The former directors of MG Rover Group (MGRG), who pocketed over £40 million as the company spiralled into administration, should have been punished with lengthy disqualifications forcing them into early retirement and out of business management.
Instead, Peter Beale, John Towers, Nick Stephenson and John Edwards – known as the ‘Phoenix Four’ – received bans varying in length from three to six years.
As directors of Phoenix Venture Holdings, the quartet callously siphoned off £42m in pay and pensions while Britain’s last large car manufacturer collapsed into administration owing creditors more than £1 billion.
An independent report into the directors’ behaviour revealed that 24 hours after the government appointed inspectors to investigate MGRG’s demise, Beale bought a software program for his computer called Evidence Eliminator which he used to remove information about the income and benefits received by Towers.
Further investigations by the Insolvency Service (IS) found the businessmen created companies that helped them to manipulate income streams and assets so they, rather than MGRG’s creditors, profited.
Although the Phoenix Four deny any wrongdoing and have promised to make £30 million available to more than 6,500 former employees, I still think these guys got off lightly considering they could have been banned from managing companies for up to 15 years.
MGRG, which the businessmen bought from BMW for £10 in 2000, fell into administration in 2005.
It has taken six years for creditors and employees to get any kind of justice, which is far too long but, ironically, the exact length of time it’ll be before the Phoenix Four are back in business.
It begs the questions: with how much rigour was the IS pursuing these men who orchestrated a premeditated conspiracy which caused so much suffering?
The Phoenix Four should have been made bankrupt and ordered to repay, restore and account for all the losses they caused; an amount well in excess of the £30m they’re making available.
Moreover, what happened to the rest of the money, and how can the story end without at least one of these directors facing criminal charges?
Only the IS can answer those questions, but two things are becoming increasingly clear: bans can no longer be considered an effective deterrent, and white collar crime pays handsomely.