UK govt seeks to bar directors over MG Rover demise

* Govt publishes long-awaited report into demise of MG Rover

* Govt seeks to bar "Phoenix Four" from directorships

* Former owners accuse government of whitewash

By Keith Weir

LONDON, Sept 11 (Reuters) - The British government has started moves 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 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 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".

Written by two government-appointed inspectors, the report says the owners and former chief executive, Kevin Howe, got pay and benefits totalling 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 totalling tens of millions of pounds," the report said in its conclusion.

There was also criticism of government officials for briefing the press in April 2005 that talks to agree a joint venture with China's SAIC had stalled. The company went into administration shortly after the negotiations failed, with the loss of over 6,000 jobs.

"...We consider that telling the press, without consulting the Group, that talks had "stalled" was irresponsible."

Opposition politicians have accused the government of wasting millions of pounds of taxpayers' money to prop up the ailing carmaker in the run-up to a parliamentary election in May 2005 when Labour won a third successive term.

The Phoenix Four dismissed the criticism.

"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.