Belfast Telegraph

Home News UK

Co-op boss steps down over scandal

Co-operative Group chairman Len Wardle quit today amid a deepening scandal over disgraced former banking boss Paul Flowers - as it emerged that adult content had been found on Mr Flowers's laptop during his time as a local councillor.

Mr Wardle brought forward his plans to leave the group by six months, acknowledging that he led the board that had appointed Mr Flowers - who was caught allegedly buying and using illegal drugs in a newspaper sting at the weekend.

In a new development it emerged that Mr Flowers, who led the Co-operative Bank for three years from 2010, had resigned as a Bradford city councillor in 2011 after the discovery of material on his computer.

It also emerged that the Methodist minister was convicted of gross indecency in 1981, reportedly over a sex act in a public toilet. A church spokesman said that at the time he went through the "usual procedures" before being allowed to continue in his role.

"He was very contrite, and he continued his work," the spokesman said.

Both the church and the Labour party suspended Mr Flowers following the revelations at the weekend.

West Yorkshire Police have launched an inquiry and are understood to be in the process of trying to obtain video footage at the centre of the allegations.

Mr Flowers, 63, is thought to be away from his Bradford home but detectives are aware of his location and have been in touch via a third party.

Now further details have emerged of his resignation from the city's council in September 2011, after serving for almost a decade. At the time he cited personal reasons and increased responsibilities at the Co-op.

But a spokesman for Bradford Council said today: "Inappropriate but not illegal adult content was found on a council computer handed in by Councillor Flowers for servicing. This was put to him and he resigned immediately."

The lurid revelations came as Mr Wardle, who had been due to step down in May, brought forward his resignation, admitting that the behaviour of Mr Flowers raised "serious questions for both the bank and the group".

He is replaced by his deputy, Ursula Lidbetter, chief executive of the Lincolnshire Co-operative, which has 200,000 members.

She said: "These are very difficult times for the Co-operative Group and the wider movement, but I believe that we can and will come through this period stronger than ever by facing up to our challenges."

Ms Lidbetter is to lead the group through a "root-and-branch" structural review announced last night in the wake of the revelations about Mr Flowers.

It is expected to report around the same time as a previously-announced independent investigation by former Treasury mandarin Sir Christopher Kelly into what went wrong at the bank - which is trying to plug a £1.5 billion gap in its finances.

Sir Christopher is due to report back to the group's annual general meeting in May.

Meanwhile also announced last night was a fact-finding probe into "any inappropriate behaviour" at the group or bank.

In Westminster, Labour has been trying to distance itself from Mr Flowers after it emerged he attended a private meeting with leader Ed Miliband and both men were also present at two dinners. Sources said he was "neither influential nor important".

But the party came under pressure to return a £50,000 donation from the Co-operative group approved by the disgraced former boss.

The debacle over Mr Flowers is the latest sorry episode for the bank, which is facing a rescue plan which will see majority control turned over to investors including US hedge funds.

Much of the blame for its financial difficulties has been pinned on an ill-fated merger with Britannia Building Society in 2009 but at a Treasury Select Committee meeting the former Co-op bank chief executive who steered it through defended the move.

David Anderson admitted that the deal turned out to be "not as attractive as we thought it was going to be" but said it was years before anyone thought it was a "daft" idea and only after a series of further problems did the bank face collapse.

Mr Anderson said it was a later decision by Bank of England regulators to tighten rules on capital requirements held by banks which, added to those factors, "virtually guaranteed a downfall".

The Co-operative Group, which employs 100,000 people, plunged to £559 million losses in the first half of the year, weighed down by its banking arm.

It was further hit today by latest supermarket industry figures from Kantar Worldpanel showing its grocery business was losing market share.

Critics have questioned how Mr Flowers could ever have been appointed as the Co-op's banking boss given his apparent lack of experience.

Andrew Tyrie, chairman of the Treasury Select Committee, said even before the weekend's revelations it was clear he was "manifestly unsuitable" - following a widely-panned appearance before the committee earlier this month.

Mr Tyrie, who heads the Parliamentary Commission on Banking Standards, has said there needs to be continuing and "intrusive" supervision of bank bosses.

Regulators have said Mr Flowers went through a suitability interview when he joined the Co-op's board as non-executive director but there was no formal process when he became chairman.

Instead, there was an informal conversation followed by an agreement that he would have two deputies who had financial services experience.

The Methodist Church said it had not been aware of the circumstances of Mr Flowers's departure from Bradford council.

A spokesman said: "We were not privy to that information until this afternoon."


From Belfast Telegraph