Head of the independent Financial Reporting Council (FRC), Sir Bryan Nicholson will look into the decision to give £6.5m to keep workers on for an extra week and will also investigate parent company, Phoenix Venture Holdings’ accounts.
In response to the investigation, John Towers, part of the “Phoenix Four” has claimed to be a victim of “character assassination”.
Towers argues that an estimated £40m in pay and pensions was “justified”.
“My annual salary has been £200,000 and the pension I will get is £105,000, not £16m as reported. “If you look at the salaries of other company chairman within the same industry, you will see that this is significantly below average,” says Towers.
British Trade and Industry secretary Patricia Hewitt said she believes Phoenix chairman Towers and other directors had taken too much money out of the business.
"Where entrepreneurs take a risk, they should be entitled to big rewards for big success. But that is not what we are talking about here,” says Hewitt.
"They did not put up huge amounts of money, the company has not been a success and it was virtually given to them by BMW."
In a statement Saturday night, Phoenix denied suggestions of financial irregularities, noting annual audits by Deloitte & Touche as well as examinations by a parliamentary committee and trade unions.
The Phoenix Four have offered £50m in assets to a trust fun for the MG Rover employees, but pointed out that the assets on offer were subject to attack from creditors.
A task force that was set up after the collapse of MG Rover is due to meet to discuss plans to distribute £150m of Government aid, which is also to be used to help Rover's suppliers.
Tesco is considering building a superstore on the Longbridge site, which was sold to developers in January.
When MG Rover first went into administration, Tony Woodley, leader of the Transport and General Workers Union, stressed he and his union had no intention of seeing the Birmingham plant "turned into a supermarket".
St Modwen Properties paid £57m for the 400-acre site in two transactions in 2003 and 2004 and has since sought planning permission to build on the land.
A spokeswoman for Tesco said yesterday that the firm was considering developing a store in the area but had not made any decisions.