'The unacceptable face of capitalism'

The most senior BMW executive in Britain has launched an astonishing attack on the directors of MG Rover, describing them as "the unacceptable face of capitalism".

The most senior BMW executive in Britain has launched an astonishing attack on the directors of MG Rover, describing them as "the unacceptable face of capitalism".

The phrase was coined by Edward Heath in 1973 to describe the former Lonrho chief executive Tiny Rowland. But Jim O'Donnell, managing director of BMW (GB), said that nowadays it could equally apply to the five directors of Phoenix Venture Holdings, the parent company of MG Rover. Referring to the five men - John Towers, Peter Beale, Kevin Howe, John Edwards and Nick Stephenson - Mr O'Donnell said: "I think it is a disgrace that the Rover board pay themselves more that the board of BMW if you include pensions. It is the unacceptable face of capitalism."

Mr O'Donnell also questioned the amount of risk the Phoenix Five had taken when they bought MG Rover from BMW for a nominal £10 in May, 2000. They each put up £60,000 of risk capital and, in return, BMW injected £550m into the Longbridge-based car maker in the form of an interest-free loan repayable in 2049.

Last year the five Phoenix directors took home more than £16m, including salaries, pension trust contributions, loan note payments and other income even though MG Rover lost £89m. The highest-paid director was MG Rover's chief executive Kevin Howe, who received a total of £1.55m. Last year the board of BMW, led by its chairman Helmut Panke, received €10.7m (£7.5m) while the company made a profit of €3.2bn (£2.24bn). BMW does not disclose the pay of individual directors.

This is not the first time the Phoenix directors have been criticised over the amount they have taken out of MG Rover. Earlier this year, the chairman of the Commons Trade and Industry Select Committee, Martin O'Neill, accused Mr Towers and Mr Beale, respectively chairman and vice-chairman of Phoenix, of using "financial sleight of hand" to line their own pockets and failing to exercise good corporate governance.

Mr O'Donnell's outspoken attack came as fresh details emerged of inter-company payments between the various private businesses that the Phoenix directors own. Techtronic, the ultimate holding company used by Mr Towers and his fellow directors to acquire MG Rover, paid a £32.5m dividend to Phoenix Venture Holdings, even though it made an operating loss of £119m. Meanwhile, Phoenix Venture Holdings paid £11m of interest on the BMW loan back to Techtronic. Since 2000, it has received £70m in dividends and paid £40m in interest payments.

Separately, Mr O'Donnell claimed that new rules being imposed on the motor industry next year by the Financial Services Authority in line with a Brussels directive could force up the cost of car warranties by as much as a quarter.

The legislation, introduced in compliance with the Insurance Mediation Directive, means that car warranties must be classed as insurance policies. Therefore, dealers will have to be registered with the FSA and warranties will become liable to Insurance Premium Tax, VAT on the tax and whatever mark-up the insurance company puts on top, costing the car industry millions of pounds. The warranty, for instance, on a three-year old BMW3 series could go up from £510 to £637.50.

"I believe this is a case of the law of unintended consequences," he said. "What a farce, the FSA can now dictate who can and cannot service one of your cars."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
News
i100
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project