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MG Rover

Volume 495: debated on Monday 6 July 2009

(Urgent Question): To ask the Minister of State, Department for Business, Innovation and Skills if he will make a statement on MG Rover.

I would like to ask the Secretary of State for Business, Innovation and Skills—or his representative on earth—to make a statement on the Companies Act inquiry into the collapse of MG Rover, including an explanation of why the results of the Government’s investigation cannot now be made public in whole or in part.

I am very pleased to be here to respond to the right hon. and learned Gentleman’s question. On 31 May 2005, the then Secretary of State for Trade and Industry appointed Guy Newey QC and Gervase MacGregor, a forensic accountant at BDO Stoy Hayward, to examine the issues raised by the Financial Reporting Review Panel and the events leading up to the appointment of administrators on 8 April 2005.

After the collapse of MG Rover, a number of factors concerning the affairs of the company—including issues raised by the Financial Reporting Review Panel, which examined the published accounts of the Rover Group—resulted in the Secretary of State deciding to appoint Companies Act inspectors to carry out a thorough investigation. The inspectors were appointed under section 432 of the Companies Act 1985 and had wide powers to require documents and the attendance of witnesses, including directors, officers and agents of the company. They investigated the affairs of the MG Rover Group, its parent company Phoenix Venture Holdings, and MGR Capital Ltd, between the purchase of MG Rover Group from BMW in May 2000 and the date of its entering administration. The inspectors are independent of the Department.

The inspectors carried out a thorough review, and delivered their report to the Secretary of State for Business, Innovation and Skills on 11 June 2009. The Secretary of State has studied the report in full and taken legal advice on the next steps. After considering the report in its entirety, he has asked the Serious Fraud Office to review the report and consider whether there are any grounds for a criminal investigation. Following legal advice, this report will not be published at this time, in order to ensure that any criminal investigation or prosecution that the SFO might decide to take is not prejudiced. Publication now could also prejudice the possibility of a fair trial. The discretion of the Secretary of State to publish a Companies Act report when inspectors are appointed under section 432 is only to publish the whole report. The legislation does not provide for the report to be published in part.

Does not that reply show that the Government’s consistent approach to difficult questions about the car industry has always been to put them into the long grass? Does the Minister recall that, on 31 May 2005, the then Secretary of State for Trade and Industry, while declining to answer questions about the Government’s role in the affair, set up the inquiry, saying:

“I have asked them to report to me as quickly as possible and in a form which will enable the report to be made public.”

Does the Minister not accept that four years later, after £16 million-worth of taxpayers’ money has been spent on this inquiry, it is quite inadequate now to decide to refer the issue again—this time to the Serious Fraud Office, which could have been brought in long ago? Is it not obvious that the whole point is to continue to avoid publication and to avoid answering questions about the Government’s own role in this embarrassing affair?

Will the Minister try to answer today, if he is able, the question of why that particular consortium was selected by the Government to buy MG Rover from BMW in the first place, which was never clear? Will he also explain why, before the 2005 election, another Secretary of State spent £6.5 million-worth of taxpayers’ money on a loan to keep the company alive through the general election campaign—a decision later described by the National Audit Office as a waste of public money?

Most particularly and finally, is the Minister not aware that the former MG Rover workers are hoping to benefit from the MG Rover trust fund, which holds £16 million from asset sales, but that none of that money can be disbursed until this report is published? The workers are innocent victims of the Secretary of State’s ingenious discovery of another reason to avoid publication. Will he not reconsider the decision and just reflect on the fact that the Government’s policy towards the car industry today shows the same combination of indecision and inactivity that it has shown on the inquiry into the affairs of the late MG Rover, which we are considering today?

I made it clear in my statement that the investigation under the Companies Act 1985 was an independent investigation carried out by individuals who are entirely independent of Government. The length of time taken by the investigation has been the result of the work carried out by the inspectors, and it would have been quite inappropriate for the Government to intervene in that investigation. It is surely the correct decision—as the right hon. and learned Member for Rushcliffe (Mr. Clarke), as a learned member of the Bar, will be aware—to consider the report and the evidence as a whole before making any decision to refer any investigation to a criminal authority such as the Serious Fraud Office. That is precisely the approach that the Secretary of State has undertaken. The report was delivered as recently as 11 June. The Secretary of State has acted quickly and has made a decision based on consideration of the evidence to refer this matter to the Serious Fraud Office. That decision has not been taken lightly; it is a serious matter and the Secretary of State has taken the entirely correct approach.

It would not be appropriate for me to comment on any allegations concerning the specifics of the history of MG Rover, because any comment I make, as the right hon. and learned Gentleman is well aware, could itself be prejudicial to any future criminal inquiry. I am very well aware of the position of those former employees of the MG Rover group, and of the trust fund, because of the concerns of my hon. Friend the Member for Birmingham, Northfield (Richard Burden). I am afraid that it is quite appropriate to refer these matters to the Serious Fraud Office, and until that inquiry and investigation is resolved, I regret that no further steps can be taken with regard to the trust fund.

The decision to make a referral in this way raises extremely serious questions—not least, as has already been mentioned, concerning the manner in which the original investment decisions were taken, and what due diligence may or may not have been undertaken with regard both to the deal itself and to those involved in it. It also raises some fairly serious questions about what PricewaterhouseCoopers was doing for four years, and how the process has reached this particular point. In reaching the decision to make a referral to the Serious Fraud Office, what regard did the investigators have to the report of PWC, the administrators, which dealt with whether there was improper conduct? Can we now conclude that prima facie evidence of improper conduct has indeed been found?

May I pursue a point that has already been made? Notwithstanding the Minister’s answer about the employees, it seems remarkably unfair that four years on they should still be waiting for payments. What can the Department do to expedite the payments that may be due to those employees?

