'Byers knew of threat to Rover three months ago'

The embattled Trade and Industry Secretary, Stephen Byers, faces tough questioning from MPs today about claims by BMW that he has admitted being aware of the threat to break up Rover as long ago as last December.

BMW's claim looked likely to blow apart Mr Byers' defence hours before he is due to appear before the Commons Select Committee on Trade and Industry to face allegations that his handling of the Rover crisis was incompetent.

A top BMW executive has told The Independent that Mr Byers made the admission at a meeting in Munich on 23 March with the BMW chairman, Professor Joachim Milberg, a week after the Rover sale was announced. Helmut Panke, BMW's finance director, said: "Secretary Byers seemed to use the words that he was aware of the seriousness of the situation and that he was aware of the change that was seriously threatening to come but that he was not informed of a specific decision."

Mr Panke also maintained that it had been made clear to Mr Byers in "no-nonsense" language before Christmas that alternatives to maintaining car production at Rover's Longbridge plant were being evaluated. "During the meeting in late December, Professor Milberg made it very clear that there was uncertainty and the need to potentially re-evaluate the Longbridge situation and that in view of the uncertainty nobody would go ahead with Longbridge," said Mr Panke.

"In January and February the seriousness of the economic situation at Rover, and the need to do something and look at the alternatives, was mentioned clearly. The BMW top managers involved in these discussions are known for their no-nonsense communication and being clear to understand," he added.

Confidential minutes of telephone calls and meetings between Mr Byers and BMW chiefs before the sale were supplied last night to the Commons select committee under privilege before today's meeting, when they will be published.

Friends of Mr Byers said they contained "no smoking gun". Mr Byers insists that official minutes of his private meeting and telephone conversations with BMW board members support his contention that he was not told of any specific plan to break up or sell Rover.

BMW said last night that it kept Mr Byers in the dark about the sale of Rover to the venture capital group Alchemy, and the sale of Land Rover to Ford, because it feared a government leak would destroy the deal.

According to BMW, the chairman of Rover, Werner Sämann, told Mr Byers at a meeting on 10 March that Rover was losing £2m a day, that it was in "survival mode", and that the time was five minutes to 12. After that warning, BMW said Mr Byers ordered Department of Trade and Industry officials to make inquiries elsewhere within BMW and Rover to find out whether the German car-maker was about to pull out.

Mr Panke said negotiations with Alchemy were progressing well and BMW was confident of finalising a deal by the end of April or early May. He said there had been "no hint" of a credible rival offer since exclusive negotiations with Alchemy began last month. BMW had offered to sell the Rover group "lock stock and barrel" to the world's four biggest car-makers, General Motors, Ford, Toyota and Volkswagen but none had shown any interest.

Unions have accused BMW of denying other potential bidders financial information. John Hemming, a West Midlands businessman who is assembling a consortium to bid for Rover, said yesterday that BMW had refused to give him any information. Mr Panke said: "When there is a credible alternative we will consider it."