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Shanghai Automotive Industry Corporation told MG Rover boss John Towers four days before it collapsed that the UK car maker would be insolvent in 2005 and much of 2006 without “bridge finance and asset sales”, the Daily Telegraph said in its latest report on the company.

The paper said a letter sent from SAIC to Towers, chairman of MG Rover’s parent company Phoenix Venture Holdings, on April 4 makes clear the Chinese concerns about its financial health and stresses the importance of the UK government’s offer of a £110 million bridging loan.

According to the Daily Telegraph, Towers said in an interview with BBC local radio last Wednesday: “On Tuesday evening 5th of April we were actually waiting for [trade and industry minister] Patricia Hewitt’s announcement and [car workers union leader] Tony Woodley was prepared to come to Longbridge to make the positive statement about the announcement.

“And then, for us, completely out of the blue, the DTI was contacted by SAIC’s advisers with a very puzzling position.

“The position they took with the [Department of Trade and Industry] was that client SAIC was unlikely to proceed. We could not understand that. We were entirely shocked by that… That was the moment when we were 20 minutes from doing the deal.”

The Daily Telegraph said a similar letter, stressing that MG Rover was reliant on the loan and asset sales to stay solvent, was also sent by the Chinese to officials at the DTI on April 4.

The paper said that, despite these clear warnings, the UK government sanctioned a £6.5 million loan to pay wages at MG Rover for a week from April 10 and, on Tuesday, the opposition Conservative party renewed its call for an official investigation into the affair.

Stephen O’Brien, shadow industry spokesman, told the Daily Telegraph: “This is yet further evidence that a full inquiry needs to be undertaken into exactly what went on behind the scenes in the last weeks of MG Rover. Was the Government involved in a cruel deception?”