Rover: The Full Story

The long-awaited report into the collapse of MG Rover today lay the blame firmly at the feet of the Phoenix Four.

The long-awaited report into the collapse of MG Rover today lay the blame firmly at the feet of the Phoenix Four.

The collapse left 6,300 people out of work but saw the directors walk away with £40 million in pay and pensions.

See also: Collapse left region reeling

Today they came out fighting, describing the report as a "whitewash", adding the Government had "bottled" a rescue of the stricken car giant.

The former Rover directors, John Towers, John Edwards, Nick Stephenson and Peter Beale, are set to be banned from running companies following the publication of today's report.

Business Secretary Lord Mandelson said action would be taken after one of the directors was accused of attempting to mislead an investigation by MPs into MG Rover's demise in April 2005, when it folded with debts of £1.3billion.

The Phoenix Four responded with a vicious attack on the report and the Government, accusing ministers of a "witch hunt" and a "pre-ordained strategy of character assassination".

Briefings

Findings in today's 850-page report include:

The Phoenix Four and their MG Rover chief executive Kevin Howes paid themselves "unreasonably large, financial rewards" totalling of £42 million over five years
MPs investigating the collapse were given "inaccurate and misleading information" by one of the four directors, Peter Beale
Government officials gave "questionable briefings" to the press in the run up to the company collapsing
Senior ministers and civil servants should be largely cleared of any wrongdoing.

Lord Mandelson said lawyers had already started work compiling evidence to bring proceedings against the directors to prevent them holding company office in the future.

The report, by QC Guy Newey and leading accountant Gervase MacGregor,

says: "During the five year period, the members of the Phoenix Consortium and Mr Howe obtained large, and we say unreasonably large, financial rewards, totalling tens of millions of pounds."

They also question a series of transactions moving assets to companies outside the MG Rover group. Inspectors further revealed in the report that Mr Beale bought computer software to eliminate evidence the day after the government announced the inquiry into Rover's collapse.

The report said inspectors looked at explanations the four directors gave to the business select committee and found that Mr Beale gave "inaccurate and misleading" explanations.

But in a furious response today, the former Rover directors said: "The Government has spent more money on this deeply flawed than it ever put up to help MG Rover."

Their statement added the report was "seriously flawed, prejudiced, incomplete, slanted towards Government and, most damning of all, completely fails to explain why MG Rover was allowed to collapse".

Referring to Lord Mandelson's decision to refer the report to the Serious Fraud Office before publication, the Phoenix directors

continue: "The government has also tried to accuse us of fraud - a tactic that failed."

And they dismiss Government efforts to have them disqualified as directors as "political grandstanding". All four are retired or semi-retired and say there is no possibility of them ever again considering working as directors.

"We find it offensive and untrue that we acted improperly in relation to remuneration," they said today. "Everything was legal, above board."

The four also attack the role of the then Department of Trade & Industry (now renamed Department of Business, Innovation and Skills), saying it undermined the business by planning for its closure in 2004.Richard Burden, Labour MP for Birmingham Northfields, home of the doomed car-maker, called for the Phoenix Four to resolve "unfinished business" by compensating the former workers, adding: "Rover workers have been waiting for four-and-a-half years for that money."

By Simon Penfold