to make a go of this we should put our own money in as workers (see the latest initiatives on employee-owned businesses from a left-wing thinktank by the way) and make the business a success. As somebody else has alluded to where was the backing of the union for this?
Mmm....perhaps they knew that they were just getting the short-term fix because it was on offer?
Where is your moral society ethos in that?
Why I agree with some of your comments I think the question should be - are we just getting the government and values culture we deserve because too many are ok with the easy fix (even if it means losing your job eventually or not bothering to find one) and at the other end 'I'm alright jack'?
Perhaps the answer lies there...
By the way, as somebody has already mentioned whatever the obscenity of taking £42 million out the directors would have contributed about £18 million in tax and NI unless they were fraudulent (which they've not found to be). So society benefitted from this but there's no mention of it - just nasty horrible greedy directors - see the imbalance? how about nasty horrible greedy government and those who voted for them?
And for those talking of revolt, a few questions:
Against whom?
Against what?
And how is it going to make any difference?
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167 - Writings...
An interesting point on equality against liberalism. Generally there is outrage when something doesn't work to someones favour or someone is seen as getting an unfair deal so you will have outrage whichever path you chose (are they mutually exclusive then...?)
When we "enforce" equality it is seen as a nanny-state interfering and obsessiveness with political correctness or bureaucracy (eg health and safety legislation is generally regarded as a joke now but the aim is to protect the workforce from unscrupulous management practices) there is therefore outrage that we are being treated as children and there is general miscontent. When there is the absence of such legisaltion the "powers that be" are seen as not doing their duties to protect the masses.
Whilst I would love the utopian state idea where people genuinely had others best interest at heart we are not (and sadly I believe never will be) in a society where such a thing happens. The question is how do we draw a balance and try and please all of the people all of the time (oh and if I knew the answer to that I wouldn't be writing on a blog but instead producing a book - where I would only take a society adjudged profit share of course :-) )
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92. At 10:16am on 11 Sep 2009, Prozac1000 wrote:
'Ok, so the directors of the company paid themselves £42m. Given that the company failed with "debts greater than £1bn", why is this significant? If the directors had worked for nothing, would that have stopped the company from failing? I think not'
That's not the point though is it Prozac. No one is arguing that the directors should not have been paid. But they got Rover for £10 by claiming they could make a success of it and secure jobs and livelihoods in the process. Then they ran it into the ground while rewarding themselves VERY handsomely for their abject failure.
Daft as it was for the Government to believe them in the first place, I think most people would agree the directors' approach was greedy, shoddy and selfish.
It simply doesn't make sense to excuse their greed by comparing the money they took to the much larger loss they produced. If you think it does, imagine how you would feel if you discovered that, say, your pension fund manager had charged you exorbitant fees and they defended themselves by saying 'our fees are a mere fraction of the money we've lost on your behalf'.
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Ok, most of you won't like this but there are many ways to extract cash
Yesterday I had scaffolding put up outside my house for replacement windows. The scaffolders were decent hardworking chaps. They said they are really busy and the companies they work for are really busy too.
They said they just can't get UK national workers. They start, turn up late, cause damage, loaf and leave to go back to claiming benefits. They can get polish workers who have a good work ethic but who send remittances home.
So, say I was pretty much unemployed for 40 years and then was retired on a state pension for 20 years beyond that. Say with council tax benefits and housing benefits and a range of other 'free' services that on average I cost the state £200 per week. Over 60 years that would be about £600,000. If the cost were closer to £1000 per week then its £3,000,000
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Billions of pounds of taxpayers money wasted over my lifetime and there is no end in sight. First we subsidise people who can hardly need the money to buy Citroens and VWs. Now there is talk of a sweetener from government to keep jobs at the GM plant in Luton. Why are we doing this? There is a certain lack of democratic accountability here as in other policy areas. Presumably there is overcapacity in the motor industry. Should we not be investing money in renewable energy and replacing run down public sector facilities instead?
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Rugbyprof #181
To say the workforce were immoral for working seems a bit extreme, especially as the bulk of the funding was from BMW's £428million interest free loan, not as indicated taxpayers money. The Unions at Rover had for years been indicating that only sections (Land Rover) were viable, that the insistance on historical management in producing cars for the tweed and pearls set, middle-class pipe smokers who had moved on to Japanese and German manufaturers. Ask you hero Clarkson what the public thought about the cars being made, workers produce what they are told to, managers decide what is to be manufactured. Morals, your comments indicate that you believe an employee has the power to object if the management choose the easy fix as you put it - get real. the history lies in the confrontational management style that existed in the car industry for decades - managers straight from university/management school with little or no understanding of manufacturing or the car industry. Thatcher with her petty, small minded middle-class obsession with the working classes and their union representatives. Over the past fifty years successive governments have played games with the car industry, letting it muddle along at times of increased competition, or re-arranging the dechchairs on the Titanic when it was sinking through lack of investment. France, where the workforce are treated as people, not subjects as in Britain, has maintained a viable car manufacturing industry through state intervention - oh no that would be immoral of the workers to accept earnings supported by the tax payer. Hold on I think it was Napoleon III who had the workers planting trees along the roads of Paris because he could see that it would be immoral not to provide for people at a time of recession.
Revolt against what and whom, why you Rugbyprof and your self-satisfied smugness in assuming that your lords and masters know best, that the robber barons have everybody's interests at heart. The Pheonix four knew what they were doing, because the SFO say they do not intend to prosecute does not make it any the less a crime, judge and delivered by a jury of their peers.
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Well you fell for it, again. I am not saying the Phoenix 4 were blameless, but try putting a decent blog together giving the total story. You might look at the government ineptitude in yet aother fiasco. Mandy once had a loan and a property purchase that was not exactly straight. Mandy is hardly the one to lecture anyone.
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#43 womford
"Be honest with your selves offered the deal BMW offered would you not have a go and would you all have paid your selves £50k a year. I dont think so!"
That is the point, people suck! So measures are supposed to be in place to ensure our selfish human instincts are prevented (as much as possible) from doing stuff like this. Depending if you lean left or right it is supposed to be government or the free-market that prevents people from getting away with this kind of thing. Neither are working
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I presume that as the treasury will have taken a substantial amount of the P4 income in tax this will now be given to the people who lost their jobs. Peter Mandelson must agree with this or will he find that he cannot ensure that this will happen. An apology under these circumstances seems irrelevant.
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...and no one has so far given a thought to anyone who bought an MG Rover and the fact that they were left high and dry. No warranties. No customer service (yeh right). Nowt. Nothing. Thank you and good night.
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What I don’t understand is how the scoundrels who asset stripped Rover are only getting away with being unable to be a Company Director from now on. This is a punishment? We all know that there are many ways to control a business, to make money and it doesn’t need your name on the corporate door. Why aren’t these men in jail? I don’t believe the government should be pilloried about this, they were in a situation where a major company was in trouble and they grasped at the lifeline offered. But these men! They’ve got millions and have left thousands with out a job. How can they get away with this?
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If the Phoenix Four can be disbarred from being directors again can we do the same thing with certain politicians? The Business Secretary might not be a bad place to start.
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