British Fraud Office To Investigate MG Rover

LONDON (AP) -- Britain's Serious Fraud Office will investigate the collapse of MG Rover following an independent inquiry in to the carmaker's demise four years ago, the government said Monday.

Business Secretary Peter Mandelson said in a written statement that he had ordered the agency to "consider whether there should be a criminal investigation" in light of the report.

The report has not been published to avoid prejudicing any potential prosecution, the Department for Business, Innovation and Skills said.

The investigation of what went wrong after BMW unloaded MG Rover to Phoenix Ventures in 2000 has taken four years to complete and reportedly cost 16 million pounds ($26 million).

John Towers, a former Rover Cars director, and three other executives who formed the Phoenix Partnership paid 10 pounds to acquire MG Rover from BMW, which also gave the new owners an interest-free loan of 427 million pounds. The partners reportedly received 30 million pounds or more in compensation during the five years they ran the company.

MG Rover owed nearly 1.3 billion pounds to creditors when it ceased operating in April 2005, the government said.

China's Nanjing Auto acquired the MG brand in 2005, and produces the cars in China and Britain.

Mandelson's announcement said the four-year investigation covered the affairs of MGRG (MG Rover Group), its parent company Phoenix Venture Holdings and MGR Capital Limited and 32 related companies.

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