Co-op told to axe its board or face continued decline
The Co-op has been urged to back radical reforms that will sweep away the "dysfunctional" board which presided over the mutual's near-collapse.
Former City minister Lord Myners set out his plans for a "plc and beyond" structure by replacing the existing 20-strong board of representatives from the co-operative movement with professionally-trained directors.
His proposals will be put to the vote at the Co-op's AGM in Manchester on May 17 but the peer fears that many traditionalists are "still stuck in denial" over the failings of the Co-op, which reported an annual loss of £2.5bn last month.
Despite its membership of around eight million and 90,000 workforce, Lord Myners said that whether his report is accepted will depend on the votes of about 100 "elected democrats" who sit on regional boards.
He said: "It is these people I need to persuade that if they do not make the changes I'm proposing the Co-op will decline into less and less significance and come under more and more directions from banks."
Lord Myners, who spent four months as a Co-op director but resigned in April, said that the 15 lay directors on the current main 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 their lack of relevant skills and experience, this was not "genuine democracy at work".
The former Marks & Spencer chairman said it was apparent to him within 30 minutes of his first board meeting that not one single member had the ability to address the complex issues faced by a group burdened with debts of £1.4bn.
He added it was a "catastrophe" that chief executive Euan Sutherland left the group earlier this year on the grounds that it was ungovernable, having been forced out by some people "who should lower their heads in shame".
Lord Myners said he believed the Co-op will survive but faces the prospect of having to sell assets in order to meet the demands of its lending banks if it does not adopt reform.
The jewel in the crown of the portfolio is the Co-op's funeralcare business, which Lord Myners believes could fetch £1bn from private equity.
He pointed out that 40 years ago the Co-op was paying an annual dividend in monetary terms of £1bn.