Patricia Hewitt, the British government’s trade and industry secretary, has reportedly defended the four men who have made millions of pounds by restructuring MG Rover, the company they bought for a nominal £10 four years ago.
The Daily Telegraph newspaper said Hewitt’s outspoken defence came despite criticism from a Labour chairman of a House of Commons committee seven weeks ago that the men were using “financial sleight of hand” and “manipulative book-keeping” in the way they are running the company.
At the British motor show in Birmingham on Tuesday, Hewitt reportedly said that the rewards handed to John Towers, Peter Beale, John Edwards and Nick Stephenson were not excessive – they include the four-way split of a £10 million loan note and a £13 million pension fund.
According to the newspaper, Hewitt said the size of the sums was balanced by the risk the four men had taken when they bought MG Rover.
She reportedly said: “I am very pleased with Rover’s performance and I look forward to going to their stand to look at the redesigned Rover 45. There was a very big risk involved when setting up Rover again when it looked likely to come to the end of the road for car manufacturing.”
The paper said the comments, the first by Hewitt since The Telegraph revealed the extent of MG Rover’s restructuring last October, were at odds with comments made at the end of March by Martin O’Neill MP, chairman of the Trade and Industry Select Committee.
He reportedly told Towers and Beale, who were giving evidence to the committee: “You are judges and jury on your own future. The scale of your individual achievements is being undermined by what appears to be financial sleight of hand. Nothing illegal, but manipulative book-keeping practices, so you are doing well and everyone else is just muddling along.”
The Daily Telegraph said the Rover four invested £60,000 each in a specially set up company called Techtronic, which eventually bought Rover in April 2000, receiving a £427 million ‘soft’ loan from BMW in return. They had also invested £500,000 each to buy separately MGR Capital, Rover’s finance arm.
Hewitt reportedly added that the payments received by the Rover four were not a matter for the government. “It is for companies and their directors to hold boards to account,” she said.
The Daily Telegraph added that Hewitt’s aides subsequently tried to play down her remarks. One reportedly stressed that the government was “keeping an eye” on the company and the officials added that Hewitt was reluctant to raise any concerns because “things are delicately poised”.
MG Rover is currently chasing third party partnerships in Poland [where it is trying to buy a former Daewoo plant], Malaysia [a possible tie-up with Proton] and China [a joint manufacturing venture], the paper noted.