MG Rover: MPs plan to take Phoenix Four to court to get millions back
SCANDAL-hit MG Rover directors could be forced to hand back the millions they took from the company in an explosive civil court case, MPs warned last night.
The Phoenix Four face being struck off as company directors after a devastating Government report accused them of profiting from the collapse of the Birmingham car giant.
In total, the four bosses – together with chief executive Kevin Howe – took £42 million from the company in wages and pensions before it collapsed in 2005 with the loss of 6,500 jobs.
But the damning report also reveals director Nick Stephenson paid £1.7 million to a female consultant who became his lover as the pair struggled to broker Chinese deals to save the failing company.
The report branded the sum “plainly excessive”.
Another wealthy director, Peter Beale, was also accused of destroying evidence the morning after it was announced that Government inspectors were to investigate MG Rover’s demise.
He was also accused of deliberately misleading a local MP, as well as a Parliamentary committee, over how much money the Phoenix Four had personally invested in the company.
Last night, John Hemming, Lib Dem MP for Yardley, revealed plans to consult Birmingham City Council leader Mike Whitby and Carl Chinn – trustee of a fund set up to help former workers – about forming a group to sue the Phoenix directors.
He said: “I want to see what can be done to try to ensure that some of the money taken from MG Rover is recovered for the workers – in addition to the money in the trust fund for workers.
“It may be that a lawsuit is the way to do this now.”
The 850-page report took four years to compile and cost £16 million to produce.
It exposes in staggering detail how the Phoenix Four – John Towers, Nick Stephenson, John Edwards and Peter Beale – and chief executive Kevin Howe made fortunes from the company.
While workers toiled ever harder on the factory floor in desperation to keep MG Rover afloat, their bosses were diverting millions into an offshore account.
The Phoenix Four bought the crisis-hit Longbridge car maker from BMW for a nominal £10 in 2000.
They each invested a modest £60,000. But in return they were given access to a £427 million ‘dowry’ from BMW, a stockpile of cars and other corporate facilities including the local Studley Castle conference centre and the Longbridge plant.
But the historic car company was never really to recover.
In the first year under the Phoenix Four, MG Rover lost £227 million, and then £68.4 million in 2002.
Yet the high-living directors marked the anniversary of their purchase by jetting off to Portugal for a break.
It was while enjoying the sun that Stephenson and Beale discussed “ways in which we should be appropriately remunerated”, according to the report.
John Edwards later told the inquiry he had “stayed awake all one night on the couch”, then in the morning told the other members of the Phoenix Four that their pay “must be appropriate to what [they] were achieving”.
But they went on to pay themselves “out of all proportion to the incomes which they had previously commanded”, the report concludes.
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