Lord Mandelson, the Business Secretary, has asked the Serious Fraud Office (SFO) to investigate the collapse of MG Rover, the Midlands carmaker, four years ago.

In a written statement today, Lord Mandelson said: “There has been a comprehensive and thorough investigation into the events which led to the company failing, workers losing their jobs and creditors not getting paid. The SFO must now see if there are grounds for prosecution.”

The inquiry report, which cost £15.9 million, was delivered to Lord Mandelson almost a month ago, but the decision to call in the SFO is expected to delay publication indefinitely to avoid prejudicing its investigation.

Richard Alderman, SFO director, said the group planned to make a speedy decision on whether to launch a criminal investigation into the MG Rover collapse. He said that he had set up a team of four to investigate the report sent by the Department of Business and would reach an initial decision as to whether to take the case on for investigation within 20 days.

Mr Alderman said: “We will have a look to see whether this is a case that we wish to investigate for criminal proceedings.

“The first think is to get the evidence. When we get a case such as this we first look to see if there is likely to be evidence of fraud and if so, whether or not it meets our criteria for a case that we should take on - in terms of size, complexity and so on.”

Any subsequent criminal investigation could be lengthy, because of the complexity of the allegations.

The SFO said it was "too early to tell" when it would make a decision on whether to launch an official probe, adding that it was "not practical to speculate" what potential charges could be laid one any individuals.

The collapse of Rover into administration in 2005 led to closure of its plant at Longbridge, in Birmingham, with the loss of 6,000 jobs. A further 9,000 jobs are estimated to have been lost in suppliers and car dealerships.

Rover’s failure also led to accusations of asset-stripping by the four directors of Phoenix Venture Holdings, its parent. The so-called Phoenix Four — John Towers, the chairman, Nick Stephenson, John Edwards and Peter Beale — bought the company in 2000, paying a nominal £10 to BMW after the German carmaker had decided to break up the Rover group.

Initial local support for the takeover turned into mistrust and anger as the directors quickly became multimillionaires from the business and created a labyrinthine corporate structure.

It is estimated that the directors received a combined £42 million in pay and pensions, while the Rover workers’ pension fund ended up £470 million in deficit. At one stage, the directors took a £10 million loan note from the business to compensate them for the risk they took when they each put £60,000 of their own money into the business, which was given to them by BMW with a £500 million dowry.

Their behaviour prompted the head of BMW in Britain to call them “the unacceptable face of capitalism” and led to the launch of an inquiry by the Department for Trade and Industry (DTI), now the Department for Business. The inquiry, led by Guy Newey, QC, an insolvency law specialist, and Gervase McGregor, of BDO Stoy Hayward, the accountant, was due to take 12 to 18 months, but met many hurdles.

Last December, it emerged that the Phoenix Four had stalled publication after insisting that investigators conduct fresh witness interviews. Their lawyers argued that the DTI should bear some blame for failing to provide enough aid to the carmaker. They also accused officials of disseminating damaging information, leading to some officials being interviewed for the inquiry.

The Phoenix Four responded forcefully yesterday to the SFO being called in: “There has never been any suggestion of improper conduct by the directors and this was confirmed in a report by the administrators six months after they took over the running of the company. Four years on, any suggestion of another, further investigation is frankly ridiculous and smacks of kicking this issue into the long grass.”

The former directors have said that none of the money pledged to former workers from the MG Rover Trust Fund can be paid out until the inquiry report is published. About £16 million was collected for it from asset sales.

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