UK Rover’s lingering ghost

April 16, 2009

REUTERS– Neil Collins is a Reuters columnist. The opinions expressed are his own –

In 2005, the last car stuttered off the production line of Britain’s last domestically-owned volume motor manufacturer, yet the ghost of MG Rover refuses to lie down. Instead, it continues to haunt us in the form of a seemingly everlasting enquiry, started by the then UK Department of Trade four years ago today.

The enquiry has cost 15 million pounds to date, into what looks like a simple case of blatant political fixing. In 2000, BMW <BMWG.DE> decided it could no longer support its Rover habit, and decided to abandon a new production line. The German company paid in 500 million pounds to fund generous redundancy payments.

In swooped John Towers, a former Rover executive, and three cronies, the “Phoenix four” (so called after the name they chose for their rescue vehicle). They bounced the Trade Secretary, Stephen Byers, into thinking they could succeed where one of the world’s best carmakers had failed. It was blindingly obvious that this was a Phoenix in reverse: starting fully-feathered, it would end up a pile of ashes. And so it proved. But as they spent the redundancy money proving it over the next five years, the four extracted 40 million pounds in salaries, fees and pension rights.

The thousands of former Rover employees might be comforted to learn that the lives of the four chancers “are effectively on hold” according to an anonymous spokesman reported in the Financial Times. The employees have had to get on with their lives, having finally been laid off five years older and on much worse terms in 2005. A report laying the blame where it’s due is the least they deserve.

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