6th December 2011
Are we going to get any money from the trust fund?
I've continued working in recent weeks on the trust fund but the slight interruption in updates was to allow a few points to be verified first. This time last year and still today there remains a lot of confusion around where certain matters lie and what follows is a snap shot of current events.
In Summary
In the last 12 months I've spoken with Nigel Petrie and Peter Dillon on behalf of the JFRW campaign on a number of occasions. I've attempted to ask as many of the questions raised via the website and through personal emails as possible. (N.B. Nigel Petrie is the leading director of Phoenix Board – MG Rovers parent group – since the ‘Phoenix 4’ resigned in April http://www.birminghampost.net/birmingham-business/birmingham-business-news/automotive-business/2011/04/18/phoenix-four-quit-as-directors-of-phoenix-venture-holdings-65233-28539457)
It is often suggested in the public domain and media commentary that John Towers and his fellow Phoenix Directors bought the company for £10 in 2000. However, during their tenure the Phoenix Directors accumulated some £42million in remuneration. The closure in 2005 remains the largest mass site redundancy in the UK for over 25 years. Upon closure many workers were paid half their month’s salary, had no company redundancy pay and had to wait weeks to receive state benefit. Figures produced by Professor David Bailey, Birmingham Business School (2008), showed the average worker suffered a significant post-closure wage drop of £5,640, based on research figures pre-dating the global economic downturn. Although around a third remained within the manufacturing sector on a comparative wage, around two thirds who transferred into the service sector saw their wages
drop (see: http://www.theworkfoundation.com/Assets/Docs/A3%20fold%20flier%20-%20LOW%20RES.pdf)
It is understood that the money intended for the trust fund would be derived from any funds that remained after the Phoenix Venture Holdings creditors were paid. Although when speaking at the time JohnTowers indicated the millions would be made available within weeks, this date was then changed pending the publication of the then Governments inquiry; since published in 2009.
Nigel Petrie confirmed that around £12 million had been put aside for transfer into the trust fund. This money could be seen as ‘what is left’ after the closure of MG Rover. However, a disputed claim from HBOS has seen the money withdrawn from the accounts meaning any funds allocated to the trust have been assigned to the bank.
So - what options remain for money to be paid into the fund?
There remains three ways that money can be paid into the trust fund. At the moment, only £26,000 has been transferred, which is ring-fenced for any future administration costs. I've continued to follow each of the areas closely and have in recent weeks been able to obtain further documentation which raises a number of pertinent questions.
1 – ‘the HBOS claim’
From the figures available in the public domain the £12million did exist in a PVH account. This £12 million however, was subsequently withdrawn by HBOS. Nigel Petrie and Peter Dillon believe this was done unfairly and are in legal proceedings to claim this back. They claim legal costs to date of more than £2 million in pursuit of this. Should they be successful, this money has been promised for the trust fund throughout all of the conversations held with Nigel.
Nigel and Peter have continued to seek legal advice and are due to have their case hearing in front of a registrar in London in February 2012.
The claim from Nigel is that the money disappeared when HBOS, owned by Lloyds Banking Group of which HM Treasury holds a 41% stake, made an apparent second claim for what he protests was a previously settled debt.
A fleet MG Rover vehicles were a cross guarantees for temporary loans to PVH. It can be proved through the records of the Price Water House Coopers (PwC) report, that PwC (the administrators appointed liquidators) facilitated the sales of the vehicles and the money raised was paid to HBOS. It appears there may have been a second claim after this for this disputed money.
Throughout the conversations, Nigel and Peter have also pointed out that in support of their case, they requested the release of certain documents from under the Freedom of Information (FOI) act. In 2007 a copy of the report prepared (but never published) by the Financial Reporting Review Panel for the then Secretary of State for Trade and Industry was requested. This was refused in the first instance and was refused again on appeal in 2009.
After some searching on the internet, it was possible to find a copy of the report prepared by the Information Commissioners Office, part of the Department for Business, Enterprise & Regulatory Reform (BERR), which discusses why this FOI request was turned down. It appears the information exchanged between the Financial Reporting Review Panel and the Department for BERR was in confidence. Breaking this trust has been deemed by the Commissioner at greater public interest than releasing a copy of the report (see: http://www.ico.gov.uk/upload/documents/decisionnotices/2009/fs_50176388.pdf)
When speaking to Nigel Petrie and Peter Dillon over the course of the year, they were keen to point out that their shrewd financial negations over the sale of the assets (for the benefit of PVH and ultimately the trust fund) were the reason this money (the £12 million) was fortunately still available for the ex-workers despite having to fend-off claims from a number of creditors, which ultimately has taken time.
