Government Orders Inquiry into MG Rover Collapse

The directors of MG Rover are to face a full inquiry into their accounts and management of the collapsed car maker, The Times has reported. The inquiry, to be led by Guy Newey, QC, was ordered by Alan Johnson, the Trade and Industry Secretary, after a preliminary inquiry for the Department of Trade and Industry raised concerns. Witnesses can be forced to give evidence to the inquiry.

A key issue will be whether MG Rover traded while insolvent, which is illegal. Last month The Times reported that the company had delayed payments to its suppliers as long ago as March last year. The administrators of MG Rover have also said that the company clearly had cashflow problems for several months.

The inquiry could lead to the board’s prosecution, or their disqualification as directors if wrongdoing is uncovered.

A late bid for MG Rover emerged last night from American-Arabian Investment Holding, a US-based company that hopes to rebuild Rover.