The Department of Trade and Industry is this week expected to launch an inquiry into the collapse of MG Rover.

Trade Secretary Alan Johnson will act after he received a report on the carmaker from watchdog the Financial Reporting Council.

Reports say that the initial probe into Rover's alleged £427m ‘black hole’ has uncovered possible evidence of wrongdoing.

Johnson's final decision is likely to be based on conduct reports from MG Rover's administrator PricewaterhouseCoopers on the behaviour of the so-called Phoenix Four. The Midlands businessmen have already been accused of taking £40m in salaries and pension payments from the company during the five years they ran it.

A DTI spokesman said it could not determine what further action it may take until it had received and digested a copy of the report. Some 5,000 jobs were lost at Rover's Longbridge plant when the firm collapsed last month.

Lawyers are reportedly advising PwC that a number of different courses of action are open to them to recoup money from the Phoenix Four, while the trustees of the car maker's pension funds are expected to press the four directors this week to make contributions to help cover a pensions shortfall of as much as £400m (The Scotsman).

If they do not oblige, the trustees could reportedly force Phoenix Venture Holdings into administration and then press the Pensions Regulator to force a payment from the four directors.

Land Rover is planning to limit sales of the Freelander to the US to slow down use of its remaining K-series engine stocks which were manufactured by MG Rover.

The production slowdown could mean that 300 agency workers might lose their jobs. Land Rover plans to cut a shift from the Freelander production line in early July.