£14 million and counting... Let's hope the DTI / BERR Inquiry into MG Rover is worth it! It's anyway about time that it reports its findings.

I offer no excuse in repeating comments made in several earlier blogs and articles. It's important to remember that the firm went bust owing hundreds of millions to suppliers, and creditors ended up getting a penny or two in the pound for what they were owed. The pension fund deficit ran into hundreds of millions.

From 2000 to 2005, parent Phoenix ate its way through BMW's generous dowry and a valuable pile of unsold cars left over from BMW and sold off all the key assets such as land, the (profitable) parts business and the intellectual property rights to key models (in the latter case to Shanghai Auto). It was thought to be losing around £25 million a month went it finally went under in April 2005.

Let's not forget as well that management repeatedly said that they were "20 minutes" away from an all-or-nothing deal with Shanghai Auto back in April 2005, despite both the British Government and Shanghai having looked at the books and concluding that the company was running out of cash rather too quickly for comfort.

When it was clear that the proposed wide-ranging model collaboration between MG Rover and Shanghai was not going to happen, the latter had back-up plans. Phoenix did not; it was Shanghai or bust.

Shanghai sat back and was beaten to the MG Rover left-overs by up-start Nanjing who bought the remaining assets, before Shanghai and Nanjing were themselves finally brought together into a merged entity after some collective-banging-of-heads by the Chinese government.

All of this is simply a quick reminder (if you need it) that some serious questions remain about how this meltdown occurred. But over three years on it's still not clear what the investigators are actually looking at, nor how much longer it will take.

Back in 2005, the then DTI Secretary Alan Johnson argued that 'the public interest requires that issues raised by the (Financial Reporting and) Review Panel and developments after 2003 when the last accounts were published be investigated by independent inspectors... I have asked them to report to me as quickly as possible and in a form which will enable the report to be made public. The Review Panel has not published its report and given my decision to appoint independent inspectors I will not be releasing it.

In other words, we don't actually know what questions the investigators are looking at.

Over three years and some £14 million of taxpayers' money later, one has to ask: how much longer should this go on for? At the very least one might suggest that a transparent statement of what questions the inquiry is addressing, and a clear timescale, would be helpful at least. Put stronger, one might say that the investigators have had long enough, and it would be helpful if they actually announced their findings.

Back in 2005, shortly after the MG Rover collapse, I suggested ten key questions the inquiry should look at, namely:
1. Did the accounts add up and are they 'true and fair'?
2. Why did the business strategy go so badly wrong? On taking over at Rover, Phoenix aimed to produce 200,000 cars a year, bring a new model to market, return to profit and find a partner to develop new cars. None of these objectives were achieved.
3. Why did management take so long to get to Shanghai? Why was critical time wasted with China Brilliance and Proton beforehand?
4. Did the company have the resources to get a new model to market? If it did, why did the company fail to do this?
5. Why was the group structure so complicated when in car industry terms this was such a small firm?
6. How was the money moved around? For example, why was MG Rover paying interest when the original loan from BMW was interest free?
7. In the final few months, did management realise that MG Rover was going to go insolvent?
8. How much money did the Phoenix Four pay themselves over the five years, and was this payment commensurate with the performance of the firm?
9. Why did the pension fund deficit arise?
10. What was the role of the Government, and was this adequate?

On the latter, there were questions over the Government's backing of Phoenix back in 2000 against the rival Alchemy bid, whether alarm bells went off at the DTI in 2002/3 when it was becoming clear to external commentators that the firm was running out of time, and whether the proposed £100 million 'bridging loan' proposed in April 2005 in a last-ditch attempt to shore up a Shanghai deal was an appropriate use of taxpayers' money

Now I'd add a question 11, on 'chapter 11' issues (this is a chapter of the US Bankruptcy Code): do insolvency and administration arrangements work well enough in the UK? I should stress that this isn't a criticism of the administrators PwC who did a very good job within the current legal framework they were given to operate in. They did their job in getting the best deal for creditors, by selling to the highest bidder, Nanjing.

Yet it was obvious to industry analysts that Nanjing was a small firm with limited experience (it had never successfully innovated and got a new car to market) and in economic development terms it was apparent that the Shanghai bid would have delivered superior benefits for the local economy. Of course Nanjing ended up in Shanghai hands eventually, but the delays (and maybe the StadCo pullout last year) might have been avoided by an immediate deal with Shanghai.

So, there is a question over how we deal with company failures. Would a chapter 11 type arrangement in the UK have offered more scope to arrange a deal with Shanghai without the firm actually ceasing operation, thereby retaining R&D at Longbridge?

Or, if that was not possible, should a 'public interest' clause be brought in to the administration process to make sure that the wider economic and public interest be taken into account when dealing with such cases?

Meanwhile we are left guessing how long this inquiry will take. The DTI Maxwell Pensions investigation took around 9 years... Actually it's now time for the inquiry to report, so that the thousands affected by the closure can get the answers they deserve.

David Bailey is Director of the Birmingham Business School