2 - MG Rover Capital
It is widely reported in media commentary and the public domain that £22 million lies within the accounts of MG Rover Capital. The account is reported to have profited the Phoenix Directors more than £2 million in dividends since the closure of MG Rover. However, there is a claim on this money from the Pensions Regulator and apparently the funds have been ring-fenced pending investigation. Last week, John Hemming MP agreed to write to the Pensions Regulator to clarify if this is still a claim and to try and obtain the details on it. I will post the outcome onto this website.
However, if it is assumed this claim turns out to be false, I asked on behalf of the JFRW group throughout the year to Nigel if this money would be made available or the trust fund. Nigel Petrie and Peter Dillon confirmed that it would not as it did not fall under the list of companies that compensate Phoenix Venture Holdings. This would mean that combined with their original £42million, they would have profited over £68million pounds since 2000, whilst funds transferred for the ex-workers would remain at nothing.
3 - Personal Contribution
Trustee Carl Chinn has repeatedly called for the ex-directors to personally contribute £1 million to the trust find in lieu of any extra monies to help those affected by the closure. This request has been refused. In our discussions this year on behalf of the JFRW group I also asked if personal donations would be made but again this was refused. Richard Burden MP has publicly argued the same point also to no avail. Along with John Hemming MP this matter has been discussed in the House of Commons on numerous counts but with no outcome.
What about the government in all this?
The Phoenix Directors argue that Gordon Brown, the then Chancellor of the Exchequer, blocked the bridging loan that would have ultimately been the saviour of MG Rover. The Phoenix Directors claim the then Prime Minister Tony Blair was in favour of the loan that they claim would have preserved the deal with SAIC. They say it was Gordon Brown who broke the deal upon his advice from Baroness Shriti (see: http://www.dailymail.co.uk/news/article-1198210/Gordon-Brown-responsible-letting-MG-Rover-bust.html)
Following the closure of MG Rover the Government funded a four-year, £16 million inquiry into the collapse of the company. At the time of completion it was felt by the then Business Minister, Peter Mandleson serious enough for him to delay publication in order to hand to the UK Serious Fraud Office for further investigation.
The SFO however refused to investigate further. Their reason for doing so has never been published. On the SFO website it says ‘the inspectors report has not been made public, the SFO is unable to go into detail about the reasons for its decision’ (see: http://www.sfo.gov.uk/press-room/latest-press-releases/press-releases-2009/mg-rover.aspx)
The report by the National Audit Office 2006 (see: http://www.official-documents.gov.uk/document/hc0506/hc09/0961/0961.pdf) discusses the Governments position regarding the bridging loan at the time of closure.
- Appendix 7 shows their interpretations of the events regarding the bridging loan in a timeline. It claims that information was gathered that SAIC had withdrawn from the deal.
- However, it is suggested that they also thought that it was possible SAIC may have re-entered negations.
- Also stated is that at the time of closure the Government knew of other potential parties that were interested in negotiating a deal with the Phoenix Directors and the report criticises the handling of this matter.
- Finally it is claimed that in the week leading up to MG Rover going into administration senior Government members were informed by KPMG, its financial investigator, that the directors were taking weekly legal advice on the issue of wrongful trading.
In a letter written to me in July 2010 Vince Cable stated that it is not for HM Government to intervene in the management decisions of Lloyds Banking Group or HBOS. He also mentioned that the Pensions Regulator Determinations panel were investigating the issue, which would put claims directly against the £22million assets.
In a recent letter from Lloyds Banking Group they confirm their belief that all claims made on the MG Rover assets were legitimate.
Summary
At the moment it remains very difficult to envisage that any money will come into the trust fund given the many different obstacles currently in the way as outlined above. However, keeping the issue within the public domain puts continued pressure on the Phoenix Directors to remind them that there are 6,500 former employees watching these events very closely and hoping dearly that one day they will honour their pledged promises. Until then, via the JFRW we will continue to do our utmost to bring attention to the issue.