MG Rover reached the end of the road at the weekend when its administrators ordered that the manufacturer be broken up, resulting in the retrenchment of 5 000 workers. The British government has ordered an investigation into the company's accounts.

MG Rover reached the end of the road at the weekend when its administrators ordered that the manufacturer be broken up, resulting in the retrenchment of 5 000 workers. The British government has ordered an investigation into the company's accounts.

The company's administrators, PriceWaterhouseCoopers, announced at the weekend that they planned to break up the only major British-owned car manufacturer after a lifesaving deal with China's state-owned Shanghai Automotive Industry Corporation (SAIC) failed to materialise.

British Trade and Industry Secretary Patricia Hewitt said that the independent Financial Reporting Council would look into the accounts of the company and its owners, Phoenix Venture Holdings.

Hewitt said she believed Phoenix chairman John Towers and other directors had taken too much money out of the business.

"I hope they will make a personal contribution towards supporting the work force," Hewitt said. "Where entrepreneurs take a risk they should be entitled to big rewards for big success. But that is not what we are talking about here. They did not put up huge amounts of money, the company has not been a success and it was virtually given to them by BMW."

However, MG Rover directors on Sunday yesterday rejected a call by Treasury Secretary Gordon Brown for them to give some of their R476-million pay and pension rewards to the motor company’s workforce.

A spokesman for their company, Phoenix Venture Holdings (PVH), said: "The directors have given the assets of PVH to a trust which will be administered independently for the benefit of the workforce. They have already put in considerable assets. Their position has not changed from that."

CARtoday.com reported last week that the so-called "Phoenix Four" offered assets of up to R357 million to assist Rover as it tried to resuscitate talks with SAIC, but acknowledged that the assets on offer were subject to attack from creditors.

The directors' snub to Brown came as Sir Bryan Nicholson, chairman of the Financial Reporting Council, confirmed that he would head an investigation into MG Rover's accounts. Sir Bryan told The Times that the car company appeared to have a complicated accounting structure. He said that the investigation would start with the accounts but could be widened by other regulatory authorities if it was thought necessary.

PricewaterhouseCoopers has indicated that MG Rover is likely to have liabilities of about R11,9 billion. This is thought to include the R5,95 billion long-term loan from BMW, R4,76 billion in pension liabilities and money owing to creditors. HBOS, the UK's largest mortgage and savings provider, is thought to be heavily exposed to debts from MG Rover because it had a car finance joint venture with the company.

Work will begin this week on finishing about 1 000 half-built cars that seem likely to be the last Rover cars made as administrators try to maximise the value of the assets.

MG Rover's downfall was precipitated by the failure of talks with SAIC. PricewaterhouseCoopers, appointed to oversee the company's future after it closed its Longbridge plant in central England and filed for a form of bankruptcy protection a week ago, said there was now no prospect of selling the company as a going concern to SAIC or anybody else.

The resulting loss of jobs at Longbridge, and among 18 000 other workers at companies that supply parts to the manufacturer, is a setback for Prime Minister Tony Blair, who is campaigning for the May 5 national election on the strength of the British economy.

Blair and Brown announced a R1,79-billion support package for stricken MG Rover workers at the weekend.

"We tried our level best to persuade the Chinese company to enter into a venture with MG Rover, it's not been possible to do that," Blair said. "Having done everything we possibly can to save Longbridge, what we've got to now do is look after the work force and the families of the work force."

PwC joint administrator Tony Lomas said the administrator would "mothball" the Longbridge plant, keeping on just 600 workers to complete production. About 400 staff will be retained at the company's Powertrain engine plant and 25 at MG Sport and Racing.