SFO to investigate MG Rover collapse

The fraud body will examine the failure of the car-maker in 2005, following a four-year inquiry

FIRST POSTED JULY 6, 2009

Business secretary Lord Mandelson is to confirm later today that he has asked the Serious Fraud Office (SFO) to look into MG Rover's collapse in 2005. The probe will follow a controversial inquiry by the Department for Trade and Industry (DTI) which has taken four years to complete after facing several hurdles.

The 2005 collapse of Rover, with more than £1bn of debt, led to the loss of 6,000 jobs and was the last chapter in the company's chequered history. At least 9,000 employees at suppliers were also affected. Private equity group Phoenix Ventures bought the company for £10 in 2000 and along with it received an interest-free loan of £427m from previous owner BMW.

Initially seen as the saviours of the Birmingham-based carmaker, Phoenix consisted of John Towers, Peter Beale, John Edwards and Nick Stephenson.

MG Rover suffered its high-profile collapse in 2005

They are thought to have earned £40m from their five years at the helm of the company, before it suffered its high-profile collapse. The executives' reputation then took a dive along with MG Rover's demise as the public questioned their involvement and remuneration.

The Department for Business Innovation and Skills said: "We have received and studied the report, and there will be a statement in Parliament [on Monday] when members will be updated." The Serious Fraud Office declined to comment.

However their is a great deal of controversy over the investigation's findings. It has cost the public £16m and goes against the initial report by administrators Price WaterhouseCoopers which concluded there had been no improper conduct.

WHAT THEY ARE SAYING:

Vince Cable, the Liberal Democrat Treasury spokesman, on Reuters: "I welcome the introduction of the fraud squad into what appears to be a major corporate scandal, but it must not be used as a smokescreen to hide what the public needs to know."

Richard Burden, Labour MP for Birmingham Northfield, on Thisismoney: "The important people in all of this are the people who lost their jobs when MG Rover collapsed. They deserve answers to the unanswered questions."