Jon Moulton: I could have saved Rover, but Stephen Byers wouldn't let me

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The Independent Online

Yesterday, after £16m more of the taxpayer's money has been spent and four more years have passed, we got the inspectors' report. Cynically, the inspectors chose not to noticeably probe the actions of HMG, their employer. But otherwise, they did a commendably thorough if somewhat overdue job.

The report revealed some great new colour: one of the Phoenix Four bought a program called Evidence Eliminator (you cannot make this stuff up) the day after the inspectors were appointed and succeeded in thoroughly deleting stuff on his hard disc. However no imputation of evidence destruction can be made. There are accounts of seriously advanced tax schemes featuring 767s, Barclays and Deloittes, which are uncomfortable to see.

Given the quantity of evidence about the number and variety of schemes devised with a view to extracting, or at least having the incidental benefit of extracting, assets from the car company, it is hardly surprising that the business failed. Only the most talented of managements could have simultaneously run such a complex business and progressed all these schemes.

And they were not the most talented of teams. But they needed to be. MG was in a terrible hole. Falling sales, elderly, mediocre products, poor systems and a massive need for new-product investment meant that either the Government had to pour in something in excess of £1bn, or some (improbable) alliance with a charitably inclined and/or foolish foreign car manufacturer had to be formed at a brisk pace.

Essentially, MG had become too small and backward to survive in the very difficult world of mass car production. It still had some great brand names and an image in its sports cars which resonated globally. So we had the idea of getting enough money from BMW to wind down the non-sports-car business and to make a good fist of having a globally significant sports-car business.

We would have got there but for the intervention of Mr Byers (later famous for Railtrack; I fear there was something about things with wheels for him ...) who backed the Phoenix Four into doing a deal with a lot less from BMW, and left MG on a short road to ruin.

Now the rest of us ended up paying redundancy and filling up the pension fund, actually a great deal more than the amounts trousered by the Four. The staff and suppliers lost a lot.

Jon Moulton is the founder and former head of Alchemy Partners, the venture capitalist company that made a rival bid for MG Rover in 2000