OK, you buy a car company for, say 10 quid, seems reasonable?
Though, while I thought about it – that isn’t the lead into a daft joke, it’s true. But buying the company for a tenner was supposed to be a way of saving the company and keeping the 6000 people employed who were later laid off because the car company failed.
But there’s more:
A report found the men pocketed an “unreasonable” £42m in pay and perks.
The Phoenix Four blame Labour for Rover’s collapse but Lord Mandelson said ministers had been “faultless”.
Read that again – £42 million pounds!
As for faultless – who sold the sodding company for a tenner, Mandy?
It isn’t that 6000 people lost their jobs, although that is bad enough, but Rover was supposed to pay its creditors, too. That is more people who could effectively be out of work because of four men lining their pockets.
Yet – what irks me the most – the serious fraud office (police) won’t be opening an investigation into this. They are away scott free!
How they did it.
In May 2000, the Phoenix consortium – John Towers, Nick Stephenson, Peter Beale and John Edwards – acquired the business for nothing (well, a nominal £10) from BMW. And because BMW wanted shot of this loss-making motor manufacturer, the German company endowed it with £75m (in lieu of warranties) and an interest free 49-year loan of £427m.
This is not a tale of industrial success. However, as I mentioned last night, Messrs Beale, Edwards, Stephenson and Towers each pocketed £9m (give or take a few thousand) between 2000 and 2005 and Mr Howe received £5.7m.
The inspectors describe the remuneration as “unreasonably large” for a whole host of reasons, such as:
(1) the financial performance of the business was lamentable;
(2) the executives risked only paltry sums of their own money;
(3) they had never in the past been paid anything like this for their alleged business skills.
How did they get the money out?
Well the loss-making operating company, MG Rover Group, which made the cars, was separate from the company that held the loan from BMW, Techtronic. Now, although the loan from BMW was interest-free, Techtronic charged interest on the loans it made to Rover.
Hey presto: Techtronic generated a profit, even though Rover was incurring losses.
And Techtronic paid dividends to another company, Phoenix Venture Holdings, which in turns rewarded Towers et al.
You can read the rest of the blog post here.
So, with all that evidence – they still walk away with vast sums of money and no one will do anything about it?
You have to begin to wonder why it is that business men and women this day and age feel they can do what they like with no consequence.
Mandleson believes they should say sorry. Well that’s going to put the fear of God into all those other businesses who are flipping the finger then isn’t it!