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UK fraud authorities to probe MG Rover collapse

  • Story Highlights
  • MG Rover Group collapsed in 2005 owing more than $2 billion to creditors
  • Closure of the British automaker led to the loss of 6,000 jobs
  • UK minister confirmed Serious Fraud Office (SFO) will probe matter
  • Peter Mandelson: "SFO must now see if there are grounds for prosecution"
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LONDON, England (CNN) -- The circumstances surrounding the 2005 collapse of carmaker MG Rover are to be investigated, the British government confirmed Monday.

MG Rover collapsed despite a lengthy campaign by its workers to keep the company open.

MG Rover collapsed despite a lengthy campaign by its workers to keep the company open.

The Serious Fraud Office (SFO) said in a statement it had been asked to consider whether there should be a criminal investigation following completion of an inquiry into the failure of the MG Rover Group (MGRG) on April 8, 2005, which owed nearly £1.3 billion ($2.09 billion) to creditors.

The closure of the Birmingham-based company led to the loss of 6,000 jobs.

According to the SFO, Monday's decision was taken after Business Secretary Peter Mandelson studied the findings of independent inspectors instructed to look into the affair by Alan Johnson, the trade and industry secretary at the time.

"There has been a comprehensive and thorough investigation into the events which led to the company failing, workers losing their jobs and creditors not getting paid. The SFO must now see if there are grounds for prosecution," Mandelson said.

According to the SFO statement, the inspectors looked at MGRG, its parent company Phoenix Venture Holdings (PVH) and MGR Capital Limited, in addition to 32 related companies between the purchase of MGRG from German automaker BMW in May 2000 and the date of it entering administration in 2005.

The inspectors delivered their report in June this year, but due to legal advice it will not be published at this time in order to ensure any potential prosecution is not prejudiced, the SFO said.

Lawmaker, Richard Burden, whose constituency includes almost all of the former MG Rover site, was quoted by Britain's Press Association as saying it was "right" that any matters arising out of the inquiry should be pursued and that "nothing is done to prejudice those inquiries."

But he added: "What I do know is that my constituents -- including many former MG Rover workers -- and the people in the West Midlands still need to be told the facts about what led to the closure of the company.

"They have now waited over four years for those answers and they know that 1.6 million ($2.58 million) of public money has been spent on the Companies Act Inquiry.

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"It will be a bitter blow for everyone to face the prospect of further delays before they have answers to their questions."

The collapse of MG Rover brought to an end the era of mass car production by British-owned manufacturers. Its assets were sold in 2006 to China's Nanjing Automobile.

All About MG Rover Group Ltd.Peter Mandelson

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