THE DIRECTORS who ran British carmaker MG Rover at the time of its collapse have been banned from managing companies for up to six years.
The so-called “Phoenix four” of John Towers (pictured), Peter Beale, Nick Stephenson and John Edwards voluntarily agreed to the ban after a lengthy government investigation. They will each serve varying disqualification periods of between three and six years.
The group bought Birmingham-based MG Rover, Britain’s last volume carmaker, for £10 in 2000 through their investment vehicle Phoenix Venture Holdings.
Led by Phoenix chairman John Edwards, the group went on to pay themselves lavish salaries and pensions before the manufacturer collapsed in 2005, owing £1.3bn to creditors and at the cost of 6,500 jobs.
Along with MG Rover chief executive Kevin Howe, the Phoenix four paid themselves a total of £42m by the time of the failure.
Beale receives a six-year disqualification, whilst Towers and Stephenson have been banned for five years. Edwards has been disqualified for three years, whilst Howe did not receive a ban.
The disqualifications come on the back of a “lengthy and complex” investigation by the department of business, innovation and skills into the failure that found the directors “unfit” to run a business.
Ed Davey, the government minister responsible for corporate governance, said: “The outcome of this case serves as an important reminder that unacceptable conduct by company directors can result in lengthy periods of disqualification.”
TIME LINE | MG ROVER AND THE PHOENIX FOUR
● May 2000
Phoenix Venture Holdings, a consortium led by former Rover chief executive John Towers, buys MG Rover from BMW for just £10.
● November 2002
The firm posts a loss of £95m, missing a management target to break even.
● February 2004
It emerges that four men from Phoenix – John Towers, Nick Stephenson, Peter Beale and John Edwards – and chief executive Kevin Howe have been paid £31m, despite falling sales. An outcry leads to the four being grilled by MPs later in the year.
● 7 April 2005
MG Rover goes into administration after suppliers refuse to deliver to the firm’s Birmingham plant.
● 15 April 2005
MG Rover collapses, leaving 5,000 workers and a further 15,000 in the supply chain facing redundancy.
● 19 April 2005
Scrutiny of MG Rover’s accounts shows cash black holes and accountancy errors that leave millions of pounds unaccounted for.
● 31 May 2005
Then trade secretary Alan Johnson orders a full independent inquiry into the collapse.
● 11 September 2009
The report finds the four paid themselves a total of £75m from a BMW dowry payment after the group bought the firm from the German carmaker.