Monday July 6, 12:05 PM
Britain launches fraud probe into MG Rover collapse
By Ben Perry
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LONDON (AFP) - Britain launched on Monday a major fraud probe into the collapse of carmaker MG Rover, one of the great names of British motoring, which failed in the hands of a consortium in 2005.
In a written statement to parliament, Business Secretary Peter Mandelson called on the Serious Fraud Office to "consider whether there should be a criminal investigation" into the collapse that led to the loss of 6,000 jobs.
The government's recommendation comes following its own four-year investigation into what went wrong between the sale of the company in 2000 to a consortium, Phoenix Ventures, and its collapse five years later.
MG Rover folded in April 2005 with debts of more than one billion pounds (1.15 billion euros, 1.6 billion dollars). Chinese company Nanjing Automobile went on to buy its assets, reviving the MG sports car brand.
"The Serious Fraud Office has today been asked to consider whether there should be a criminal investigation following completion of an inquiry into the collapse of the MG Rover Group owing creditors nearly 1.3 billion pounds," said Mandelson's statement.
"Following legal advice, the (government's) Rover Report will not be published at this time in order to ensure any potential prosecution is not prejudiced.
"The position will be reviewed following the outcome of the SFO's considerations," it added.
The Phoenix Venture consortium bought MG Rover in 2000 for the nominal sum of 10 pounds from BMW (Xetra: 519000 - news) after the German manufacturer failed to boost the brand's fortunes.
British media have raised questions over a long period about alleged holes in the accounts at MG Rover while it was under management by Phoenix.
A spokesman for the former directors of Phoenix have denied any wrongdoing.
"There has never been any suggestion of improper conduct by the directors and this was confirmed in a report by the administrators PricewaterhouseCoopers six months after they took over the running of the company," he said in a statement issued Monday.
"Their pay and remuneration has been open and transparent for years -- there's no secret and there never has been."
MG Rover, which lasted a century, had been the envy of the global automaking industry, producing classic brands including Jaguar, the Mini and MGB sports car.
Born in 1904, Rover was bought by German luxury car maker BMW 90 years later. Phoenix, led by John Towers, renamed the group MG Rover, incorporating Rover's popular MG sports car brand.
Rover vehicles were made for 100 years at the Longbridge factory in Birmingham, Britain's second biggest city. In 2007, Nanjing restarted MG production at Longbridge.
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