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UK government seeks to bar directors over MG Rover demise
LONDON (Reuters) - The British government is looking to bar executives from failed carmaker MG Rover from running other companies following the publication of a report into the collapse of the business in 2005.
After purchasing Rover from BMW (BMWG.DE) for a nominal 10 pounds in May 2000, the management team known as the "Phoenix Four" tried to revive Britain's last major independent carmaker but the company went into insolvency in 2005 with debts of nearly 1.3 billion pounds ($2.18 billion).
"Based on this report, work has been commissioned to start legal proceedings to seek to declare relevant directors unfit to hold office and to disqualify them from management of any company in future," Business Secretary Peter Mandelson said in a statement on Friday.
The action targets Peter Beale, John Edwards, Nick Stephenson and John Towers, known as the Phoenix Four.
The men said they were the victims of a witch hunt. They questioned why the report had not looked into the role Prime Minister Gordon Brown, finance minister at the time, had played in the failure to provide a 100 million-pound bridging loan.
Written by two government-appointed inspectors, the report says the owners and former chief executive, Kevin Howe, got pay and benefits totaling some 42 million pounds.
"During the five-year period, the members of the Phoenix Consortium and Mr Howe obtained large, and we say unreasonably large, financial rewards totaling tens of millions of pounds," the report said in its conclusion.
Britain's Serious Fraud Office (SFO) last month ruled out a criminal investigation into the affair.
While critical of the Phoenix Four, there was also criticism of government officials for briefing the press in April 2005 that talks on a joint venture with China's SAIC had stalled.
Based in the central English city of Birmingham, the company went into administration shortly after the negotiations failed, with the loss of over 6,000 jobs.
Telling the press that talks had "stalled" was irresponsible, the report said.
The Phoenix Four said the government could have done more to rescue one of the most famous names in British motoring.
"The report is entirely as we expected -- a witch hunt against us and a whitewash for the government," they said in a statement to British media.
"The Government has spent 18 million pounds of taxpayers' money on a report - many millions more than they ever gave MG Rover," they said. "Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover."
Mandelson said the failure to agree a deal meant the issue of a bridging loan was academic.
"There was nothing for us to give a bridging loan for, and simply to give the money ... would have been illegal under EU law," he told BBC television.
The Phoenix Four took over MG Rover with an interest-free loan of 427 million pounds ($714 million) from BMW after talks with venture capital firm Alchemy broke down.
(Editing by Hans Peters, Greg Mahlich)
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