The UK’s Serious Fraud Office (SFO) will not investigate the 2005 collapse of MG Rover Group Ltd, which went into bankruptcy with GBP1.3bn (US$2.1bn) of debt. 

The SFO had been asked to investigate by UK Business Secretary Peter Mandelson but after reviewing a report from Mandelson’s office, it has decided not to start a criminal investigation, prosecutors said in a statement on the agency’s web site. 

The decision follows a four-year government review of the collapse of the company, which was then owned by Phoenix Venture Holdings. Nanjing Automobile Group Corp, a state-owned Chinese company, bought the assets of MG Rover in July 2005 for about US$97m.  

The SFO said it was unable to explain in detail the reasons for its decision because the independent report has not been made public.

Lord Mandelson’s decision to delay the release of the report until the SFO reached a conclusion has caused controversy.  

The four executives in control of MG Rover, the so-called Phoenix Four, have always denied any wrongdoing. John Towers, Nick Stephenson, Peter Beale and John Edwards bought MG Rover from BMW in May 2000 for a nominal GBP10 (US$16.50). They received a GBP427m (US$707m) interest-free loan from previous owner BMW.

Between them, the Phoenix Four are estimated to have made GBP30m-GBP40m (US$50m-US$66m) through pay, pensions and the sale of a 60% stake to dealers and employees.  

At its peak in the 1960s, the carmaker employed 250,000 people and the company produced 40% of the cars bought in the UK. Its brands once included Triumph, Austin, Land Rover and Morris. MG Rover had less than 3% of the UK market when it folded.