The Phoenix Four took unreasonably large financial rewards from MG Rover but did not break the law, said the report out today.
BBC News reported directors along with chief executive Kevin Howe took £42m in pay and pensions from the troubled firm.
The long-awaited results of the inquiry on MG Rover’s demise, which has cost over £16m, was set up by the Secretary of State for Trade and Industry after MGRG, manufacturer of Rover and MG cars, went into administration in April 2005 owing creditors nearly £1.3billion.
The report said that members of Phoenix Consortium, Peter Beale, John Edwards, Nick Stephenson and John Towers, had received a “wave of employee and public support” when taking on the company despite acquiring it for a nominal sum from BMW and with the benefit of a large dowry from BMW.
But the directors did not invest further money in the company.
He said: "I think it's breathtaking that these Phoenix Four directors should show such brass knecked nerve in trying to claim that this report is some sort of witch hunt.
"We've not seen an ounce of humility from them and they should give an apology."
Despite the company remaining unprofitable and going into administration, the Phoenix Consortium and Howe “still chose to give themselves rewards out of all proportion to the incomes which they had previously commanded, which were also large when compared with remuneration paid in other companies and which were not obviously demanded by their qualifications and experience”, said the report.
According to the report by Gervase MacGregor of accountants BDO Stoy Hayward and Guy Newey QC, MG Rover chairman John Towers, ex-vice chairman Nick Stephenson, Peter Beale and John Edwards received around £9m.
Howe is said to have taken £5.7m.
No criminal investigation
The Serious Fraud Office (SFO) has said it does not intend to launch a criminal investigation into the collapse, which saw about 6,500 people lose their jobs.
As well as investigating the directors, the report investigated restructuring changes within the group which led to the creation of 33 separate companies throughout that period; the scale of financial rewards made to the directors and the events which led to administration itself.
This included the role of Government to secure bridge finance while take-over discussions took place with Chinese car manufacturers Shanghai Automotive (SAIC).
The inquiry studies the role played by professional advisors including auditors and corporate finance advisers Deloitte and lawyers Eversheds, aspects of corporate governance and financial statements and audit arrangements including the transfer of assets.
MPs given misleading information
The report also said that misleading and inaccurate explanations were given to MPs and others. For example, they were led to believe in 2003 to 2004 that the Phoenix Four had invested considerable sums and taken substantial financial risks when MGRG was acquired and that the sums which had been reported as paid to them did not come from MGRG but "from separate Phoenix sources".
In reality, the relevant payments to or for the benefit of the members of the Phoenix Consortium can for the most part be traced back to interest paid by MGRG and the exploitation of MGRG’s tax losses. The members of the Phoenix Consortium had invested relatively little in the Group and undertaken only limited risks.
The 897-page MG Rover report is available in two parts as pdfs.
- View part one here.
- View part two here.