The owners of MG Rover, Britain's last independent car maker, last night sought to head off a union revolt over allegations that they are asset-stripping the company.
Chairman John Towers and three other west Midlands business executives, who set up the Phoenix consortium in 2000 to buy Rover for £10 from BMW, met angry senior union officials over a controversial financial restructuring of the company.
Rover, which was given a £500m dowry by BMW three years ago, last year made a pre-tax loss of £95m, down from £187m in 2001, but set up a near-£13m trust fund for the four owners and their families.
Mr Towers and his fellow owners - Nick Stephenson, Peter Beale and John Edwards - insist the fund was set up to provide them with "post-retirement benefits" since they have had none since buying the company.
But unions representing Rover's 6,500 employees are incensed that the fund served to increase the directors' pay from £3.7m in 2001 to £15.1m last year, making them among the highest-paid auto industry executives in the world - earning 100 times more than staff.
Each benefits from an interest-bearing loan note, enabling them to swap their shares for £2.5m in 2005. It has so far paid out £1.2m in interest.
Union officials contrasted the largesse the directors awarded themselves with the £73m deficit in the employees' pension fund. "Our members feel very unprotected if anything goes wrong with the company," they said ahead of last night's meeting.
Mr Towers has insisted that the fund did not involve taking money from MG Rover but from other, non-car sources within Phoenix Venture Holdings, the parent group.
The four claimed they each contributed £500,000 when Phoenix set up a joint venture with HBOS bank to acquire - for £340m - a former BMW leasing vehicle called MGR Capital. Their aides claim this separate company, which made £13.7m profit in the 17 months to the end of 2002, was not part of the group because it was felt "inappropriate" to put a large amount of debt on the group's books.
Union officials last night also raised concerns about the sale of 42 acres of surplus land at the main Longbridge car plant near Birmingham but Mr Towers insisted proceeds would be used to help Rover develop new models.
