The collapse of MG Rover will be investigated by the Serious Fraud Office (SFO).
A near four year enquiry into the collapse of the company - produced at a cost to the tax payer of £16 million - was handed to business secretary Peter Mandelson last month.
He has now confirmed that there are grounds for a criminal investigation.
Lord Mandelson said in a statement: “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.”
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.
Any subsequent criminal investigation could be lengthy, because of the complexity of the allegations.
MG Rover was one of Britain’s largest private companies when it went into administration four years ago. About 6000 people lost their jobs directly, with an estimated additional 9000 other workers at suppliers and dealers also losing their jobs.
The company owners - known in the press as the Phoenix Four, were John Towers, Peter Beale, John Edwards and Nick Stephenson. At the time of the collapse they were accused of asset-stripping MG Rover.