Opposition parties frustrated by MG Rover story
By Alex Stevenson
Opposition parties expressed frustration with the government’s role in the demise of MG Rover but struggled to find a consistent angle to attack ministers on.
Shadow business secretary Ken Clarke said it was a “pity” the report had not investigated the role of government, which was prepared to provide a bridging loan to facilitate a potential rescue bid from a Chinese carmaker in April 2005.
As Shanghai Automotive Industry Corporation pulled out of the deal MGRG went into administration. A long-awaited report published today showed the Phoenix Four, who had bought MGRG for £10 in 2000, received around £9 million each during their five years’ work for the failed company.
“It is regrettable that they did not investigate the possible misuse of taxpayers’ money, when ministers put in £6.5 million in the middle of an election campaign, to keep the company going beyond polling day,” Mr Clarke said.
“Unfortunately this report does not shed enough light on the government’s undoubted involvement in brokering the deal in the first place and failing to realise that the project was heading for disaster.
“I can understand why Peter Mandelson was so reluctant for this report to come out because it reminds us of this whole sorry episode from which government ministers do not emerge with any credit.”
According to the Tories the government should not have rejected an alternative bid for MGRG by Alchemy Partners, which was adopted by Nanjing Automotive – the buyer of bust MGRG’s assets.
They say the government did not criticise the Phoenix Four’s pay packages at the time.
And they say questions remain unanswered about why the government then offer a bridging loan after MGRG had gone into administration.
The Liberal Democrats’ business spokesman, John Thurso, said an “all too familiar story of greed and incompetence” had emerged.
“Former Rover employees throughout the Midlands will be shaking their heads in disbelief at the colossal sums that the Phoenix Four made off with in pay and pensions,” he said.
“The government needs to take action to ensure that this type of cynical asset stripping can never happen again.”
Mr Thurso was critical of the one note of criticism against the government today’s independent report did sound. It described the unattributed briefing of the press that talks with SAIC had “stalled” as “irresponsible”.
“This is a damning verdict on the pervasiveness of New Labour’s spin machine in the workings of government,” he added.
“It shouldn’t be forgotten that the government jumped at a £10 bid from an inexperienced consortium, having failed to do proper due diligence. This turned out to be a terrible decision for all involved.”
