European CEO

April 17, 2014 05:00 ET

Remembering the MG Rover Scandal

LONDON, ENGLAND--(Marketwired - April 17, 2014) - The sale of MG Rover in 2005 denoted the downfall of a major British institution and highlighted in painstaking detail the repercussions of tax evasion, bribery, mismanagement and corruption. "It is clear that towards the end MG Rover was a company rotten to the core and totally bankrupt," writes Rita Lobo in a special report for European CEO, looking into the circumstances leading up to MG Rover's demise.

Following a stint of sustained losses at the turn of the 21st century, MG Rover was sold by BMW to the Phoenix Consortium for the grand total of £10. The sale not only signalled the beginning of a downward spiral for the British automaker, but the start of a scandal as the new owners quickly began to offload the company's many divisions - awarding themselves generous pensions and lofty bonuses along the way.

The play landed the company with irreparable damages, and in 2005 the once iconic automaker was sold off for scrap.

What emerged in the wake of the scandal were a string of complex tax arrangements and accounting fiddles, all figured in such a way that the company's owners, otherwise known as the 'Phoneix Four', would walk away liability free and filthy rich.

To read the report on the MG Rover scandal in full, read the new summer issue of European CEO, available online and in print now.

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