MG Rover report: Response from Phoenix Four
At 9am today the government published the long awaited report into the collapse almost five years ago of MG Rover.
The 850 page report - which has cost taxpayers upwards of £16million - accused the so called Phoenix Four - John Towers, John Edwards, Nick Stephenson and Peter Beale - of putting personal gain ahead of the success of the company and of being out of their depth.
The report confirms many facts already well known about the debacle including that four men, along with the former chief executive Kevin Howe, took £42million out of the company in pay and pension contributions during their time at the company.
However, there was no mention of the government’s involvement in either brokering the original deal or its attempts - or not as the case may be - to save the company when the takeover from BMW turned sour.
While the report clears the Phoenix Four of any illegality, Business Secretary Lord Mandelson is now reported to be looking to ban them all from holding directorships, a move described by the four as further political grandstanding by the government.
( Download the MG Rover report here )
Here the directors of PVH Holdings and the Phoenix Four give their response to this morning’s report:
The report is entirely as we expected – a witch hunt against us and a whitewash for the government. It is also dripping 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 this report is that price.
The government was, however, willing to spend £18 million of taxpayers’ money on a report – many millions more than they ever gave MG Rover. Not surprisingly, they have got a version of events that suits their interests. This report was supposed to explain why MG Rover collapsed and it has failed to do that. Our remuneration was not the reason for the collapse. The real reason it collapsed is because this country’s government bottled its chance to save MG Rover.
The script for this report had been written before the process started. The Inspectors were not interested in hearing about any of the fundamental business processes, and in virtual denial when it came to discussing the role of government.
The government also tried to accuse us of fraud – a tactic that failed. The latest indications are that they will pursue disqualification proceedings against us, despite the fact that it is very well known that there is no possibility of us ever again considering this sort of role in the UK. It is political grandstanding.
This report tells us nothing new about our remuneration – everyone knew what we were paid. It was never a secret. They did not have to spend £18 million to find that out. Our remuneration was all in the company accounts and signed off by Deloitte, one of the world’s most respected firms of auditors. It was entirely legal, above board, and much less than similar payments in large car companies.
Swept aside in this report is the fact that, in April 2000, the padlocks were going on the gates at Longbridge. The mighty BMW was closing the company and thousands of people were staring the dole in the face.
That didn’t happen because we were not prepared to let it happen. We then succeeded in drastically reducing the company losses where BMW could not. We secured hundreds of millions of pounds of new investment and most importantly, secured employment for a workforce who received £1 billion in wages over five years. The Exchequer also received £450 million in taxes.
Our greatest regret is that the company could not ultimately be saved. All of us had strong links to the company. Saving MG Rover was why we took the challenge on in the first place, not personal gain. And no-one else wanted the job. The suggestion that we put personal gain ahead of the interests of MG Rover is utterly offensive and a complete travesty of the truth. One point which has been conveniently overlooked in the report, even though it was widely known, was that we were willing to put £10 million of our own funds back into the business to ensure the future of the company.
