Friday, 11 September 2009

Down in Flames

I’ve been reading (selectively, it’s 850 pages) the DTI Report on the demise of MG Rover over lunch. There are some absolute crackers in it which will make for uncomfortable reading across the Midlands today.

There’s the email from a lawyer at a firm not too far away from where I sit, sent on the day after the completion of the deal with BMW. “Congratulations and thanks to everyone for a great job in completing Phoenix within an impossible timetable – even if we don’t know what we have bought or what any of the agreements say!!” So much for due diligence.

Or there’s the fact that one of the Phoenix 4 was having a ‘relationship’ with a Chinese consultant, employed to advise on the Shanghai Automotive partnership, who was paid £1.7 million over 15 months. My mother has a name for that sort of relationship.

Or there’s the lovely little anecdote of an attempt by the Phoenix 4 to pilfer the monies from an escrow account at MG Rover subsidiary, Powertrain, which amounted to a mere £25 million.

Or there is the mysterious transfer of XPart, the parts subsidiary of MG Rover, to Phoenix Venture Holdings for just £2 in 2002. It was later sold to CAT for £31.6 million.

Overall, the impression gained from the report is of four individuals with careers going nowhere (since when does a former Bromsgrove accountant qualify to be a finance director of a volume car firm) who got lucky, saw their chance to make a lot of money and took it. Today’s statement from the Phoenix 4, which attempts to blame the Government for not baling out MG Rover in its death throes, is one of the most blatant attempts to deflect blame I have read in some time.

The real irony is that, with deals like the XPart one, Phoenix asset stripped MG Rover of some of its most valuable business streams, which is of course exactly what Alchemy Partners were accused of planning.


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