Business Secretary Vince Cable was accused of “washing his hands of MG Rover” after refusing to meet a city MP to discuss a £14 million fine.

Richard Burden (Lab Northfield), the MP whose constituency includes the former MG Rover plant, wants at least some of the cash to go to former Rover workers who lost their jobs when the carmaker collapsed in 2005.

The fine was imposed on accountants Deloitte by watchdog the Financial Reporting Council last year, after a tribunal found Deloitte failed to spot conflicts of interest when it acted as adviser to MG Rover directors.

But Mr Burden’s requests for a meeting with Dr Cable to discuss how the money might be used have been rebuffed.

The Business Secretary told him that no discussions could take place until Deloitte’s appeal against the fine had been completed.


Richard Burden
Richard Burden

 

Mr Burden said he did not expect Dr Cable to discuss the appeal – but did want to talk about how the money would be used if the Financial Reporting Council’s ruling was upheld.

As things stand, the money will simply go to the Institute of Chartered Accountants, which is funded partly from fines, However, the penalty imposed on Deloitte far outstrips any fine previously imposed.

Mr Burden said: “I am astonished that the Government appears to be washing their hands of this matter.

“This unprecedented fine demonstrated that there were major ethical breaches by Deloitte in their advice to MG Rover and the directors.

“But the £14 million fine imposed on Deloitte, if it is upheld after the appeal, is expected to go to the Institute of Chartered Accountants.

“I know that many people will be shocked to hear that a fine that is meant to punish accountants for failing to adhere to expected professional standards will be going back into the same profession.

“It’s extremely disappointing to hear that the Government seem to have no opinion on where the fine should go at all.”

MG Rover’s four directors were known as the Phoenix Four after they set up the Phoenix Venture Holdings which bought much of the Rover Group in 2000, naming the new business MG Rover.

Up to 6,000 jobs were lost when MG Rover collapsed in 2005 with debts of £1.4 billion.

MG Motor, a firm owned by Chinese business SAIC, bought the MG marque and operates on part of the old site where it employs around 540 people.

The Phoenix Four promised that the company’s remaining assets would be used to set up a trust fund, to benefit workers who lost their jobs.

But the cash never materialised and Mr Burden believes that the money from the fine could be used to create the fund instead.

Deloitte advised MG Rover but the tribunal found it had earned fees of £9.4 million advising on two deals which benefited the directors and not the business.

The transactions, called Project Platinum and Project Aircraft, involved buying loan books from Rover’s former owner BMW and a scheme to use tax losses from the Rover business to the benefit of the Phoenix Four.

Mr Burden said: “This record sum has clearly been imposed in the public interest. I think that means doing the right thing by the people who lost most – the employees.

“After five years of supporting the Phoenix Four directors and buying time for the West Midlands economy to diversify and modernise from its dependence on Rover, it was the workers who lost everything when the collapse finally came in 2005.

“The wider community around Longbridge was also hit hard, and unemployment in this area is still well above the national average.”

Mr Burden wrote to the Business Secretary requesting a meeting but Dr Cable replied stating it would “not be appropriate for a discussion to be held on this issue in advance of the appeal proceedings” and warning he was “not able to intervene” in the proceeds of the fine.

A spokesman for the Department of Business, Innovation and Skills said: “Ministers cannot discuss ongoing legal cases. However, the Secretary of State and officials have worked tirelessly over the past few years on the collapse of MG Rover.

“This has included £40 million in payments to former workers of the company since 2005 and the successful disqualification action in 2011 by the Insolvency Service against the former directors.”

A tribunal judge in November gave Deloitte permission to appeal against six of the 13 findings made against it by the audit regulator’s disciplinary tribunal.

Richard de Lacy, QC, a tribunal judge, said in a ruling that Deloitte could appeal against the tribunal’s decision in relation to its six findings on Project Aircraft, but not on the seven findings relating to Project Platinum.