MG Rover is ending cash payments into its controversial retirement fund for the "Phoenix Four", the Midlands businessmen who bought the car maker for £10 four years ago and who are now close to a rescue deal that will see effective control pass to China.
Unions were scandalised by the creation of the £17m fund and the four were recently dubbed "the unacceptable face of capitalism" for perceived greed.
However, John Towers, the chairman of Rover, said he had no regrets over the creation of the fund, except that it should have been set up immediately in 2000 rather than two years later. That would have allowed him to "smooth" payments into the fund.
The fund was set up in 2002 with a £12.9m initial payment, topped up the following year with a further £3.6m. But Mr Towers said the contribution in 2004 has been about 10 per cent of the previous year's total.
A fund of £17m will pay the four annual pensions of about £85,000, Mr Towers said, compared with £150,000 for the average car industry executive.
The remuneration controversy has grown in tandem with the losses at Rover, which are expected to top £100m this year. Its share of UK car sales is at an all-time low of 3 per cent.
The four, through their company Phoenix Venture Holdings, own 50 per cent of Rover. Their future financial arrangements will be scrutinised closely when Rover finalises its expected joint venture with the Shanghai Automotive Industry Corporation (SAIC) early next year. It is possible there could be further payouts as part of the deal.
The new joint-venture company will design, develop and produce cars. The Chinese are injecting more than £1bn into the venture, which will control the key assets and intellectual property rights of the two car makers.
Jim O'Donnell, the UK managing director of BMW, which sold Rover to the four for a nominal £10, said earlier this month that it was a "disgrace" that the Rover board pay themselves more than the board of BMW, when pensions are included. "It is the unacceptable face of capitalism," he said.
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