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Co-op Bank: Chancellor George Osborne confirms inquiry Co-op Bank: Inquiry into bank under Paul Flowers
(about 4 hours later)
An independent inquiry into events at the Co-operative Bank has been confirmed by Chancellor George Osborne. An independent inquiry will look into "events at the Co-op Bank" dating back to 2008, Chancellor George Osborne has said.
The bank's ex-chairman, Paul Flowers, has been released on bail after being arrested in Merseyside in connection with a "drugs supply investigation".The bank's ex-chairman, Paul Flowers, has been released on bail after being arrested in Merseyside in connection with a "drugs supply investigation".
The Treasury has not yet announced who will lead the independent inquiry. Mr Flowers, a Methodist minister in Bradford, has been suspended from the church and the Labour Party.
It comes after Mr Flowers, 63, was suspended from both the Methodist Church, of which he was a minister in Bradford, and the Labour Party. Bradford Council is investigating his departure form the council in 2011.
He has been filmed allegedly handing over £300 for cocaine and discussing buying other illegal drugs. The Mail on Sunday published a video on 17 November allegedly showing Mr Flowers, 63, handing over £300 for cocaine and discussing buying other illegal drugs.
Mr Flowers resigned from his position as deputy chairman of the Co-op Group in June amid concerns about his expenses.Mr Flowers resigned from his position as deputy chairman of the Co-op Group in June amid concerns about his expenses.
Separately, he was forced out of the Co-op's banking arm in June because of doubts about his competence for the job.Separately, he was forced out of the Co-op's banking arm in June because of doubts about his competence for the job.
Conduct of directorsConduct of directors
A Treasury spokesman said: "The investigation has been jointly agreed with the two regulators - the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) - who agree there is a public interest in a statutory investigation. The Treasury has not yet said who will lead the inquiry announced by Mr Osborne.
"The investigation has been jointly agreed with the two regulators - the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) - who agree there is a public interest in a statutory investigation," a Treasury spokesman said.
"It will be led by an independent person appointed by the regulators, with the approval of the Treasury.""It will be led by an independent person appointed by the regulators, with the approval of the Treasury."
The chancellor used the Financial Services Act 2012 to order an independent investigation into "events at the Co-op Bank and the circumstances surrounding them".The chancellor used the Financial Services Act 2012 to order an independent investigation into "events at the Co-op Bank and the circumstances surrounding them".
This will date from 2008 and include the conduct and appointment of directors.This will date from 2008 and include the conduct and appointment of directors.
Separately, the FCA and PRA are considering whether they should launch formal enforcement investigations.Separately, the FCA and PRA are considering whether they should launch formal enforcement investigations.
The PRA, part of the Bank of England, welcomed the independent inquiry.
"The Prudential Regulation Authority fully agrees that the investigation should be led by an independent person, and looks forward to supporting them in their work," it said in a statement.
"The Prudential Regulation Authority will make its full resources available to support the investigation."
Internal reviewInternal review
The Co-op is seeking to recover money paid to its former chairman who has been told to hand back £31,000. The Co-op Bank is seeking to recover money paid to its former chairman, telling him to hand back £31,000.
The bank is also looking at emails and other evidence as part of an "internal fact-finding review". It is also looking at emails and other evidence as part of an "internal fact-finding review".
The Mail on Sunday published a video of Mr Flowers allegedly paying for and discussing recreational drugs. The Co-op Group has launched a "root and branch" review of how it governs itself in the wake of the revelations about Mr Flowers, which its new chairman called "shocking".
Labour has sought to distance itself from Mr Flowers, as a political row developed over why he was allowed to reach a such high position in the bank.Labour has sought to distance itself from Mr Flowers, as a political row developed over why he was allowed to reach a such high position in the bank.
Until 2011 he was a Labour councillor in Bradford and subsequently served the party on what it says was an informal advisory group. From 2002-11 he was a Labour councillor in Bradford and subsequently served the party on what it says was an informal advisory group.
Bradford Council said the circumstances in which "inappropriate material" was found on his council computer will be investigated. 'Inappropriate material'
A council spokeswoman said: "Coun David Green has asked officers to produce a report outlining what action was taken, and on what basis, from the point when the inappropriate material was discovered. Mr Flowers stood down as a Bradford councillor after "inappropriate but not illegal" material was found on his council computer, but other councillors were told he had left due to work pressures.
"This report will be made public and decisions about any further actions/investigations will then be taken. It is important to note that the material found on the computer was 'inappropriate' and not 'illegal'." The council said the circumstances of this would now be investigated.
"Coun David Green has asked officers to produce a report outlining what action was taken, and on what basis, from the point when the inappropriate material was discovered," a spokeswoman said.
"This report will be made public and decisions about any further actions/investigations will then be taken."
The Methodist Church said it had offered "pastoral care" to Mr Flowers, who is indefinitely suspended as a minister.The Methodist Church said it had offered "pastoral care" to Mr Flowers, who is indefinitely suspended as a minister.
It has emerged that he resigned from running drugs charity Lifeline in 2004 after allegedly lodging false expenses claims.It has emerged that he resigned from running drugs charity Lifeline in 2004 after allegedly lodging false expenses claims.
The Charity Commission said it received a complaint at the time but had no evidence that Mr Flowers "acted in bad faith or fraudulently".The Charity Commission said it received a complaint at the time but had no evidence that Mr Flowers "acted in bad faith or fraudulently".