Hard-working executives need holidays as much as anyone and Mr Howe would not have been the first to have been found on the beach when crisis hit his company. But to absent oneself when it is clear that the company is on the brink and the chairman is likely to have to be in China rather than the West Midlands does seem symptomatic of the sense of priorities that has characterised the behaviour of the Phoenix regime at MG Rover.

Mr Howe was not a member of the Phoenix Four, who have enriched themselves so handomely at MG Rover’s expense, but he must have been influenced by their approach to the business.

The results of that approach have now been exposed, as MG Rover called in the administrators yesterday. But there is much more to be exposed. The Phoenix Four have never favoured clarity and transparency. Now that the MG Rover pension fund is destined to be a customer of the Pension Protection Fund there is very good reason why the financial affairs of the business should be subject to the closest of scrutiny.

As John Towers led the reshuffling of MG Rover assets, so that he and his colleagues amassed valuable businesses in Phoenix Ventures, away from the problematic car manufacturing, doubts began to arise about their motivation. By the time they appeared in front of the Treasury Select Committee last year, its members were worried enough to make highly unflattering accusations against the integrity of the Phoenix Four. They denied them completely, but then they denied most things, whether it were the £100 million bridging loan that the Government was prepared to hand them or the fact that the company was calling in the administrators.

That it should have been Patricia Hewitt who made that announcement yesterday was unusual, as was the government briefing earlier in the day which intimated that the company had no hope of securing the Chinese deal and was, effectively, finished. The directors might have hoped to have strung things out a little longer but it would appear that the Government wanted to get the collapse of MG Rover out of the way as quickly as possible. With a papal funeral followed by a royal wedding and the Grand National ahead, the possibility of burying bad news as early as possible in the election campaign might just have occurred somewhere within the Government.

It is clear that MG Rover could not survive. Suppliers had decided that and car production had stopped before the administrators arrived. The Chinese have already extracted most of what they might have wanted from the business and it seems that their talks with Mr Towers might have been aborted months ago if only the company had been open about the state of its financial affairs.

Once the Shanghai company had access to MG Rover’s books, it knew that it did not want any deeper involvement with the business. The hole in the pension fund was a major disincentive. But Mr Towers and his Phoenix colleagues are the beneficiaries of a handsome pension fund and they also have some very valuable properties squirrelled away inside Phoenix Ventures. The new, tougher pensions regulations that now exist in Britain should enable that situation to be reassessed.

• THE Department of Trade and Industry’s emergency mission to China failed to rescue MG Rover’s deal. The Scottish Executive has clearly decided that more permanent efforts to build Sino-Scottish relationships is required. It is advertising for a ‘First Secretary/Counsellor — Beijing’. This, apparently, is part of the Executive’s “over-arching international strategy”. The post will involve developing “Scotland ’s profile and interests in China” and winning business for Scottish firms, helped, no doubt, with money from English taxpayers. That’s devolution at work.

  Boots is no Debenhams

  PRIVATE equity funds, well supplied with cash and rather less abundantly with innovative ideas, continue to be drawn to the retail sector. The news that Debenhams is negotiating a refinancing that will enable the funds that bought it in late 2003 to extract a second tranche of cash will add to their enthusiasm.

  But the three private equity houses which backed John Lovering and Rob Templeman to take over Debenhams bought one of the most successful businesses on the high street. Its unique collection of designer brands at high street prices has kept sales buoyant while rivals have faltered. Boots, which several funds are now apparently contemplating, would offer much more of a challenge.

  If the funds really are interested, it is logical that they would want to move before the company has sold its over-the-counter medicine business and handed part of the proceeds back to shareholders. A private equity buyer, looking at the struggle chief executive Richard Baker is currently having against the supermarkets, might then decide to be far more brutal than he in restructuring the retail business and scaling back the number of stores.

  But offloading unwanted shops is not likely to be easy. The slowdown in consumer spending has meant that many retailers are halting expansion plans. Some are making more of an effort, for a relatively paltry investment, to build internet traffic, which brings sales without the heavy overheads of actually running shops.

  There are exceptions, of which Debenhams is one, with its plan to increase its chain from 116 to 240 over the medium term. That company, however, would not be interested in Boots’ cast-offs.

  Few would appeal to Philip Green either, although yesterday he clinched a deal that will further swell his tally of clothing stores. It seems that he has already lined up takers for those of the Etam stores that he does not wish to absorb into his Arcadia portfolio, having paid only a few million pounds for the loss-making business.

  Those private equity players who are now pondering a bid for Boots probably dream of emulating the fortune that Mr Green has made from his Bhs and Arcadia purchases. They should instead remember that the French team which took Etam’s quoted British business private seven years ago paid many times more than the price for which they have just sold it.

  Query on bill

  THE City may have been a little premature in welcoming the levy structure unveiled yesterday by the main lifeboat, the Financial Services Compensation Scheme. True, the £161 million cost is £42 million less than what firms had been told to expect in January. But the chief executive, Loretta Minghella, has left little doubt that there will be an additional levy later in the year. This will be to pay for some of the victims of firms that could not afford to sign up for the main split capital trust settlement brokered by the Financial Services Authority in December.
  Overall, after adding in the cost of running the FSA and the Financial Ombudsman Service, the total cost of regulation is running at close to £440 million a year. That doesn’t include the billions paid out in compensation by solvent firms.

  The FSA, meanwhile, has announced a debate over the formula that determines how the pain is divvied up between different sub-sectors in the City. Perhaps it hopes that, like diners in a restaurant, they will be so busy squabbling over their share of the cost they fail to notice the egregious size of the total bill.

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