The government faces an awkward political decision as it considers whether or not to give struggling van manufacturer LDV bailout funds.
The Birmingham-based company has requested up to £30 million in bridging loans as it seeks to stay afloat. It hopes its management buyout will succeed in the longer-term thanks to a loan request to the European Investment Bank.
Peter Mandelson faces an awkward decision, however, on whether he will grant the request. LDV's parent company, Russian firm Gaz, is controlled by Oleg Deripaska – a friend of the business secretary.
Lord Mandelson's stay on Mr Deripaska's yacht in Corfu last summer proved deeply controversial and nearly ended the career of shadow chancellor George Osborne, who was also visiting at the time.
As a result the government may face accusations of corruption. If it fails to act, however, the 850 workers at the LDV plant will lose their jobs. And a further 5,200 jobs reliant on LDV will also be affected.
The Birmingham plant has not been operational for two months, meaning running costs are outweighing profits.
"The company is literally running out of cash right as we speak," Erik Eberhardson of Gaz told the Today programme.
LDV has not made a profit for four years but is now seeking to become a major developer of 'green' vans, which are powered by electricity.
The government indicated this morning it would be reluctant to step in, insisting in the first instance the responsibility for bailing it out rested with Gaz.
"The British taxpayer cannot be expected to pay for the company's losses," the prime minister's spokesman said. "It must be down to the parent company."
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