News digest
Clive Goldthorp
1) The Demise of MG Rover Group Limited
£16m promised to MG Rovers workers is marooned in bank
Jon Griffin, Business Editor, Birmingham Mail 26th June, 2008
UP TO £16 million promised to former MG Rover workers is
marooned in a bank account, more than three years after the firm’s collapse.
The 6500 ex-employees waiting for potential payouts of £5000-plus from
the Phoenix Trust fund are still being denied payment, on advice from lawyers
representing the Phoenix Four.
They continue to wait for payouts from the fund set up to compensate
redundant car workers with money amassed from the assets of Phoenix Venture
Holdings, MG Rover’s parent company. As much as £35 million could
yet be generated – more than £5000 per worker – depending
on liability claims yet to be settled.
But the trust fund originally approved by MG Rover chairman John
Towers and the other members of the Phoenix Four is effectively in mothballs
as the Government inquiry into the collapse of the Longbridge car factory grinds
on. Money already realised by the sale of PVH assets includes £4.5 million
for former conference centre Studley Castle, £12 million for dealerships,
and a potential £21 million payout from PVH for an inter-group loan to
prop up MG Rover.
Around £16 million has been generated by the sale of Studley
Castle and dealerships, but lies untouched in a PVH bank account. The delay
in payments was attacked today by Prof Carl Chinn, one of four trustees of the
Phoenix Trust. “A lot of former Rover workers have contacted me wondering
what has happened with the trust fund. I am really disappointed and angry that
we are not able to help former MG Rover workers. I have repeatedly asked the
directors of PVH, and they have not replied to me, on what basis their legal
advisers have stated that they should not pay any money over to us. A lot of
former MG Rover workers could do with this money. Many have only got low paid
or temporary jobs - this money should be shared out fairly and squarely to all
former workers. But nobody is telling us anything, and it is a most frustrating
position. We have not had a trust meeting for a long, long time because there
is nothing to discuss. Promises have been made and we have not been able to
fulfil those promises.”
Prof Chinn added: “I have felt like resigning from the trust
on several occasions, but Eric Macdonald and Tony Woodley from the TGWU have
asked me not to.” A spokesman for Phoenix Venture Holdings said: “The
advice, which was given by PVH’s lawyers, was that while PVH Ltd was still
a trading company with liabilities, it would be illegal to gift any money until
its liabilities are settled. We do not know what the DTI inquiry is going to
turn up. The DTI might say that Phoenix has to respond to a claim from whomever.”
Heavy costs in review of Rover’s fall
Jean Eaglesham and Michael Peel, Financial Times 27th June, 2008
The three-year inquiry into the collapse of MG Rover has cost more
than £250,000 in hotel bills, meals and other taxpayer-funded expenses,
figures released to the Financial Times show. The protracted Companies Act investigation
is entering its final months. Draft sections of the report commenting on individuals’
conduct have been sent to them for comment, as required by the inquiry process.
One lawyer who has seen parts of the draft report described its tone as highly
critical.
Ministers ordered the inquiry a month after the collapse of the
UK’s last independent volume car maker in May 2005, amid a furore over
the “Phoenix Four” directors who bought Rover in 2000. John Towers,
Peter Beale, John Edwards and Nick Stephenson came under intense attack from
the media and unions for their role in Rover’s failure, in which about
6,000 workers lost their jobs. The businessmen, who bought Rover from BMW for
£10, extracted an estimated £40m in benefits from the company.
The government was criticised for encouraging the bid in 2000 and
supporting the company financially in 2005, during abortive takeover talks with
Shanghai Automotive, the Chinese bidder. The inquiry was initially expected
to take 18 months. Local MPs have expressed concern at its War and Peace length
– and the commensurate increase in the bill to the taxpayer, which had
passed £12m by the end of April.
The work has netted about £2m for the two inspectors who
have led the inquiry, according to data released to the FT under the Freedom
of Information Act. Guy Newey QC had been paid fees of £1.1m, including
value added tax, as at the end of April. Gervase MacGregor, a senior partner
at BDO Stoy Hayward, the forensic accountancy firm, had been paid fees of more
than £896,000 including VAT.
Payments have also been made to Stoy Hayward for staff it has seconded
to the inquiry. The Department for Business refused to release details of this
team but said expenses had been paid for “between 10 and 16 people”
staying at Birmingham hotels while working at Rover’s Longbridge site
between June 2005 and February 2006. The £235,960 expenses bill for the
inspectors and Stoy Hayward team to the end of April includes £102,682
on accommodation and £34,054 for “subsistence”, which includes
“meals/food” but not alcoholic drinks, the department said.
The statutory nature of the inquiry means the government has no
control over its duration and only limited influence on its final cost. Richard
Burden, a Labour MP whose Birmingham Northfield constituency includes the Longbridge
site, said on Friday the inspectors were dealing with “really serious
issues.” He warned that the worst outcome would be “when the report
is published, if all people talk about is how much it cost and how long it’s
taken, rather than what it says.”
