Company: MG Rover
BMW chief criticises Rover bosses
|12th Nov 2004
||Questionable Business Practice
|BMW's UK chief has launched a scathing attack on the four businessmen who own MG Rover, branding them "the unacceptable face of capitalism".
Managing director Jim O'Donnell said it was "disgusting" that MG Rover's owners paid themselves fat salaries while losses continued at the company.
The "Phoenix four" were sold MG Rover by German owners BMW back in May 2000 for just £10 (14 euros).
But since them, Mr O'Donnell said, BMW had been "let down" by them.
When the four men took control of the Longbridge-based car maker, BMW also handed them an interest-free loan of £550m.
Since then, the businessmen behind Phoenix Venture Holdings have been criticised for the amount they have taken out of MG Rover given its worsening financial state.
Last year, five Phoenix directors took home more than £16m, including salaries and pension contributions despite the fact that MG Rover lost £89m.
BMWs board, in the meantime, took home £7.5m, while the company made a profit of £2.24bn.
Earlier this year, the Commons Trade and Industry Select Committee accused the chairman and vice-chairman of Phoenix of failing to exercise good corporate governance and using "financial sleight of hand" to line their own pockets.
Speaking at BMW's annual press dinner in London on Wednesday, Mr O'Donnell said: "I think it is a disgrace. The Rover board pay themselves more than the BMW board if you include the pensions.
"I think it is the unacceptable face of capitalism. BMW gave them a real opportunity for £10."
The Birmingham businessmen have previously defended themselves on the grounds that they took huge risks when they bought Rover because each invested £60,000 in a bid vehicle called Techtronic to do the deal.
Jim O'Donnell, who became managing director of BMW GB a month after MG Rover was sold off, told journalists that a better choice of owner would have been Alchemy Partners.
Alchemy, a rival bidder to Phoenix, had planned to shut down Rover and pour money instead into the MG sports cars division.
"I regret BMW buying MG Rover in the first place," he stated. BMW tried very hard. They put a huge amount of investment into it and it was clear that it was not going to work."
In response, a spokesman for Phoenix said: "We would obviously disagree with Mr O'Donnell's comments.
"But we have commented on this so often that we have to get to the point where we are not going to comment anymore.
"More comment now would fuel the debate."