BMW admit lying over Rover sale

Serious questions about the ethics of the firms involved in the sale of Rover were raised yesterday as The Independent on Sunday learnt that BMW lied to the Government.

In a separate twist, the paper can also reveal that Alchemy, the firm seeking to buy the troubled car maker, had planned to evict pensioners from an old people's home it owns.

The leader of the council which took action against the venture capital group over its home for the elderly said: "Our experience of dealing with Alchemy is that you have to stand up to them or you get steamrollered. They showed no interest in the future of these elderly and frail residents."

The developments will fuel the political row about the sale of the Longbridge plant and the loss of thousands of jobs. Of especial concern will be the lie that was told to Stephen Byers, the Secretary of State for Trade and Industry, by the chairman of BMW. The Prime Minister's official spokesman, Alastair Campbell, said he would not be surprised if there was now a boycott of the German manufacturer's cars.

BMW's chairman, Werner Sämann, admitted to Mr Byers last Friday during a "frank exchange of views" that he had lied to him a week earlier when they had lunch together at the Department of Trade and Industry's offices in Victoria, west London.

A senior Government source said Mr Byers asked Mr Sämann directly at the first meeting if BMW's supervisory board, which was due to meet the following Thursday, had any plans to discuss the future of car production at Longbridge. Mr Sämann categorically denied any such plan, and said the only thing up for discussion was the possible disposal of non-core businesses such as its Swindon foundry.

The following Tuesday, the pro-BMW German paper Suddeutsche Zeitung reported that Professor Joachim Milberg, BMW's chief executive, was to recommend to the board that Rover be sold. Mr Byers confronted Mr Sämann on Friday and the shamefaced chairman admitted he had been aware of the plans at their first meeting. Apologising to Mr Byers, Mr Sämann claimed he was forced to lie for commercial reasons.

The Government source said the rest of the conversation was heated, and Mr Byers left Mr Sämann in no doubt that he felt BMW had fallen below the standards expected of a major international company.

Mr Byers said he was considering challenging Professor Milberg at a meeting this week to contribute to the economic regeneration of Longbridge and the West Midlands.

Meanwhile, Alchemy Partners has work to do on its own image after it backed down in a legal fight with Wandsworth council in London over plans to throw pensioners out of a privatised care home. The deal avoided a High Court battle that could have tarnished its reputation as a "white knight".

The climbdown came days before Alchemy was due in court for a hearing over its plan to close Holybourne House, Roehampton, one of three nursing homes it owns in south-west London, on 19 April. Instead, it has agreed that the 14 residents could remain for their lifetimes.

Alchemy, said Edward Lister, the leader of Wandsworth Council, "refused to tell us what they were planning to do with the home, but whatever they had in mind, the fate of residents came a poor second to financial gain."

Alchemy confirmed fears of substantial job losses in the West Midlands when it announced plans to halve production to about 100,000 cars a year, with engines and other components bought in from outside firms. Shifts at Longbridge are to be scaled down from tomorrow, costing workers about £80 a month.