THE prospect of an imminent election can surely not be influencing the Government in thinking that perhaps it should proffer a £100 million bung to Shanghai Automotive Industry Corporation to persuade the company to conclude some sort of deal with Rover.

Thoughts about the size of the Labour majority in Birmingham Northfields will have played no part in the debate at the Department of Trade and Industry. But if there is any industrial logic to be found in the apparent willingness to use taxpayers’ money to ease the way to a deal, it is not immediately clear. The episode is reminiscent of the misguided interfering by Stephen Byers, when he was Secretary of State at the Department of Trade and Industry, and he decided that the ailing Rover needed the Government’s helping hand.

John Towers and his cronies have made a mockery of that decision. The MG Rover chairman and his pals put up a few thousand pounds to buy the business and since then have squirrelled away millions. En route, they have provided themselves with pension packages that would each have kept the average Longbridge worker and a dozen members of his family in luxury for a lifetime.

While this farce has been played out, Rover itself has failed to thrive. Sales of its cars have been dogged by doubts over the maker’s future. The hunt for an international partner that might give the marque a new lease of life has dragged on, leaving the Longbridge workers and the component suppliers that depend on the company in limbo as to what the future might hold. The prospect of a deal with SAIC was joyously proclaimed as a lifesaver. At first, way back last year, the story was that SAIC was keen on a link up which would make the Chinese company the majority owner of a business that would be making Rover cars.

The Chinese are becoming enthused by some international brands. TCL acquired RCA television, for instance, in a joint venture with France’s Thomson. Perhaps Rover would have a certain kudos well away from Britain, where the label has been so tarnished by the behaviour of Mr Towers and his greedy team.

But gradually the failure to complete the deal has sent out signals much louder than any words could. When towards the end of last year the MG Rover camp let it be known that the deal was 100 per cent certain to go ahead, the state-owned Chinese company was quick to let it be known that this should not be taken for granted. Negotiations were still proceeding, came the response.

If the negotiations had been on the lines that MG Rover had intimated, they would have been worth pursuing: an injection of £1 billion from China’s number one carmaker to develop and tool up a new range of cars for the partners to make.

This, however, was not a version that was ever corroborated from China. Instead, SAIC bought a Korean car company, whose models it now seems more predisposed towards. In fact, it now seems that if it is interested in a deal with Rover at all, it may be restricted to engines alone. This hardly sounds like a recipe for the long term future of Longbridge. So why would the Government be willing to put £100 million into trying to ensure that it could be agreed? What would be the long term benefits for Rover? Mr Towers and his colleagues have already ensured that they have no need to concern themselves with the long-term future of car manufacturing. The property assets of the business are already theirs and they have those pensions to look forward to. But for the car workers, £100 million would buy only a very brief and expensive respite.

Compliance complexity

WILLIAM DONALDSON, the SEC’s Wall Street-hardened chairman, made the right noises in his mercy mission to London yesterday. They now need to be translated into action.

When the Sarbanes-Oxley legislation was rushed through Congress, foreign companies that used US financial markets were ignored. There was no question of treating them differently from American companies that had to pay the price for Enron and WorldCom.

After lobbying by British and German companies, with help from the CBI and the European Commission, the SEC now accepts that EU companies face a genuine dilemma. Like their counterparts in Australia and Russia, they will adopt International Financial Reporting Standards for the first time this year.

On top of the management time and effort it will absorb this has created a shortage of qualified accountants and driven up auditing costs. Complying with SOx, especially the dreaded Section 404, is such a gravy train for accountants and consultants that one of the leading UK firms is bringing experts over from India to cope.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive