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Leaders clash over Co-op Bank's links with Labour Co-op Bank to face inquiry, says PM David Cameron
(about 1 hour later)
David Cameron and Ed Miliband have clashed over the running of the Co-op Bank and its former chair Paul Flowers' links with the Labour Party. David Cameron is to launch an inquiry into how Paul Flowers was deemed suitable to be the chairman the Co-op Bank, the BBC understands.
The prime minister told MPs "alarm bell" should have rung earlier about Mr Flowers' role at the bank, accusing him of "driving it into the wall" The inquiry is also expected to examine whether the bank's recent leadership crisis has had any financial impact on its customers.
He said Labour knew about his "past" before drug and porn claims emerged. Its exact terms of reference and the name of its chair are likely to be formally announced in coming days.
But Ed Miliband questioned the Conservatives' own ethics, claiming they took money from tax exiles. Mr Flowers, 63, apologised after he was filmed allegedly buying drugs.
The Co-op Group, a major donor to Labour, is investigating the leadership of its bank subsidiary prior to its near-collapse earlier this year. He had stepped down as chairman of Co-op Bank and as deputy chairman of Co-op Group in June.
'Nightmare'
Since Mr Flowers resigned as its chair in July, the Methodist preacher and adviser to Mr Miliband on business has been filmed buying cocaine - allegations currently being investigated by the police.
It has also emerged that he was found to have had "inappropriate" adult images on his computer in 2011 while he was a Labour councillor in Bradford.It has also emerged that he was found to have had "inappropriate" adult images on his computer in 2011 while he was a Labour councillor in Bradford.
Mr Cameron was asked by Tory MP Steve Brine at PM's questions about the "nightmare unfolding" at the bank the "sense of disbelief" that Mr Flowers was appointed to his role in the first place. 'Alarm bells'
Earlier in the Commons, Prime Minister David Cameron said Labour knew about his "past" before the drugs and porn claims emerged.
Mr Cameron had been asked by Tory MP Steve Brine at PM's questions about the "nightmare unfolding" at the bank and the "sense of disbelief" that Mr Flowers was appointed to his role in the first place.
Mr Cameron said the government's first priority was to safeguard the Co-op Bank and ensure its customers and bondholders were protected, but the prime minister went on to question Mr Flowers' suitability for the role and his links with Labour.Mr Cameron said the government's first priority was to safeguard the Co-op Bank and ensure its customers and bondholders were protected, but the prime minister went on to question Mr Flowers' suitability for the role and his links with Labour.
"There are a lot of questions to be answered," he said. "Why was Reverend Flowers judged suitable to be chairman of a bank. Why weren't alarm bells rung earlier, particularly by those who knew." "Why was Reverend Flowers judged suitable to be chairman of a bank? Why weren't alarm bells rung earlier, particularly by those who knew?" he said.
The prime minister went on to poke fun at Labour's policies to fund more free childcare through a levy on bank profits, suggesting it had been dreamt up after "a night out with Reverend Flowers" and suggested the Co-op had help bankroll Labour politicians for many years and Mr Flowers had been a regular visitor to Downing Street while Labour was in power". West Yorkshire Police officers have searched Mr Flowers' Bradford home.
"Now we know, all along, they knew about his past," he added. The force is investigating allegations that Mr Flowers, a Methodist minister, bought and used illegal drugs, including cocaine.
"Why did they do nothing to bring to the attention of the authorities this man who has broken a bank?" But opposition leader Ed Miliband questioned the Conservatives' own ethics, claiming they took money from tax exiles.
Mr Miliband hit back with a series of jibes about the people David Cameron "associated with".Mr Miliband hit back with a series of jibes about the people David Cameron "associated with".
He accused the Conservatives of taking £5m from a City firm found whose traders were subsequently rigged interest rates, had "taken millions" from tax exiles and had not returned donations made in he 1990s by Asil Nadir, subsequently convicted in 2012 of fraud.He accused the Conservatives of taking £5m from a City firm found whose traders were subsequently rigged interest rates, had "taken millions" from tax exiles and had not returned donations made in he 1990s by Asil Nadir, subsequently convicted in 2012 of fraud.
"The single biggest problem facing the Conservative Party is being seen as the party of the rich." "The single biggest problem facing the Conservative Party is being seen as the party of the rich," Mr Miliband argued.
Since Mr Flowers resigned as its chair, the Methodist preacher and adviser to Mr Miliband on business has been filmed appearing to try to buy cocaine - allegations currently being investigated by the police.
Earlier the PM in the Commons had indicated only that the chancellor would be "discussing with the regulator what is the appropriate form of inquiry" without making definitively clear whether one would be held.
The Co-op Group, a major donor to Labour, is investigating the leadership of its bank subsidiary prior to its near-collapse earlier this year.