A report into the collapse of the MG Rover Group (MGRG) has found that MPs were given inaccurate and misleading explanations about the group’s activities by one of its directors.
Gervase MacGregor FCA and Guy Newey QC were instructed to investigate MGRG, its parent company Phoenix Venture Holdings (PVH) and MGR Capital in the period between the purchase of MGRG from BMW in May 2000 and the date it entered administration, owing creditors around £1.3bn.
The inspectors examined the actions of the directors of PVH throughout their five-year ownership, particularly Peter Beale, John Edwards, Nick Stephenson and John Towers, known as the Phoenix Consortium or Phoenix Four.
The report investigated the purchase, installation and operation of computer software to eliminate evidence held by Beale the day after the inquiry was announced. It also looked at restructuring changes within the group that led to the creation of 33 separate companies throughout the period and the large financial rewards made to the directors.
Lord Mandelson, business secretary, said lawyers had already begun work compiling the underlying evidence required to bring proceedings against the relevant directors to prevent them from holding company office in future.
He also stated that the report would be referred to the Financial Reporting Council, the regulatory body for auditors, accounting and corporate governance.
Mandelson said: ‘This has been a painstaking inquiry by independent inspectors. It was important to get all the facts into the open so that workers who lost their jobs and creditors who were not paid know the truth.’
He added: ‘I have written to the Business and Enterprise Select Committee to ask it to look into the serious findings in the report that one of the MG Rover directors, Mr Beale, misled its committee about the reasons for setting up a joint venture with MGR Capital. It will be for the committee chair to decide whether any action should be taken.
‘We are also determined to learn any lessons we can to ensure greater transparency about the impact of decisions that directors are making and the state of the companies they are running. To this end, I am asking the Financial Reporting Council to review the report to see whether changes to audit or accounting standards or guidance should be considered.’
The Queen’s Counsel believes that the findings of the report, if supported by the underlying documents, will be enough for a court to find at least some of the directors are unfit to be involved in the management of a company.