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Flowers quit amid expenses probe

Former Co-op Bank chairman and disgraced Methodist minister Paul Flowers left a drug charity after an investigation over claims for expenses including for travel and dining.

Mr Flowers resigned from the Lifeline Project, where he was a trustee on the board of the organisation, the charity said.

He left the charity in 2004, long before he was engulfed in allegations of illegal drug use and gay sex that led to his suspension from the Methodist Church and a growing political row over his appointment to the Co-op Bank and its close ties with the Labour Party.

Labour leader Ed Miliband has insisted the party acted with the "utmost integrity" and shadow chancellor Ed Balls, who received a £50,000 donation to his office from the Co-operative Group, said he had "nothing to hide" and Mr Flowers was not involved.

Ian Wardle, Lifeline's chief executive, told BBC Radio 4's World at One there was concern at the nature of some of the claims made by Mr Flowers during his time with the charity.

He said: " The sum in question initially was between £60,000 and £70,000 spread over a five year period. There was a concern about that sum of money, it's a significant sum of money.

"There was greater concern, it's fair to say, about the nature of some of the claims.

"There were a variety of claims and some of them were clearly legitimate but there was quite a lot of travel, quite a lot of dining, quite a lot of hotels. So the variety of the claims and the size of the claim concerned us and we felt it legitimate to present this information to our trustee body, that's the ruling body of our charity, because we felt a more detailed investigation was necessary.

"That detailed investigation took place, part of it was to actually get clear from Reverend Flowers what the purpose of a lot of these claims had been. But we didn't really get satisfactory answers to that questions."

He added: " We didn't conclude the investigation in the manner in which we wished because the Reverend Flowers resigned as chair of Lifeline during the course of this."

A Charity Commission spokeswoman said: " We can now confirm that the charity Lifeline Projects contacted the Commission in 2004 to inform us of concerns into expenses payments made to a former trustee. We are working to establish the details of the charity's report to us and our regulatory response."

Mr Miliband hit out at David Cameron over his attempts to "smear" Labour over its relationship with the Co-operative.

The Labour leader said: "What this episode shows is more about the character of the Prime Minister than about the character of Labour's relationship with the Co-op.

"We have a Prime Minister who, when he sees a serious situation at the bank, tries to make cheap political points rather than sorting it out. David Cameron is determined to smear his way through the next 18 months. That is not what the British people expect from their Prime Minister."

At Prime Minister's Questions Mr Cameron announced an inquiry into the bank's ailing finances and decision to appoint Mr Flowers.

Chancellor George Osborne was in discussions with financial regulators over what form any inquiry should take, with details to be announced "in the coming days", Downing Street said.

Mr Flowers was suspended from the Labour Party when the allegations about his private life emerged and Mr Miliband said there was a need to look at the issues around the regulation of the Co-op Bank and Mr Flowers' role.

"But I think what the British people have a right to expect from the Prime Minister is not just engaging in unjustified smears, but actually to concentrate on helping the borrowers, the savers, the investors, in this important institution," Mr Miliband said.

"Rev Flowers has deeply let down the people who entrusted him to be the chair of the bank. Obviously he has deep questions to answer about that. As far as the Labour Party's relationship with the Co-operative, we certainly have a long-standing and historic relationship quite apart from the role of Rev Flowers."

On his LBC 97.3 phone-in show Deputy Prime Minister Nick Clegg claimed the relationship between Labour and Mr Flowers sounded "extremely murky" .

But Mr Balls told BBC Radio 4's World at One: "I have never had a meeting with Paul Flowers, a telephone conversation exchanged, an email, never. Nor have I ever received any donation from him or the Co-op Bank.

"I have been to a dinner which he was also invited to, I think I have spoken at a reception at a party conference and he was also on the platform, but other than that I have had no contact with him at all."

He added that minsters had questions to answer about contacts with Mr Flowers and the Co-op Bank over its plan to take over branches of Lloyds.

"What on earth were George Osborne, Nick Clegg, the Treasury and the Bank of England, the regulator, doing? Didn't they do due diligence?"

It emerged today that Mr Flowers, 63, was convicted of drink-driving years before his alleged drug- taking was exposed. He was caught over the limit behind the wheel in Manchester in June 1990.

A spokeswoman for the Methodist Church said they were aware of the drink-drive conviction and a disciplinary hearing was held but he had been allowed to continue his role in the church.

She said: "This was a matter for our usual procedures and after that process was complete, it was decided he could continue as a minister. This matter did not preclude him from his activities in the church.

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

Mr Flowers' home in Bradford was searched by police yesterday after he hit the headlines over allegations that he bought cocaine and crystal meth while the troubled bank's fate was hanging in the balance.

He earned £132,000 a year as chairman of the Co-op Bank until he left his post in May.

Co-operative Group chairman Len Wardle has resigned, citing "serious questions" raised by the scandal surrounding its former chairman of the firm's banking operations.

He led the board that appointed Mr Flowers at the bank, which prides itself on its "ethical" practices but has recently agreed a rescue plan that would see US hedge funds take a large stake.

Mr Flowers has apologised for his "stupid and wrong behaviour".

It has also emerged that he stepped down as a councillor in Bradford in 2011 after "adult content" was allegedly found on a computer he had used.

He resigned citing pressures of his workload and the information about the adult material was not made public.

Bradford City Council said the information was known only by the then-council leader and the local authority's chief executive and solicitor.

Pressure on Mr Osborne and the Treasury to explain its oversight of the abandoned Lloyds takeover plan was joined by senior Tory MP David Davis.

"There are really serious questions to answer about what they were all doing," he told the Financial Times.

"These problems were apparent to a rival and would have been - with a bit of work - to anyone else."

Shadow chief secretary to the Treasury Chris Leslie said: "David Davis is right to say that there are serious questions for George Osborne, the Treasury and regulators to answer about how the Co-operative Bank has got into trouble over the last three years.

"What due diligence was done by the Chancellor and the Treasury into the state of the Co-op Bank and its leadership when ministers were encouraging the bank's failed bid for 632 Lloyds branches?

"George Osborne and Ministers in David Cameron's government must finally come clean and answer questions about what went wrong at the Co-op Bank on their watch and whether they knew of the balance sheet risks. Any inquiry must get to the bottom of these issues."


From Belfast Telegraph