The four former directors of Phoenix Venture Holdings Limited (PVH) and MG Rover Group Limited (MGR), Peter Beale, John Towers, Nick Stephenson and John Edwards, popularly known as ‘The Phoenix Four’, have been disqualified as directors of UK companies for various periods, the government’s Department for Business, Innovation and Skills has announced.
“[They have] each undertaken not to act in the management of limited companies for varying periods, of between three and six years. The disqualification undertakings conclude the enforcement action by The Insolvency Service on behalf of the government,” the department said in a statement.
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“In line with the findings of the independent report, it was the position of The Insolvency Service that taken as a whole, the overall conduct of the Phoenix Four made them unfit to be company directors. The service particularly highlighted the report’s findings in respect of the way the directors manipulated the assets and income streams through the use of companies in which they, rather than the creditors of MG Rover had an interest, allowing them to benefit through large salaries, dividends and profits,” the statement added.
Edward Davey, UK government minister for corporate governance and company law said: “These disqualification undertakings represent a successful conclusion to a lengthy and complex investigation into the collapse of MG Rover. [Beale, Towers, Stephenson and Edwards] have each been banned from being involved in the management of any company for several years. The outcome of this case serves as an important reminder that unacceptable conduct by company directors can result in lengthy periods of disqualification.”
Beale has been disqualified from acting in the management of companies for six years; Towers and Stephenson have each been disqualified for five years and Edwards for three years.
But the Phoenix Four told the Daily Telegraph they had “done nothing which justifies disqualification” and would have “vigorously” contested any disqualification proceedings against them.
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By GlobalDataThe paper noted that the businessmen, who had collected GBP42m in pay and pensions over just five years from MG Rover after buying it for just GBP10 in 2000, had agreed “not to act in the management of limited companies for varying periods”.
A spokesman for the Phoenix Four told the Telegraph: “All of the many enquiries into the collapse of MG Rover have achieved little other than a series of massive bills. Having had this process lumber on for more than six years, and since none of the four actually want to be directors anymore, they have agreed a voluntary arrangement in order to avoid adding to the already enormous cost to the taxpayer and to themselves.”
MGR collapsed in 2005 with the loss of 6,000 jobs and debts of GBP1.3bn, the government said, adding that an independent report found the ‘Phoenix Four’ “manipulated MGR’s assets and income streams, such as land and its financing arm, through the creation of companies in which they, rather than the creditors of MGR, had an interest”.
The manufacturer of Rover and MG cars went into administration on 8 April, 2005 owing creditors nearly GBP1.3bn. The secretary of state appointed inspectors to investigate the affairs of MGR Group (MGRG), its parent company Phoenix Venture Holdings (PVH) and MGR Capital Limited between the purchase of MGRG from BMW in May 2000 and the date of it entering administration.
The disqualification undertakings come into effect on 17 May 2011.
In a statement following the publication of a government report into the MG Rover collapse, published in September 2010, Towers, Edwards, Stephenson and Beale described the report as “entirely as we expected – a witch hunt against us and a whitewash for the government.”
It added: “We criticised the government for failing to help MG Rover. As we have seen elsewhere, there is a price to be paid for criticising this government and for us the price is this report.
“The government has spent GBP18m of taxpayers’ money on a report – many millions more than they ever gave MG Rover. Not surprisingly, they have got a version of events that suits their interests. There is no explanation for the Longbridge workers why MG Rover collapsed. As we predicted, it has failed them. Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover.”
The statement also noted that the “government also tried to accuse us of fraud by referring the matter to the Serious Fraud Office – a tactic that failed. The latest indications are that ministers will pursue disqualification proceedings against us, despite the fact that it is very well known that there is no possibility of us ever again considering this sort of role in the UK. It is political grandstanding.
“This report says nothing new about our remuneration – everyone knew what we were paid. It was never a secret. They did not have to spend GBP18m to find that out. Our remuneration was all in the company accounts and signed off by Deloitte, one of the world’s most respected firms of auditors. It was entirely legal, above board, and much less than similar payments in large car companies.”
The ‘four’ added that they had stepped in to prevent former MG Rover owner BMW shutting the automaker down in April 2000 “when no one else wanted the job”.
“The team we built succeeded in drastically reducing the company losses where BMW could not. We secured hundreds of millions of pounds of new investment and most importantly, secured employment for a workforce who received almost GBP1bn in wages over five years whilst chancellor Brown banked GBP450m in taxes.
“Our greatest regret is that the company could not ultimately be saved. All of us had strong links to the company. Saving MG Rover was why we took the challenge on in the first place, not personal gain. The suggestion that we put personal gain ahead of the interests of MG Rover is utterly offensive and a complete travesty of the truth. One point which has been conveniently overlooked in the report, even though it was widely known, was that we agreed to put GBP10m of our own funds back into the business to ensure the future of the company.
“We tried our best and to this day we are bitterly disappointed that when the moment came for the government to step up to the plate to help MG Rover, it didn’t.”
The BBC noted the four resigned as directors of PVH and its associated companies last March.
But the area’s local MP believes the decision to disqualify the four directors would be of little consolation to MG’s former workers.
“It doesn’t change anything. It won’t bring back the jobs of the 6,000 people who lost them when MG Rover collapsed,” Richard Burdon, Labour MP for Northfield, told the broadcaster.
“One thing they could do that would make a difference, though, would be to make good on the promise they made to put money into the trust fund set up for former employees.
“They could put some of their personal fortunes into the trust. That way it would help former employees to have closure and move forward in their lives.”