End of the road as New West Works building bites the dust
Steve Pain, Acting Business Editor, Birmingham Post 27th June, 2008
One of Birmingham’s biggest buildings is being reduced to
dust as part of the £750 million transformation of the former MG Rover
site at Longbridge. Regeneration specialist St Modwen has begun demolishing
the 750,000 sq ft New West Works building – built in 1973 to house the
body plant for the new Mini Metro and subsequently used to build all future
Rover models.
The building, itself the size of Birmingham’s Brindleyplace,
is 294m long, 229m wide and 18m high. It is being demolished to make way for
proposed new homes and business space. The demolition follows on from the extensive
investigation and ground clearing work which began in February on Longbridge
West, and which involved the remediation of more than 200,000 cubic metres of
soil across the site to prepare the land for development.
St Modwen’s construction manager Mark Batchelor said: “The
demolition of one of the UK’s largest industrial buildings is a huge undertaking
and a great deal of planning has been carried out not only to make the process
safe, but to ensure we recycle as much of the material as possible. In keeping
with our sustainable approach to this whole project, all of the material, bar
any asbestos related substances, will be taken away for recycling or will be
re-used elsewhere on site. This includes 4,804 tonnes of steelwork, 34 tonnes
of non-ferrous metals and 115 tonnes of cable and copper – fitting perfectly
with our corporate target to reclaim or re-use 95 per cent of all materials
from demolition and remediation. The demolition process is expected to be completed
in the autumn."
2) China Watch
CCT Auction over - Everyone’s a winner!
The China Car Times Auction is finally over, with the amount raised coming to
a final amount of just over £950
China Car Times 26th June, 2008
The earthquake that struck in Wen Chuan, Sichuan, left over 50,000
dead and over 5 million homeless. The amount which we have raised, although
small in Western terms, will go a long way to help those that were effected;
the average monthly salary of a Wen Chuan worker is just over 300rmb a month,
thus we’ve raised enough to support just over 40 workers for a month,
or buy several thousand bowls of rice, or tents, or on whatever the Chinese
Red Cross decide to spend the money.
We’d like to thank Paul Stowe, for pushing the idea into
becoming a reality, APR Automotive for sending out an excellent press release,
Keith and Clive from AROnline for being good eggs, Chris Tutor from Autoblog,
David Leggett for blogging about it, Erik for his behind the scenes work, and
Steve Childs from MG-Rover.org.
Not forgetting those who donated gifts:
Richard Ji – Nanjing MG UK
Ben Boycott – Lotus China
Mathew Cheyne – LTI Coventry
Lifan Automotive – China
Martin Hayes – APR London (He sent out a press release to 50,000 media
people)
Paul Stowe summed it up nicely in his charity blog: “Such
has been the success of the project; we are considering holding another auction
later this year. Over the years I and Ash have collected various items of automotive
memorabilia (Signed books by Li Shu Fu Geely founder), registration plates off
the first MG built at Nanjing, limited edition NAC MG models, limited edition
Shanghai Maple and Geely models, etc., etc.– let us know what you think.”
Between the pair of us, we have a lot of automotive tat memorabilia,
books, t-shirts, magazines, automotive accessories that we get given and never
use- even, oddly enough, a Roewe branded tea set. Perhaps, in the near future,
we’ll have another auction to further the good work that we, and you,
have done so far.
3) India Watch
Indian villagers and police clash at Tata car plant
Automotive News Europe 27th June, 2008
KOLKATA, India (Reuters) -- Indian police on Friday fired tear
gas and beat villagers protesting land seizures who had tried to force their
way into a factory owned by India's Tata Motors. Tata Motors, a unit of Indian
conglomerate Tata group, plans to launch the world's cheapest car, the Nano,
later this year from its new factory at a 1,000-acre (400-ha) complex in Singur,
a cluster of villages near Kolkata, capital of West Bengal state.
Villagers, who say the car plant has forced them from their farmland,
threw stones at police in the communist-ruled state on Friday and tried to damage
a boundary wall of the factory, officials said. At least 15 villagers and some
police were injured in the clashes, police and community leaders said.
"We had to fire tear gas shells and use batons to chase away
the protesters who tried to go inside," Rajiv Mishra, a senior police officer,
said. The clashes are a reminder of the obstacles that India faces in industrializing
and competing with the likes of China as many villagers, two-thirds of a 1.1
billion population, protest the seizure of farmland. The state of India's farmers
promises to be one of the biggest issues ahead of a likely 2009 general election.
In mineral-rich Orissa state villagers have been protesting against
chemical and steel factories. This week, villagers clashed over construction
of a $250 million plant to produce titanium dioxide, a non-chemical agent used
in sunscreen products. Authorities said they had stopped construction work hoping
officials could sort out land acquisition problems in the India-Russia joint
venture.
About 300 tribal people protesting the acquisition of tribal land
for a steel factory in Orissa state set seven vehicles on fire this week.