The Co-op Group board members are “still stuck in denial” over its failings, former City minister Lord Myners says in a review published on Wednesday.
Former Co-op Bank boss Paul Flowers pleads guilty to drug charges
Disgraced former Co-op Bank boss Paul Flowers on Wednesday admitted possessing drugs including cocaine and crystal meth.
The minister, dubbed the Crystal Methodist, appeared before magistrates in Leeds where he pleaded guilty to two counts of possession of class A drugs - cocaine and methamphetamine - and one count of possession of class C drug ketamine
He was fined £400 and ordered to pay £125 costs.
Flowers, 63, stepped down as the Co-op Bank's chairman in June after claims of illegal drug use and inappropriate expenses payments.
He was also suspended by the Methodist Church and the Labour Party.
Lord Myners, who recently resigned as a director after just four months, said that the 15 lay directors on the current board were drawn from a total eligible pool of only 35 regional board members. They include an engineer, a plasterer and a retired deputy head teacher.
He said that apart from the lack of relevant skills and experience, “this has not even been genuine democracy at work”.
The former chairman of Marks & Spencer said: “I have no doubt that the Co-operative Group can over the next five years reverse a decline that started over 50 years ago. But I am less confident that it will choose to do so.
“Much will depend on the small number of ‘elected democrats’, less than one in 10,000 of the group’s entire membership.
In the report, Lord Myners' proposals for reform include:
- The creation of a new group board made up of an independent chair with no previous association or involvement with the Co-op, six to seven independent non-executive directors and two executive directors. The non-executive directors will have the skills and experience of directors sitting on the boards of the group's primary competitors.
- The establishment of a National Membership Council (NMC) of about 50 individuals, including around 10 employees. The NMC will elect from its membership a steering committee of 12 which will also include representation from independent societies.
- A nominations committee to screen and propose candidates for group board approval and for election and re-election by members at each AGM. The committee would comprise five non-executive members, including up to two representatives designated by the NMC.
- The review will also seek to extend constitutional rights to the entire membership of the group. The "one member, one vote" has been a core principle of co-operative ownership, but Lord Myners said at present ordinary members have very little power. All members will have the right to elect board members, the right to attend meetings and to approve significant transactions
“Will they put their self-interest to one side for the greater good, acknowledging the collective failure of the current board and the crippling deficiencies of the entire governance system?”
“I would say that the group board and many on the regional boards are still stuck in denial over this near ruinous failure of governance, whereas the vast majority of ordinary members feel justified anger.”
Lord Myners said the resistance from traditionalists reflected a culture of entitlement within a small but highly active proportion of the membership.
He added: “This has undoubtedly created strong vested interests and a reluctance to rethink existing ways of doing things.
“I have myself witnessed repeated instances where there has been denial of responsibility, corrosive suspicion, deliberate delay and a practice of hiding behind ‘values’ in order to deflect or stifle criticism and protect self-interest.”