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How Rover executives pocketed £42m

Robert Peston | 21:47 UK time, Thursday, 10 September 2009

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.

Rover cars destined for the scrap heap at a car breakers yard near York, Friday 15 April, 2005, following the announcement of the end of car production at the MG Rover plant / Press Association

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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  • Comment number 1.

    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?

  • Comment number 2.

    This comes as no surprise to anyone within the motor trade, all it's done is made the rumours official...

  • Comment number 3.

    Isn't that what elite is all about in the UK? Helping yourself before you help others?

  • Comment number 4.

    Yet another tale of how our fabulous "elite" are running the show - lining their pockets, dumping the workers, and getting away with it.

  • Comment number 5.

    #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'.

  • Comment number 6.

    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.

  • Comment number 7.

    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.

  • Comment number 8.

    Brown's Britain in all its glory...... can we get this money back?

  • Comment number 9.

    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?

  • Comment number 10.

    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.

  • Comment number 11.

    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...

  • Comment number 12.

    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

  • Comment number 13.

    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!

  • Comment number 14.

    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

  • Comment number 15.

    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!

  • Comment number 16.

    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.

  • Comment number 17.

    An extremely expensive whitewash, which once again takes the taxpayer for a ride while bringing undeserved relief to the government.

  • Comment number 18.

    Yup, another whitewash.

  • Comment number 19.

    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.

  • Comment number 20.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 21.

    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.

  • Comment number 22.

    Theres no rule against being 'successful' but is this really acting in the best interests of the company and the employees?

  • Comment number 23.

    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.

  • Comment number 24.

    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!

  • Comment number 25.

    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.

  • Comment number 26.

    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

  • Comment number 27.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 28.

    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.

  • Comment number 29.

    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.

  • Comment number 30.

    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.

  • Comment number 31.

    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.

  • Comment number 32.

    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.

  • Comment number 33.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 34.

    Got moderated last post ... the main problem is Peter Mandelson, MP.

  • Comment number 35.

    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.

  • Comment number 36.

    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.

  • Comment number 37.

    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.

  • Comment number 38.

    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.

  • Comment number 39.

    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.

  • Comment number 40.

    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.....

  • Comment number 41.

    Hopefully that's the last we'll hear of John Towers as a commentator on the Today Programme.

  • Comment number 42.

    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.

  • Comment number 43.

    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!

  • Comment number 44.

    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.

  • Comment number 45.

    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.

  • Comment number 46.

    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!

  • Comment number 47.

    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!!!

  • Comment number 48.

    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?

  • Comment number 49.

    Well, I guess that if they weren't allowed to plunder that's English talent that would flee abroad ...

  • Comment number 50.

    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.

  • Comment number 51.

    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.

  • Comment number 52.

    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?

  • Comment number 53.

    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?

  • Comment number 54.

    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.

  • Comment number 55.

    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.

  • Comment number 56.

    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.

  • Comment number 57.

    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!!

  • Comment number 58.

    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....

  • Comment number 59.

    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.

  • Comment number 60.


    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.

  • Comment number 61.

    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.

  • Comment number 62.

    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 !

  • Comment number 63.

    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!

  • Comment number 64.

    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?

  • Comment number 65.

    #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'.

  • Comment number 66.

    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!

  • Comment number 67.

    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 "

  • Comment number 68.

    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?

  • Comment number 69.

    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?

  • Comment number 70.

    £1.5 trillion pumped into the UK economy - 94.4% of GDP - and the UK economy has only grown by how much?

  • Comment number 71.

    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.

  • Comment number 72.

    "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.

  • Comment number 73.


    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!

  • Comment number 74.

    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.

  • Comment number 75.

    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

  • Comment number 76.


    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.

  • Comment number 77.

    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.

  • Comment number 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.'

  • Comment number 79.

    #69 Damgerous move by Mandy. I suspect the Phoenix Four know a lot of things that could seriously embarras the governemnt!

  • Comment number 80.


    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.

  • Comment number 81.


    Hear hear. Very very well said.


    Interesting analysis, especially about the 75, a future classic, probably one of the best cars Rover ever made. I've still got one!

  • Comment number 82.

    #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.

  • Comment number 83.

    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 !!

  • Comment number 84.

    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...

  • Comment number 85.

    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

  • Comment number 86.

    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.

  • Comment number 87.

    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?

  • Comment number 88.

    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

  • Comment number 89.

    Surely you would be better employed investigating the destruction of wealth within the country?

  • Comment number 90.

    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?

  • Comment number 91.

    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!

  • Comment number 92.

    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.

  • Comment number 93.

    Snuffle! Grunt! Squeal!
    Oink! Oink! Oink!
    Just doing what our disgusting MPs have been doing, only on a larger scale.

  • Comment number 94.

    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.

  • Comment number 95.

    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" .

  • Comment number 96.

    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!)

  • Comment number 97.

    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.

  • Comment number 98.

    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.

  • Comment number 99.

    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".

  • Comment number 100.

    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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