CO-OP bosses are looking for evidence of drug taking at the group’s banking arm, the group said yesterday, after evidence emerged of former chairman Reverend Paul Flowers taking drugs including cocaine, crystal meth and ketamine.
The board will also look at whether it is still practical for local members to be elevated to the board by votes, putting the 160-year-old mutual’s democratic tradition under threat.
Flowers, who was chairman of the Co-op Bank from 2009 until May this year, was yesterday suspended by the Labour party for bringing the party into disrepute. He was a former councillor for the party. The Co-op has long-standing links with Labour and is cutting back the amount it gives to the party and the international co-operative movement in light of its poor financial position – though critics believe it should go further and axe the donations altogether.
The Reverend stepped down from the Co-op over the summer when it became apparent that the bank was sitting on a £1.5bn capital hole.
Flowers was suspended as a Methodist minister at the weekend after the Mail of Sunday published a video of him buying drugs. He has apologised for his behaviour.
The Co-op announced its reviews yesterday in light of the revelations.
“Given the serious and wide-ranging nature of recent allegations, the new executive management team has started a fact-finding process to look into any inappropriate behaviour at group or bank and to take action as necessary,” it said in a statement.
“In addition, the board has launched a root and branch review of the democratic structure of the organisation. We need to modernise to ensure the interests of our 7m members are properly and directly represented in the oversight of our business activities.”
The Co-op has an unusual structure for a major company as it is a mutual.
Members vote for local boards and then for the central group board, which is made up of 20 non-professional non-executive directors to oversee the direction of the group.
Flowers – whose prior banking experience totalled four years at NatWest more than 40 years ago – was selected as chairman of the bank. Last week he admitted to MPs that “my experience was largely out of date to the needs of contemporary banking. I believe my skills are in terms of governance”.
“The Banking Commission has recommended radical reform, replacing the failed system with vigorous and continuous supervision for senior persons which identifies who is responsible for what,” said Andrew Tyrie MP, chairman of the Treasury committee.