MG Rover boss had 'personal relationship' with supplier

13 September 2009

14 September 2009

The men in charge of carmaker MG Rover Group at the time of its collapse have been criticised for awarding "excessive" consultancy work in a UK government-commissioned report.

Nick Stephenson, one of MG Rover's directors between 2000 and 2005, was said to have had a "personal relationship" with consultant Dr Qu Li after negotiating her contract himself.

The independent study from Guy Newey QC and Gervase MacGregor of BDO Stoy Hayward was released last Friday after being commissioned by UK trade and industry secretary Alan Johnson four years ago.

Among its findings was that Li received fees totalling more than £1.6 million through two companies she owned to help MG Rover find a Chinese buyer. It said the payments were "much too high" and that, apart from Chinese-born Li's translation skills, she "didn't seem to add much".

The directors made "no attempt" to find out what the market rate for the services was, or look around for other consultants, according to the investigation.

It said: "Dr Li suggested to us that she would not have agreed to anything less. Were that right, it seems to us that the group should, if necessary, have sought assistance elsewhere."

The report also found that the four directors, from MG Rover's parent company Phoenix Venture Holdinave themselves "unreasonably large" payouts and there was also evidence they attempted to dispose of information after the igs, gnvestigators were appointed.

Business secretary Lord Mandelson said the government would attempt to prevent the directors from taking over a company again.

Around 100 buyers were made redundant when MG Rover collapsed four years ago with debts of £1.3 billion. Former supply chain director Tony Shine gave evidence in the report.

Former MG Rover bosses, including Stephenson, described the investigation as a "witch hunt".

SMsep2009

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