LONDON (AP) -- The British government is taking legal action to bar four investors involved in the collapse of automaker MG Rover from any company management positions, a senior official said Friday.
Business Secretary Peter Mandelson announced the move as his department released a long-awaited report on MG Rover's collapse in 2005, which put 6,300 people out of work and left creditors owing 1.3 billion pounds ($2.2 billion).
The businessmen, known as the Phoenix Four, collected millions in pay and pensions from the company before its collapse.
The four responded angrily, saying the report "drips with the hallmarks of this government -- spin, smear and point-blank refusal to take any responsibility for their own actions."
They said the government spent 16 million pounds on the report but only 5 million pounds supporting MG Rover, and they claimed the government killed a possible deal with China's Shanghai Automotive by failing to offer a 100 million pound loan.
Former Rover executive John Towers, Rover dealer John Edwards, Peter Beale, a board director of Edwards Cars, and Nick Stephenson, an MG Rover director under BMW, bought the company for a token 10 pounds ($16.50) from BMW in 2000.
The report said there was evidence that Beale had given inaccurate and misleading evidence to a Parliamentary committee. The day after the independent inquiry was announced, Beale purchased a software program called Evidence Eliminator.
"It is impossible to determine to what extent (if any) material of significance to our investigation was deleted," the report said. Beale said his intention was to remove personal items from his laptop.
The four and Kevin Howe, who was MG Rover's chief executive until its collapse, took "unreasonably large" rewards of about 9 million pounds each for the five years they were running the company, the report said.
The compensation, the report said, was "out of all proportion to the incomes which they had previously commanded," were out of line with compensation at other companies and "which were not obviously demanded by their qualifications and experience."
"Our remuneration was not the reason for the collapse," the four investors said. "The real reason is the government bungled the last chance to save MG Rover."
The Serious Fraud Office has already reviewed the report, and decided not to launch its own investigation of possible criminal activity.
"It was important to get all the facts into the open so that workers who lost their jobs and creditors who were not paid know the truth," Mandelson said.
"Action is being taken. Based on this report, work has been commissioned to start legal proceedings to seek to declare relevant directors unfit to hold office and to disqualify them from management of any company in future."
MG Rover emerged from the nationalized automaker British Leyland, which was sold to British Aerospace in 1988. BMW bought it in 1994.
BMW spent hundreds of millions on MG Rover, sold the Land Rover business to Ford, kept the Mini car and effectively gave away the rest of the company in 2000 to the Phoenix Four, who paid a symbolic sum for the assets.
BMW made a contribution of 75 million pounds and agreed to lend 427 million pounds free of interest for up to 49 years. If MG Rover's assets proved to be worth less than 740 million pounds, BMW said it would pay the difference.
MG Rover suspended production in April 2005 at its Longbridge plant in west central England, wiping out more than 6,000 jobs. The company went into administration and its assets were sold to China's Nanjing Automobile Group.
The report also faulted the government for leaking news in 2005 that MG Rover was negotiating a possible sale to Shanghai Automotive.
"We consider that telling the press without consulting the group that the talks had stalled was irresponsible," the report said. However, it said it wasn't the government's fault that the sale didn't happen.
The four investors accused the government of scuppering the deal.
"The Chinese only indicated they would not go ahead with the deal when they knew the UK government would not be making the loan to MG Rover," the four investors said.