With all due respect to the hon. Gentleman, it would be inappropriate to draw any conclusions at this stage from the Secretary of State’s decision to refer the matter to the Serious Fraud Office. Any specific allegations that have been made will be considered in the context of the report as a whole, and the Serious Fraud Office will report in due course. I think that it is in the interests of all parties for its report to be delivered as expeditiously as possible, but the decisions to be made are in its hands, and we shall simply have to wait until those decisions are made.

May I pass on the apologies of my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who would be here if he were not stuck in traffic on his way to the House? May I also point out that Whips, who usually have to remain silent, are none the less present? For instance, my hon. Friend the Member for Birmingham, Hall Green (Steve McCabe) is present, but is unable to speak on behalf of his constituents.

I hope that none of the parties will use the MG Rover affair as a political football. Having referred it to the Serious Fraud Office, Ministers have less influence on the timing of the final report than they had before. Once the Minister has been given an indication of how much longer it might be delayed, will he engage in serious discussions on whether the trust fund can be released before its publication? I think that after four years, the most important aspect of the affair must be the position of the workers. They have been most affected by it, and they have a right to look to us to resolve it as quickly as possible.

My hon. Friend has made an important point. The position of the former employees of the MG Rover group must now be at the forefront of our minds, and I will do all I can to deal with it as fast as is humanly possible.

As someone who represents a great many former Rover workers, may I tell the Minister that they are simply outraged at the time that it has taken for the report to be completed, and at the £16 million price tag that has been put on it? They now want answers. They want to know why they lost their jobs, and why, on the demise of MG Rover in April 2005, none of the company’s assets still belonged to it. Bearing in mind that there may be an investigation, can the Minister at least put a finite time limit on when the report will be put in the public domain, thereby ensuring that the people who have been most affected by this whole tragic case can have access to the £16 million trust fund that is their desert and right?

I have, of course, a great deal of sympathy for the former workers at MG Rover. I well understand their frustration over the time that the investigation has taken. However, as I said earlier, the investigation conducted under the Companies Act was an independent investigation, and it would not have been appropriate for the Government to curtail it. It has been a complex investigation involving a great deal of work over a longer time than any of us would have wished, and for that reason I hope that the further step of referring the matter to the Serious Fraud Office can be dealt with as soon as possible. However, as I have said, the Serious Fraud Office is an independent body, and the matter is now in its hands.

I support what my Birmingham colleagues have said about the Rover work force. It is important for the trust issue to be resolved as quickly as possible. If my hon. Friend were to agree with the right hon. and learned Member for Rushcliffe (Mr. Clarke), would he ensure that precedents were addressed? I was not able to get reports on, for example, H. H. Robertson—which collapsed in the Tory days—into the public domain. There must be consistency across the piece.

I am grateful to my hon. Friend for raising that point. His parliamentary memory is rather longer than mine, although it is probably not as long as that of the right hon. and learned Member for Rushcliffe.

Fairly or unfairly, at a time of deep political cynicism among the public, the general feeling will be that this is an attempt to delay an embarrassing admission of guilt until after the general election. Will the Minister therefore say whether it is likely that any parts of this report that are not sub judice will contain criticisms of the Government? Are there any such criticisms of the Government in the report?

I am grateful to the hon. Gentleman for raising that point, but I regret that it would not be appropriate for me to make specific comments on the content of the report because, as I have already pointed out, these issues are now in the hands of the Serious Fraud Office and any statements that I might make concerning the detail of the report could prejudice further criminal proceedings.

I have to make a rather unusual declaration of interest because, along with Mike Whitby and Carl Chinn, I was one of the people who opened negotiations with BMW and then got kicked out as a community representative from the bid, and although we may have residual legal rights, we would not wish to exercise them other than in the interests of the wider community. It is the wider community, of which I too am a representative, that needs to be thought of. A cost of £16 million for a report, plus £16 million in the trust fund, is a lot of money. I therefore ask the Minister to consider whether it might be possible to negotiate a further contribution towards that from the Phoenix directors, to ensure that we can bring this to a conclusion that will benefit those who have suffered the most: the work force.

I have already made it clear that I have great concerns for the work force and that I will discuss their position with colleagues in the Department. I am very concerned about the trust fund, and we clearly need to facilitate access to that as soon as possible. At this moment, however, I am afraid that the investigation and the referral to the SFO must take precedence.

During the Minister’s disappointing statement, should he not have apologised for the fact that the Government traduced the previous owners, BMW, whose headquarters are in my constituency, and which did the right thing by the work force by selling for nothing to the new owners? Should he not also apologise for the Government’s failure to accept the bid from Alchemy, which was clearly seen by everybody who knew anything about the industry as the only way to save jobs?

I am sorry that the right hon. Gentleman was disappointed by my statement, but I do not think it appropriate for the Government to comment on the detail of the report, because the matter has been referred to the SFO.

Everyone shares the desire, which the Minister has pointed to, for a expeditious report, but will he try to ensure that the SFO’s report is comprehensive enough to take into account the actions of the Government in their negotiations before May 2000 when the bid took place? Both my right hon. Friend the Member for Bracknell (Mr. Mackay) and my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) have alluded to this concern. There is a feeling that the fraud did not start recently, but may have taken place as much as eight years ago.

What comments and statements the SFO will make on the report are entirely a matter for the SFO.

Were Ministers or officials at the Department made aware of any concerns about illegal activity taking place at MG Rover at any time over the past four years? Is it really only since receiving the final report that Ministers became aware of a serious fraud?

As I have already made very clear, it is appropriate to consider all the evidence in this case. That is the step that was taken by the Secretary of State at the conclusion of the presentation of the report on 11 June, and it is on the basis of the consideration of all the evidence that the matter has now been referred to the SFO.