MG Rover: the end of the road?

MG Rover

In two months it will be the third anniversary of the collapse of MG Rover.
But the meter on the investigation into what happened, led by BDO Stoy Hayward,
is still running.

The investigators have totted up a bill of £100,000 for their hotel stay and
£30,000 for food costs, incurred for the duration of the investigation to date.
The overall costs have now escalated to more than £11m.

For the 6,000 people who lost their jobs when the company collapsed, that
must look a bit much. But the questions raised by the long-running probe are
deeper. They go to the heart of the government’s investigation system, and
whether it should continue in its current form.

Rover’s hotel bills related to the use of ‘dozens’ of investigators
who spent up to a year living in and around Longbridge following Rover’s
collapse, one source who witnessed the investigation says. The Department for
Business, Enterprise and Regulatory Reform, says there were between ten and 16

The revelations, which came from a Freedom of Information Act request by
Accountancy Age, have prompted deep concern among opposition MPs.

‘The company investigating seems to have been living in the lap of luxury.
It’s lacking government control. The government has given this company a blank
cheque to spend as much taxpayers’ money as it likes. The money could have been
used very productively to benefit the Rover workers,’ said Lorely Burt, the Lib
Dem business shadow minister.

‘There has to be a suspicion that DBERR is not pressing for a quick
conclusion because of political embarrassment,’ added David Heathcoat Amory, the
Tory MP for Wells.

There is more too. Some are asking whether such investigations should go on
at all.

‘DBERR are not very keen on these inspections,’ says one lawyer familiar with
government thinking. The investigations are difficult to control financially,
and of more use for politicians than civil servants.

They have their merits politically: if the day of reckoning on an
investigation into something as sensitive as Rover can be put off until later,
politicians’ can manage the fall-out and spread the political risk.

But there is little reason for the business world, or the business
department, to support the investigations on that basis.

Some speak waspishly of firms running up bills on a ‘learning by earning’
basis: implying that junior investigators are tagged on to the payroll, with no
scrutiny of whether they are necessary, to give them experience.

Whatever is true, MG Rover was one of the most high-profile business failures
of recent times, and logic demands that a good explanation is offered for what
went wrong.

But whether an accountancy firm running up bills, seemingly without end, is
the best way to provide those explanations, is a question that may find itself
thrust on to the political agenda.

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