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Miliband says Labour acted with 'utmost integrity' regards Paul Flowers Paul Flowers was never my close adviser, Ed Miliband says
(about 1 hour later)
Labour leader Ed Miliband has said his party acted with "utmost integrity" in its dealings with the Co-op Bank and its disgraced former chairman Rev Paul Flowers. Ed Miliband has distanced himself from Paul Flowers, the Co-op Bank chairman accused of financial incompetence and buying hard drugs.
Miliband spoke out after David Cameron, the prime minister, announced an inquiry into the bank's ailing finances and decision to appoint Flowers, a former Labour councillor who faces police questioning over allegations that he bought illegal drugs. The Labour leader spoke about the disgraced bank boss after David Cameron tried to drag the opposition into the scandal over its lose links to the Co-op movement.
Miliband faced questions yesterday over why Flowers had been brought on to the party's business advisory group and further questions about the party's links to the former bank chairman, who has also been accused of incompetence. Asked about his relationship to flowers, Miliband told ITV News: "Paul Flowers was somebody who I met with on one occasion and had meetings with a wider group on a couple of other occasions. He was never my close adviser.
The Labour leader told ITV News: "Paul Flowers was somebody who I met with on one occasion and had meetings with a wider group on a couple of other occasions. He was never my close adviser.
"The important thing now is to make sure that the Co-op can go from strength to strength in the future and the police need to look at any matters that arise for them.""The important thing now is to make sure that the Co-op can go from strength to strength in the future and the police need to look at any matters that arise for them."
Asked if he welcomes the inquiry, Miliband said: "Let's see what the government proposes. Asked if he welcomed the inquiry, Miliband said: "Let's see what the government proposes. What I am utterly confident about is the Labour party always acts with the utmost integrity and we did on this occasion too."
"What I am utterly confident about is the Labour Party always acts with the utmost integrity and we did on this occasion too." Labour claimed George Osborne, had questions to answer following a Financial Times report suggesting the chancellor pressed for the Co-operative Bank to be spared from tougher capital rules imposed by Brussels.
Flowers, who led the Co-op for three years until 2013, is being investigated by the police for allegedly buying and using illegal drugs including crystal meth, crack cocaine and ketamine. He has also been suspended indefinitely by the Methodist Church. The shadow chief secretary to the Treasury, Chris Leslie, said: "There are now serious questions for George Osborne to answer about how the Co-operative Bank got into trouble on his watch and his role over the last three years.
Yesterday, Cameron announced that the chancellor George Osborne was in discussions with financial regulators over what form the inquiry should take. "The chancellor and his ministers actively encouraged the bank's failed bid for 632 Lloyds branches, with reports of 30 ministerial meetings to smooth the way for this deal.
At prime minister's questions in the House of Commons, Cameron told MPs that there were "clearly a lot of questions that have to be answered" in relation to the Co-op Bank. "What due diligence was done by the chancellor and the Treasury into the state of the Co-op Bank and its leadership? And why did the chancellor argue in Brussels for the Co-op Bank to be spared from tougher rules?
"Why was Rev Flowers judged suitable to be chairman of a bank? Why weren't alarm bells ringing earlier, particularly by those who knew? I think it will be important in the coming days that if anyone does have information they stand up and provide it to the authorities," he said. "If David Cameron wants a proper inquiry into what went wrong at the Co-op Bank, then George Osborne will have to answer all these questions."
Tory chairman Grant Shapps also challenged Miliband to explain Mr Flowers' position on Labour's business advisory group and to return a £50,000 donation to Mr Balls' office that he had backed. On Wednesday, Cameron ordered two inquiries into the bank in a move that sparked claims he was playing politics with the situation, as the wider Co-op Group has given donations and money to Labour.
Cameron added: "What we can now see is that this bank, driven into the wall by this chairman, has been giving soft loans to the Labour Party, facilities to the Labour Party, donations to the Labour Party, trooped in and out of Downing Street under Labour, still advising the leader of the Labour Party. One inquiry led by the financial regulator will pre-date 2012 and cover the period back to 2009, when the Co-op merged with the Britannia Building Society at the height of the banking crisis.
"And yet, now we know, all along they knew about his past. Why did they do nothing to bring to the attention of the authorities this man who has broken a bank?" The takeover contributed to the £1.5bn capital shortfall revealed at the bank earlier this year and forced it into the hands of US hedge funds that owned its debt.
Mr Miliband sought to avert the attack – dismissed by a senior Labour source as "a rather desperate political distraction" – by reminding Cameron that his own party had taken donations from individuals such as Asil Nadir, who was jailed after going on the run when facing fraud allegations. During prime minister's questions, Cameron described Flowers as the "man who has broken a bank" following questions about his suitability to run a bank, drug-taking and resignation as a Bradford councillor over adult material on his computer.
Co-operative Group chairman Len Wardle has already quit amid the deepening scandal, which came after the ailing bank had to be bailed out by hedge funds after getting into financial difficulties. He said that Flowers had "trooped in and out of Downing Street under Labour" and was "still advising the leader of the Labour party".
Cameron added: "And yet now we know all along they knew about his past. Why did they do nothing to bring to the attention of the authorities this man who has broken a bank?"
Questions have also been raised about the role of Conservative ministers in Co-op's financial woes. Mark Hoban, a former City minister, was deeply involved in discussions with the bank over its now aborted attempt to buy more than 600 branches from Lloyds Banking Group.
Asked about his involvement, Hoban said he had nothing to say. Osborne also intervened in a push to stop Co-Op being subject to tighter Brussels regulation on the level of capital it needs to hold.
Flowers's Labour party membership has been suspended since the publication on Sunday of a video allegedly showing him handing over cash for illegal drugs.
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