MG Rover's Phoenix Four summoned to Commons enquiry

Oct 23 2009 by Jonathan Walker, Birmingham Post

The four former MG Rover directors criticised for their management of the carmaker vowed to clear their name last night after being summoned to explain themselves to a Commons inquiry.

MPs have called on the Phoenix Four, who received nearly £36 million in pay and pensions from the carmaker, to explain the findings of a damning report into their handling of the Longbridge firm, which collapsed with the loss of 6,500 jobs.

The Business, Innovation and Skills Committee, chaired by Worcestershire MP Peter Luff, has written to the former Rover directors ordering them to give evidence.

In theory, the committee has the power to compel witnesses to appear before it.

A spokesman for the directors said they welcome the chance to clear their names and explain why many of the allegations against them were untrue.

As an official House of Commons body, the committee’s hearings are also exempt from most forms of legal action, meaning that MPs and witnesses can speak without falling foul of libel laws.

It means that the Phoenix directors – Peter Beale, John Edwards, Nick Stephenson and John Towers – will be able to put their side of the story in full.

They have previously claimed that the Government undermined their efforts to save the carmaker, and contributed to its collapse in 2005.

A spokesman for the four said: “There are statements in the inspector’s report that they would take strong issue with.

“They will be happy to make the true picture very clear to the committee. They had been expecting that a hearing like this might be called.”

However, the directors are likely to receive a rough ride from the committee, which also includes local MPs Julie Kirkbride (Con Bromsgrove) and Adrian Bailey (Lab West Bromwich West).

Last month, they were accused of giving themselves “unreasonably large” payouts, in a report by government-appointed inspectors.

The MPs are likely to focus particularly on the inspectors’ finding that MG Rover directors provided them with “inaccurate and misleading explanations” about the way the business was managed, at an earlier inquiry.

The 830-page report, which took four years to produce at a cost of £16 million, also found that Mr Beale had misled Birmingham MP Richard Burden (Lab Northfield), whose constituency included the Longbridge plant, over the acquisition of the Rover loan book by the Phoenix directors.

It revealed that Mr Stephenson paid more than £1.6 million to a Chinese consultant identified as Dr Li, with whom he had a “personal relationship”.

And it revealed that Mr Beale bought software to “clean” data from his computer, after investigators were appointed.

But although the report contained little criticism of the Government, it did warn that special advisers had briefed the media that Rover was in trouble.

While the inspectors concluded that this made little difference to the firm’s eventual fate, Conservatives and the Rover directors both claim that spin doctor leaks helped destroy confidence in the business, and hastened its demise.

Phoenix Venture Holdings bought Rover from BMW for £10 in 2000. But the business’ long-term survival depended on finding a partner for a joint venture, and this never took place. The business ran out of money in 2005.