Page last updated at 16:32 GMT, Friday, 11 September 2009 17:32 UK

Mandelson calls for Rover apology

Lord Mandelson: "We've not seen an ounce of humility from them"

Lord Mandelson has called for the businessmen who ran MG Rover prior to its 2005 collapse to apologise for taking so much money out of the firm.

The business secretary said the so-called Phoenix Four, who bought Rover for £10 in 2000, had "feathered their own nests" during their time in charge.

A report found the men pocketed an "unreasonable" £42m in pay and perks.

The Phoenix Four blame Labour for Rover's collapse but Lord Mandelson said ministers had been "faultless".

'No humility'

And he rejected criticism that ministers had not done enough to try and save the firm, whose collapse cost more than 6,000 jobs.

However, opposition parties criticised the government for allowing the group to take control of MG Rover in the first place.

Earlier this year, the Serious Fraud Office chose not to pursue a criminal investigation into Rover's collapse and the conduct of the Phoenix Four.

Mr Beale £8.981m
Mr Edwards £9.024m
Mr Stephenson £8.976m
Mr Towers £8.958m
Mr Howe £5.708m
Source: MG Rover report

Lord Mandelson said the Phoenix group had not shown an "ounce of humility" about the firm's demise and that they owed an apology to the firm's employees and creditors.

"These people feathered their own nests and filled their own pockets full of a lot of cash during the course of their time as directors," he told the BBC.

"Given all that has happened, I think they should reflect on what they have done, reflect on what they have said and give an apology."

Lord Mandelson defended the government's role in smoothing the way for Phoenix to take control of Rover from BMW in 2000, saying then Industry Secretary Stephen Byers could not have known how the men would behave once they took over.

"Stephen Byers was faultless is his efforts to save this company, these jobs and to secure the future production of this company.

"He did his level best, which is why he has received no criticism in this report."

He also defended ministers' efforts to rescue the company in 2005 following criticism that it failed to stump up a loan to facilitate a deal with a prospective Chinese partner, saying Rover itself had decided not to proceed with talks on a deal.

"The reason there was no bridging loan was there was nothing to bridge to," he said.

"Simply to give the money, given what else we had given them in the first place, would have been illegal under EU law."

Responding to claims in the report that ministers had given "irresponsible" briefings during these negotiations, Lord Mandelson said this was an "observation" not a criticism.

'Sorry episode'

Ministers have urged the Phoenix Four to voluntarily bar themselves from serving as directors of a company again rather than forcing the government to begin proceedings against them.

The four directors, Peter Beale, John Edwards, Nick Stephenson and John Towers, rejected the report's conclusions, saying the government should take responsibility for Rover's failure.

"There is no explanation for the Longbridge workers why MG Rover collapsed," they said. "Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover."

2000: Sold by BMW to the Phoenix Four for £10
2000-2004: Made losses of £611m in the first four years
2004: Started talks with Shanghai Automotive Industry Corporation (SAIC)
2005: SAIC pulled out of a deal to save the whole company and MG Rover goes into administration
2006: MG Rover's assets sold to Nanjing Automobile
2007: Nanjing resumes MG production at the Longbridge plant
2009: Serious Fraud Office investigates circumstances of collapse but says no plans for criminal charges
2009: Long-awaited report, which has cost more than £16m, is released

Shadow Business Secretary Kenneth Clarke said it was right the report criticised the Phoenix Four, whose behaviour he described as "disgraceful".

But he said ministers stood accused of siding with the Phoenix deal when there were better alternatives and failing to realise before too late that "the project was heading for disaster".

In particular, he said questions should be asked about why Rover was offered a £6.5m public loan on April 10 2005, two days after the firm went into administration, to pay wages and help keep the business together pending a possible sale of assets.

"It is regrettable that did not investigate the possible misuse of taxpayers' money, when ministers put in £6.5m in the middle of an election campaign, to keep the company going beyond polling day," he said.

He added: "I can understand why Peter Mandelson was so reluctant for this report to come out because it reminds us of this whole sorry episode from which ministers do not emerge with any credit."

The Lib Dems said the government must ensure a repeat of the Rover debacle never happened again.

The party is calling on ministers to ensure that the proceeds of remaining Rover assets frozen pending the report's publication should now be distributed among former workers.

The majority of Rover's assets were sold in 2006 to China's Nanjing Automobile which revived the MG sports car brand, but moved most of the production to China.

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