Government Pushed For MG Rover Deal With Iran

Ambrose Evans-Pritchard, Telegraph:

Senior British ministers held a series of meetings with the Iranian government before the collapse of MG Rover, hoping to clear the way for a deal that could have doubled Rover's worldwide production and perhaps saved the company. READ MORE

The talks involved an Iranian firm, Dastaan, which had been negotiating with MG Rover since early 2004 over plans to assemble some 150,000 cars each year in eastern Iran - more than the entire output of the MG Rover group in 2004.

The first trial shipment of 2,000 Rover 75 and 45s worth £20m was due this April, May and June, with another £30m delivery later in the summer.

The shipments were meant to test the market and establish a trading relationship before Rover and Dastaan moved on to the assembly stage in 2006.

Dastaan began to have cold feet as reports reached Teheran about growing difficulties at Longbridge. No money changed hands.

A senior official told The Daily Telegraph that Patricia Hewitt, the Trade and Industry Secretary, held six meetings this year with Iran's ambassador in an attempt to shore up the deal. The secret talks suggest that Labour was more involved in the search for a rescue deal than it has so far revealed.

The DTI refused to comment yesterday. "The Government did all it could to secure the future of the Longbridge site. It is not DTI policy to give out details of individual ministerial meetings," said a spokesman.

Iran's ambassador, Mohammad Hossein Adeli, also discussed Rover in a series of meetings with Jack Straw, the Foreign Secretary. The talks were highly sensitive. At the time, Mr Straw was helping to co-ordinate Europe's response to Iran's uranium enrichment plans, seen as a precursor to the development of nuclear weapons.

A Foreign Office spokesman denied last night that Mr Straw had played any role in negotiations for a Rover rescue package.

Russ Thomas, Rover's chief of business development, said he had been in talks with Dastaan for about 15 months. "The plan was to start with units fully-assembled in the UK, then move next year to partial assembly. Eventually, the idea was to reach full assembly of 150,000 cars a year," he said.

"Had it been successful, it could have been very profitable. But we were never going to rely on it until we had the money in our hands. The only contract we actually signed was for the first 2,000 cars," he said.

Dastaan is owned by an Iranian politician, Dr H Aghaee. He hoped to build the Rover plant in his home region of Sistan-Baluchistan, now a free-trade zone with special tax incentives for foreign firms.

Dr Aghaee had backing from the Baluchi government but Dastaan's structure was never clear. Mr Thomas said the firm seemed to be having trouble raising money.

One official believed Dastaan's aim was to obtain Rover's intellectual property, brand rights and engineering capability, rather than set up a production plant.

Iran has a history of ties to the UK car industry. The country's streets are filled with 1960s vintage Hillman Hunters, known as the 'Paykan'. It is still in production.