UK Serious Fraud Office says it won't begin criminal investigation into MG Rover collapse
By: JANE WARDELL
Associated Press
08/11/09 8:40 AM EDT
LONDON — The long-running saga of the collapse of luxury car maker MG Rover — and the subsequent investigation into what went wrong — reached a tentative conclusion on Tuesday when Britain's Serious Fraud Office said it didn't intend to pursue a criminal investigation.
The collapse of MG Rover, Britain's last major carmaker, in 2005 with the loss of 6,500 jobs was a staggering blow for the country's manufacturing heartland and a headline-making embarrassment for the ruling Labor Party as it fought that year's general election on a platform of economic stability.
The four executives from Phoenix Ventures that had bought the struggling MG Rover from BMW in 2000 for a nominal 10 pounds were criticized for taking an estimated 40 million pounds ($66 million) in pay and pensions over the five years they ran the company.
The so-called Phoenix Four — John Towers, Nick Stephenson, Peter Beale and John Edwards — have always denied any wrongdoing and counter-questioned why the government had withdrawn a 100 million pound bridging loan at the last minute that they argued could have saved the company.
After the SFO's statement on Tuesday, they called Business Secretary Peter Mandelson's decision to refer the matter to the agency as "the latest in a long line of bizarre and wholly unnecessary twists in the MG Rover story."
Mandelson, who referred the case a month ago after receiving an independent report into the collapse, retaliated, suggesting that the detail in that report — which has so far been kept secret — would shed more light on what happened.
"I sense rather a lot of buck passing on the part of the Phoenix Four and I think what people will be asking themselves in the light of this report is whether they, as individuals, are fit to conduct themselves as directors of companies in the future," he told Sky News.
The SFO said in its brief statement that the suppression of the independent report meant it could not go into detail about the reasons for its decision.
Mandelson's office said that report, which was also subject to criticism after taking four years to complete and reportedly costing 16 million pounds, would now be released on Sept. 11.
Mandelson was accused of attempting to further delay the report's publication when he asked the SFO to see if there were grounds for prosecution.
He said Tuesday that it had been important "to have clarity on whether or not this was a case that the SFO should be investigating."
"The workers who lost their jobs and the creditors who were owed nearly 1.3 billion pounds by the collapse deserved no less," he added.
But a spokesman for the four former MG Rover directors said they were "flabbergasted," when Mandelson referred the matter to the SFO, and that the question of fraud had never been raised.
"That view has been wholly vindicated by today's announcement and begs the question why the government chose to refer the matter to the SFO in the first place," the spokesman said, requesting anonymity.
"The directors have very little faith in a process that has seen 16 million pounds of taxpayers' money wasted on an inquiry that was originally defined, funded and then guided by the very government department that was heavily implicated in the collapse of MG Rover," he added.
More than 30 Freedom of Information requests had been made to — and turned down by — the government regarding their role, he said.
The government did plow some 6.5 million pounds into MG Rover in an ill-fated attempt to keep it afloat — for which it was later criticized by the Audit Office, which keeps tabs on government spending.
The Audit Office said that the prospect of Rover agreeing to a deal with Shanghai Automotive Industry Corporation — on which the government had pinned its hopes — was remote.
China's Nanjing Auto acquired the MG brand after the company's collapse, and now produces the cars in China and Britain.
