Too many people let their hearts rule their heads when the Phoenix Four took over Longbridge in 2000, Sir Digby Jones, director general of the CBI, has told The Birmingham Post.
Sir Digby would not name names, but it is thought he was targeting the Government and the trade unions.
"Some people should think - were we blind?" said Sir Digby. "Did we let our hearts rule our heads?"
He said the way John Towers and his team had been hailed as saviours when they came to the rescue had " created an impression with the workforce and the Government that things were going to be all right".
But the new owners "did not address the real issues" and missed a golden opportunity.
Had they concentrated on the MG brand, albeit with far fewer workers, "then the business today would be making 80-90,000 sports cars a year at Longbridge".
Sir Digby hit out following a speech to the CBI West Midlands Summer Banquet at Birmingham Botanical Gardens. In it he reiterated scathing comments about the Phoenix Four.
"Their conduct was appalling," said Sir Digby.
Detailing how Mr Towers, Peter Beale, Nick Stephenson and John Edwards had "burned" BMW's £500 million dowry in five years, put 6,000 people out of work and taken £40 million out of the business along the way, he said it "did nothing for the image of British business".
And he pleaded with the four to return as much of the money as they could.
He cautioned: "I would call on them once it is all sorted out and the smoke has blown over, then if they do end up with substantial sums, if they could find it in their hearts to put that back to help those who will not find work.
"It would help those - and there will be some - who have serious social problems for the rest of their lives."
Sir Digby said he accepted the failure was not all the fault of the management.
"They were trying to build a car in the most competitive sector of the market, in a 100 year old factory, with a road, the A38, going through the middle of it."
And listing comparative figures showing that Nissan at Sunderland produced 300,000 units with 3,000 people, Toyota at Burnsaton with 200,000 units with 2,000 people and MG Rover with 6,000 people and just over 100,000 cars a year, he noted: "Their business model was wrong. It was never going to succeed."
Sir Digby called for a major skills push in the country aimed at countering debacles such as MG Rover by going for "the jobs of tomorrow".
He praised the Rover Taskforce for their efforts at reskilling MG Rover workers and getting them back into jobs, albeit there remained a long way to go. But business had to get involved in schools to inspire the 14-15 year olds while teachers needed to be less suspicious of business.
Instead of sports competitions where nobody was allowed to be the victor, children needed to be taught about "risk and winning".
And somebody had to stop the Health and Safety Executive making it almost impossible for firms to give teenagers experience.
Turning to Europe, and the row over the Common Agricultural Policy and the British rebate, Sir Digby urged the Prime Minister to stick to his guns and "not give an inch" unless a full scale reform package was agreed.
Slamming the "hypocrisy and blatant selfishness" of French President Jacques Chirac, along with the "French rebate" from the Common Agricultural Policy, he went on: "For too long the French have thought they are the sun around which the rest of Europe revolves."
That, he said, was no longer the case.