The appointment of forensic accountant Gervase MacGregor to investigate MG Rover indicates not only the suspicions surrounding the group’s affairs but also a political determination to get to the bottom of its demise.
MacGregor, head of forensic services at BDO Stoy Hayward for 11 years, will work with QC Guy Newey on the inquiry launched by trade and industry secretary Alan Johnson. They have been charged with investigating the ‘questions raised’ by the Financial Reporting Review Panel’s confidential report into the Rover’s accounts. MacGregor and Newey will also be examining the events leading up to the car manufacturer’s collapse in April and the loss of 5,000 jobs.
A report from Rover’s administrator, PricewaterhouseCoopers, indicates the scale of their task, with figures showing the company was losing £25m a month and now owes creditors £1.4bn compared to its remaining assets of just £80m.
MacGregor has particular experience with vehicle manufacturers and dealers, suggesting Johnson wants no stone left unturned and is willing to invest time, money and expertise in examining how Phoenix Venture Holdings ran Rover. MacGregor’s hard-won reputation for tenacity and his beaver-like work rate will be crucial in this endeavour.
The author of Expert Accounting Evidence he has just concluded a two- and-a-half-year investigation into the dispute between German truck company MAN AG and Freightliner ltd, a subsidiary of US giant DaimlerChrysler.
The row centres on the sale of UK truck company ERF, owned by Freightliner, to MAN in 2000. MAN alleges that ERF’s financial controller and company secretary fabricated the accounts and overstated them to the tune of £294m. MAN is seeking damages of £300m for breach of contract and the case began in the High Court in January this year.
MacGregor, a partner at BDO since 1991, is viewed as an expert in ‘establishing the ownership of assets’ in complex group structures, exactly the type of issues under scrutiny at the Rover Group.
He is also used to dealing with high-profile political cases having served as an independent accounting adviser to the United Nations Compensation Commission. Held in Geneva, the commission was investigating damages claims following Iraq’s invasion and occupation of Kuwait in 1990.
MacGregor is also comfortable reporting on his findings, acting as an expert witness in a number of fraud cases at the High Court. He is a member of the Association of Certified Fraud Examiners and the ICAEW’s fraud advisory panel.
As a DTI external investigator, appointed under section 432 of the Companies Act 1985, MacGregor will have wide-ranging powers to demand documents, interview witnesses and inspect premises.
He is also under no obligation to explain to the Phoenix Four, the directors who bought Rover from MG in 2000 for £10, the reasons for the investigation. His powers include recommending the disqualification of directors or referring the case to other investigating bodies, such as the Serious Fraud Office.
As yet there is no timetable for the inquiry, although former workers and unions are anxious that it should take months rather than years. But the complex nature of the Rover Group structure, plus the number of unanswered questions could mean MacGregor is in for a long ride.
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