JustBritish

West Midlands car industry activists are poring over the fine detail of the government report into the collapse of MG Rover to establish whether there are grounds to bring a civil action against the so-called Phoenix Four, the executives who bought the car company from BMW for £10 in May 2000.

MG Rover watchers are said to be angry at the extent to which the Phoenix Four benefited personally while overseeing the demise of Britain’s last volume car manufacturer. They believe the report, compiled after a four-year investigation by two government inspectors, has opened the door to civil action.

“Company law on fiduciary responsibility is complex and unclear,” said Nick Matthews, an academic at Coventry University and car industry analyst for 15 years. “The inspectors agree that it is uncertain, particularly in respect of the deal to buy MGR Capital. What they have said is that the only way to establish for sure whether laws have been broken is through the courts.”

The inspectors devoted 100 pages of their 850-page report to the Phoenix Four’s investment in MGR Capital. This was the car finance joint venture with a subsidiary of the banking group HBOS, now part of Lloyds TSB, that bought the Rover cars finance and lease loan book from BMW for £313m in 2001.

However, the interest in MGR Capital was acquired independently of Phoenix Venture Holdings, the businessmen’s master company, which owned MG Rover. Their involvement in MGR came through the Phoenix Partnership, a private vehicle for the four and Kevin Howe, the man they brought in to run the car company.

The inspectors drew attention to the complex boardroom paperwork that accompanied the transaction and pointed out that company law is uncertain. “The points should rather, it seems to us, be aired if and so far as necessary in court proceedings with full legal argument,” they said.

Union leaders said it was not clear if they would lead a civil action, admitting there was unlikely to be much appetite – or funding – for ex-workers to bring a case themselves.

Richard Burden, Labour MP for Birmingham Northfield, said that it was “unacceptable” if , as the report claimed, the Phoenix Four had misled him and his constituents.

“The report makes the charge that when I and others raised questions about the structure of the company and the remuneration of the directors, at least some of the responses we received were misleading. If true, this is very serious. Not only will they have misled me as the local MP, they will also have misled my constituents and their own employees. That is unacceptable.

“The report also alleges that one of the Phoenix Four gave misleading answers to a committee of the House of Commons of which I was a member. If this is true, the directors must answer to that.”

Seen from Longbridge, MG Rover’s former base, the business’s industrial legacy five years on looks decidedly threadbare.

In one portion of the cavernous and almost deserted plant – once one of Europe’s largest – China’s Shanghai Automotive Industry Corporation, owner of the rump MG brand, began making its TF two-seater sports car last year in small numbers for the UK and Ireland, using Chinese and European parts.

The company will not comment on production volumes, but acknowledges they are modest. “It’s not MG Rover numbers – it’s a single model we’re producing,” says Peter Brooking, marketing manager for MG Motor UK.

Most MG cars are now made in China. In 2006, a year after buying rights to the brand from MG Rover’s liquidators, Nanjing Automobile Corporation moved an entire production line from Birmingham halfway across the world in 4,900 shipping containers.

SAIC, which has since taken over NAC, also bought rights to some Rover models, made now under the Roewe brand.

Notwithstanding the much-diminished output at Longbridge – or the thousands of jobs lost when MG Rover collapsed – other marques from its erstwhile portfolio are thriving under different ownership.

BMW has expanded annual production of the Mini to more than 200,000 cars, from only about 12,000 a year before the Munich carmaker bought it. It now employs about 3,500 people, from a few hundred when MG Rover owned it.

Norbert Reithofer, BMW’s chief executive, announced plans last week to bring production of two new models to the brand’s plant in Cowley near Oxford in a move expected to create 1,000 or more jobs.

Land Rover, sold to Ford Motor and then to Tata Motors last year, has arguably also fared better under a new owner. It recorded its highest sales yet in 2007, as Ford was selling it.

Sales figures have wilted over the past year – down 38 per cent in the first half of 2009 on a year ago – but together with Jaguar it remains one of Britain’s largest carmakers.

“There is a strong argument to say that even if you take into account the sad demise of MG Rover, the UK motor industry is much better off than it was,” says Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders.

The first run of MG cars have left Birmingham’s Longbridge factory for the first time in more than three years. The cars, which departed the plant shortly after 11am on Thursday, will go on sale from September 20.

Chinese owner SAIC/Nanjing began producing the sports car model, the TF LE500, at the factory last month. The Nanjing Automobile Corporation (NAC) bought the assets of the collapsed MG Rover organisation in 2005.

Approximately 6,000 workers lost their jobs at Longbridge when the huge car plant closed in April that year. The return of car production to the plant has been heralded as a boost to business in the region.

In China the Chinese MGTF is to make its worldwide debut in just over a week – 6,000 miles away from Longbridge. Longbridge owners Nanjing today opened their doors to the British press to reveal that the two-seater MGTF would finally roll off the Nanjing production lines from May 20 onwards.

The Chinese launch of the sports car paves the way for the long-delayed introduction of the two-seater in the UK in early August.

Saic-Nanjing’s confirmation of the production launch came in response to the No More Chinese Whispers campaign by the Birmingham Mail, calling on the Chinese to come clean over their intentions for Longbridge.
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