Peter Mandelson was accused last night of a cover-up after delaying the publication of a £16m taxpayer-funded report into the collapse of MG Rover, the carmaker.

The business secretary has put the release of the long-awaited dossier on hold after calling in the Serious Fraud Office to investigate whether there was any wrongdoing.

In a statement to parliament tomorrow, Lord Mandelson will announce that the findings cannot yet be made public for legal reasons. The dossier has taken four years to compile and was expected to be published this month.

The report, which is expected to show how Labour wasted £6m propping up the car company for a few extra days in the run-up to the 2005 general election, could be delayed until after the next general election.

Last night opposition politicians warned that the drafting in of the fraud squad should not be used as a “smokescreen” to prevent the release of information about the collapse of MG Rover, which cost 6,300 workers their jobs in Labour’s heart-lands in the Midlands.

The fraud inquiry is expected to focus on four former directors who pocketed more than £30m in pay and pensions despite overseeing one of Britain’s biggest corporate collapses.

Vince Cable, the Liberal Democrats’ Treasury spokesman, said: “I welcome the introduction of the fraud squad into what appears to be a major corporate scandal, but it must not be used as a smokescreen to hide what the public needs to know about the use of taxpayers’ money.”

The former directors of MG Rover – John Towers, Peter Beale, Nick Stephenson and John Edwards, known as the Phoenix Four – have reacted with fury. They claim they kept MG Rover afloat for five years and did everything possible to secure its future.

They said workers who lost their jobs deserved to know why ministers withdrew a £100m bridging loan at the last minute. “Four years and £16m of taxpayers’ money have been swallowed up on this inquiry, and the directors’ major concern is that it will fail to get to the heart of the matter: why the government withdrew its offer of a loan to the company at the 11th hour,” they said in a statement.

“Four years on, any suggestion of another further investigation is frankly ridiculous and smacks of kicking this issue into the long grass.”

A spokeswoman at Mandelson’s department said: “Having received the report and studied it, we will be making a statement to the House [tomorrow] updating members on our thinking.”

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