A report into the collapse of MG Rover sparked a war of words yesterday between the UK Government and the four businessmen who paid themselves millions for running the car-maker before it went bust.
The so-called Phoenix Four face being banned from holding office again after a damning indictment by an official probe which made a catalogue of serious accusations.
Business Secretary Lord Mandelson said work has started to begin proceedings against John Towers, Peter Beale, John Edwards and Nick Stephenson. He also said they should offer an apology to the 6,300 former Rover workers as well as creditors who lost money.
The ex-Rover directors immediately hit back. They issued a statement which said: “The report is entirely as we expected – a witch-hunt against us and a whitewash for the government. It drips with the hallmarks of this government – spin, smear and point-blank refusal to take any responsibility for their own actions.
“We criticised the government for failing to help MG Rover. As we have seen elsewhere, there is a price to be paid for criticising this government and for us the price is this report.”
They bought the Longbridge-based firm from BMW for a nominal £10 in 2000 and paid themselves £9million each between then and April 2005 when the firm went bust, and also stand to make a further £3.2million each from shares and dividends, inspectors revealed.
Lord Mandelson said the Phoenix Four had “brass-neck nerve” to describe the report as a witch-hunt, and urged them to “do the decent thing” and formally disqualify themselves from holding any future directorships.
He rejected their suggestions that the government “bungled” the last chance to save the company, and that Gordon Brown had questions to answer about his role as chancellor in the decision not to provide a bridging loan.
The report, which cost more than £16million, claimed MPs investigating what happened were given “inaccurate and misleading information” by one of the four. It also found evidence of questionable press briefings by government officials.
Other revelations included a claim Mr Beale bought computer software to eliminate evidence the day after the government announced the inquiry into Rover’s collapse. They also accused him of giving “inaccurate and misleading” explanations to a select committee of MPs.
Labour MP Richard Burden, whose Birmingham constituency includes the Longbridge plant, said claims in the report that the Phoenix Four misled him and the select committee were “extremely serious”. He said: “If that is true, it means they not only misled me, but also my constituents, and the workers.” ”
Lib Dem business spokesman John Thurso, MP for Caithness, Sutherland and Easter Ross, said the report “tells an all too familiar story of greed and incompetence”. He added: “The government needs to take action to ensure this type of cynical asset stripping can never happen again. The one ray of light for those who lost their jobs is that the report’s publication should now unlock access to a fund originally set up for the benefit of ex-employees. Lord Mandelson should immediately establish if this money can now be distributed among workers who lost their jobs.”