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Mandelson dragged into row over oligarch bail-out
Nicholas Cecil, Chief Political Correspondent23.02.09
LORD MANDELSON'S aides today said he has ruled himself out of making any decision to bail out a UK van-maker owned by his friend Oleg Deripaska.
However, the Business Secretary faces fresh controversy over his links to the Russian oligarch, whose LDV firm is seeking a bridging loan of up to £30million.
The Business Department is in talks over a management buy-out of LDV to turn it into a manufacturer of "green" electric vans. More than 6,000 jobs are at risk if LDV collapses, the outgoing chairman of its parent company GAZ, Erik Eberhardson, warned today.
He told BBC Radio 4's Today programme: "Unfortunately since the company is not producing, it is not making enough revenue to cover its costs.
"The company is literally running out of cash as we speak."
He confirmed LDV is seeking a bridging loan from the Government of between £20million and £30million. But despite the importance of negotiations, Lord Mandelson - who enjoyed lavish hospitality on Mr Deripaska's £60million yacht moored off Corfu last summer - is said not to be taking part.
"He would not be involved in any decision that would ever have to be taken about LDV," said the Business Secretary's spokeswoman. "It would go to another minister."
Such arrangements will insulate Lord Mandelson from accusations he could have been swayed to support LDV because of his friendship with Mr Deripaska. However, they will also raise questions over whether the peer has allowed his love of the high life to restrict his ability to carry out his job as European Trade Commissioner and now Business Secretary - a claim he refutes.
Liam Byrne, Labour MP for Birmingham Hodge Hill, said he has spoken to ministers and senior officials at the Department for Business, Enterprise and Regulatory Reform about LDV's plight. But this morning he refused to say if he had discussed the firm with Lord Mandelson.
LDV stopped production at its Birmingham factory on 12 December, after the global downturn hit sales. Russian giant GAZ has invested tens of millions of pounds into the firm in recent years, leading to the creation of 200 new jobs. The plant, in the Washwood Heath district of Birmingham, employs 850 workers and has a dealer network employing a further 1,200. It also supports more than 5,000 jobs in supply companies.
LDV says a management buy-out aimed at transforming the manufacturer into Europe's first "green" van firm is nearing completion. The plan, led by Mr Eberhardson, is said to be at an advanced stage with prototypes of low-carbon vans already being trialled, and strong prospects of support from the European Investment Bank.
A spokesman for LDV said: "Short-term bridging support for this management buy-out from the Government will secure its future and the future of hundreds of jobs."
However, the Government knows it faces "hard choices" in the car and van industry and is unlikely to want to fund past losses of any company.
A spokesman for the Business Department said: "We have provided considerable support to LDV in recent years and continue to offer them help including assistance with their application for funding from the European Investment Bank."
Reader views (20)
Anyone with a grain of sense would not have any dealings with this opportunist Mandelson.
A G Leeds
- Awesome Geronimo, Leeds UK
He will not be making any decisions re. his friends bailout? Ha! Pull the other one!
- Wen, Oxfordshire, England
Would you buy a used car (or green van) from Mandy or anyone connected with him?
No. Neither would I
- Graham Marlowe, Ilford essex
Shame we can't wash our hands of Mandelson.
- Chris, Woking. UK
Mandy's no fool. He has to declare a personal and prejudicial interest in Derepasko, who incidently is not worth the billions he was a year ago.
- Dhanraj, basildon
A Dent from Isleworth - so obviously a NuLab apologist - what on earth does George Osborne have to do with this crooked scenario? He is isn't in government but Mandylovesmoney is. Please take your pills and don't be so silly.
- Andrew E, Leaving the sinking ship England
Pure spin, I bet he won't 'officially' have anything to do with this but I would lay money on him having dealings with this behind the scenes. Secondly this Russian Billionaire and fund a rescue plan himself, plain and simple.
- Libbyt, London
I'm thinking mandy rarely gets dragged into anything unwillingly. although through a hedge backwards half a dozen times might be bulked at, but perhaps not undeserved.
- M.O'Brien, london.uk
Are we not sick of Mandy poncing about as a "lord" after his shocking past ?
How long will it be before this guy is thrown out for doing something else ?
- Michael Waugh, South Kensington
White vans are most unpopular in the UK Mandy, especially Russian ones and yuo know that so no money for them then.
- Albert Hall, hove england
"This factory is owned by a Russian "billionaire" - why can't he put his hands in his pocket for the paltry £30m that is needed to keep the company going?".
I agree with Nobby Clarke.Even after sufffering enormous losses in the credit crunch,this oligarch is still estimated to have a fortune circa $4.5 billion.Why doesnt the British Government point that out to him?
- Thomas, London
Are we seriously supposed to believe that Mandelson won't be involved in these discussions. Pull the other one. He is far too fond of the wealthy and the lifestyle they can give him - consorting with Deripaska on his yaught, with Nat Rothschild ... says it all about this so-called Lord.
- Boudicca, Guildford
Presumably George Osborne will also refrain from taking any part in this as he spent his summer hols trying to get a contribution from the Russian Oligarch. Or has this now been airbrushed out?
- A Dent, Isleworth England
Who is Mandelson trying to kid, we don't won't him or his lousy Party anymore.
Sevenoaks was just the start of the way the public are reacting to Labours selfish policys.
- Stephen Curry, Barnet
Why doesn't Mandy put some of his own money in ? For gooness sake he's had enough money out of the British taxpayer over the years. C'mon Mandy put your money into your mates business.
- Michael, London
And we all trust Mandelson not to have his say when it comes to supporting a "friend"financially.Was that a pig flying by?
- P Doff, filey yorks
Mandlieson not playing any active part? Pull the other one!
If there is back room scheming afoot in No.10, this shameless confidence trickster won't be far away, especially if he's in for a backhander or a dodgy mortgage deal!
- Keith Lonsdale, Doncaster
Mandys ruled himself out of making a decision about LDV! Believe that and you will believe anything. He may not be putting his name to a bail out, but who is this other minister who will be making the decision in his place? Mandys in charge of NuLabour so can you really see anyone going against his wishes? This is the trouble when you take a frebbie - there is no such thing as a free lunch. They always come back to haunt you sooner or later. If British tax payers bail out a Russian billionaire then it will not play well with the electorate. However, if the Russian billionaire is let down by his friend who knows what wil happen. Will he spill the beans? George Osborne spoke out of turn and look what happended to him. Interesting times ahead.
- Brian Gare, Norfolk Gorleston
This factory is owned by a Russian "billionaire" - why can't he put his hands in his pocket for the paltry £30m that is needed to keep the company going?
- Nobby Clark, Perth, Scotland
I think there's quite enough worthy and deserving Brits need bailing out .... before we save MPs friends and family, thank you very much. QED.
- Marianne, SW France
