Fraud inquiry 'to be held into collapse of MG Rover'

Published on Sunday 5 July 2009 22:12

THE Serious Fraud Office (SFO) is to investigate the collapse of MG Rover after a four-year inquiry set up by the government into the Midlands carmaker's demise, it was reported yesterday.

Business Secretary Lord Mandelson is expected to confirm the SFO's involvement today in a written statement to Parliament.

The move comes after a long-running inquiry has finally ended, into the collapse of Birmingham-based MG Rover in 2005 which led to the loss of 6,000 jobs at the carmaker and many more at suppliers and dealers.

The four executives in charge of MG Rover at the time reportedly said then there was "no suggestion of improper conduct".

The government launched an investigation to examine what went wrong between Phoenix Venture's acquisition of the firm in 2000 and when the administrators were brought in. But the inquiry took far longer than first thought and has cost the taxpayer 16 million to produce.

The report was finally submitted around three weeks ago and there have been calls for the findings to be made public.

However, it is understood a decision to call in the SFO could see the publication of the report withheld pending the investigation.

The Department for Business, Enterprise and Regulatory Reform declined to comment ahead of Lord Mandelson's statement tomorrow. The SFO also declined to comment.

Richard Burden, the MP for Birmingham Northfield, whose constituency includes almost all of the former MG Rover site, last month pressed for publication of the report's results.

He said: "I have found it incredibly frustrating that we have had to wait so long for this report. The escalating cost of the inquiry has also been a matter of real concern."

The inquiry was set up under the Companies Act by then trade and industry secretary Alan Johnson, who said an investigation covering the two years leading up to the collapse was in the public interest.

A spokesman for the directors said that "time and again they asked for government help and didn't get it".

He said: "Four years and 16m of taxpayers' money has been swallowed up on this inquiry and the directors' major concern is that it will fail to get to the heart of the matter – why the government withdrew its offer of a loan to the company at the 11th hour, allowing 6,000 workers to lose their jobs."

The statement added: "Four years on, any suggestion of a further investigation is frankly ridiculous and smacks of kicking this issue into the long grass."