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Former Co-op Bank chief Paul Flowers says 'I have sinned' | Former Co-op Bank chief Paul Flowers says 'I have sinned' |
(about 3 hours later) | |
Disgraced former Co-op Bank chairman Paul Flowers has spoken for the first time since his arrest over drugs allegations, saying: "I have sinned." | Disgraced former Co-op Bank chairman Paul Flowers has spoken for the first time since his arrest over drugs allegations, saying: "I have sinned." |
The Methodist minister, who stepped down from the bank last summer, told BBC Newsnight some of his "frailties" had been exposed in the public domain. | The Methodist minister, who stepped down from the bank last summer, told BBC Newsnight some of his "frailties" had been exposed in the public domain. |
He was arrested last November after the Mail on Sunday published footage showing him allegedly buying drugs. | He was arrested last November after the Mail on Sunday published footage showing him allegedly buying drugs. |
Mr Flowers, 63, said the last few months had at times been "hellish". | Mr Flowers, 63, said the last few months had at times been "hellish". |
In a wide-ranging, exclusive interview with Newsnight, he also revealed how the government had put pressure on the Co-op Bank before it aborted plans to buy 600 Lloyds branches. | In a wide-ranging, exclusive interview with Newsnight, he also revealed how the government had put pressure on the Co-op Bank before it aborted plans to buy 600 Lloyds branches. |
He said ministers had made it clear they wanted the deal - which exposed for the first time the Co-op Bank's poor financial health - to go ahead. | |
'Cathartic and traumatic' | 'Cathartic and traumatic' |
Mr Flowers, who has been a minister in Bradford since 1976, said "things got pretty hairy" for him last November when he was arrested as part of what police called a "drugs supply investigation" following the newspaper allegations. He is currently on bail. | Mr Flowers, who has been a minister in Bradford since 1976, said "things got pretty hairy" for him last November when he was arrested as part of what police called a "drugs supply investigation" following the newspaper allegations. He is currently on bail. |
At the time he was also facing questions about his suitability to have led the Co-op Bank, after he had appeared before a committee of MPs and told them the bank's assets were £3bn when they were actually £47bn. | |
"I am in company with every other human being for having my frailties and some fragility exposed," he said. | "I am in company with every other human being for having my frailties and some fragility exposed," he said. |
"Most people get through life without that ever coming into the public domain. But, of course I have sinned in that old-fashioned term, which I would rarely use, I have to say." | |
He added: "Up to [November] there hadn't been much commentary about things we were doing at the bank, but it got worse after that. | |
"And for me personally there have been several moments where it has been hellish. | "And for me personally there have been several moments where it has been hellish. |
"You certainly find out who your friends are because a significant number of people in politics and in the Co-op, and some in the Church, have been noticeable by their silence or their absence." | |
Addictions treatment | |
After his arrest at his home in Merseyside, he said he had sought "professional support for the issues that I was facing" and underwent a 28-day addictions treatment programme, which he found both "cathartic and traumatic". | |
Of his appearance before MPs, he said he had been ill-prepared for the experience and was also put off by some MPs trying to "trip me up" with their questioning and score political points. | |
He defended his appointment as the Co-op Bank's chairman, saying: "Others made a judgement that I was the right and appropriate person to be the chair at that particular time. And it went through a very rigorous process of selection." | |
When asked if he had been involved with drugs while chairman of the Co-op Bank, Mr Flowers replied: "I think you're aware that there are still some issues to be enquired into by the police and that is a question that I think has to remain at the moment unanswered." | |
He denied any involvement with drugs before he became chairman, but added: "That doesn't answer the earlier question. And I cannot answer it for the moment." | |
Mr Flowers, who is a former Labour councillor in Bradford and Rochdale, was chairman of the Co-op Bank from April 2010 to June 2013. | |
Financial troubles | Financial troubles |
The bank had to be rescued last year after it was left with a £1.5bn capital shortfall, with many of its troubles stemming from its merger with the Britannia building society in 2009. | The bank had to be rescued last year after it was left with a £1.5bn capital shortfall, with many of its troubles stemming from its merger with the Britannia building society in 2009. |
Its poor financial health was first discovered in 2012, when it was trying to acquire more than 600 branches from Lloyds in a process known as Project Verde. | Its poor financial health was first discovered in 2012, when it was trying to acquire more than 600 branches from Lloyds in a process known as Project Verde. |
The Co-op Bank was a frontrunner to buy the branches but later withdrew its offer. | The Co-op Bank was a frontrunner to buy the branches but later withdrew its offer. |
Mr Flowers said he had come under "considerable" pressure to make that deal happen "from the present government - and mainly from Conservatives". | Mr Flowers said he had come under "considerable" pressure to make that deal happen "from the present government - and mainly from Conservatives". |
He said: "They wanted a deal and remember that the government was - still is - the major shareholder of that bank because of the structural support it had needed in 2008. | He said: "They wanted a deal and remember that the government was - still is - the major shareholder of that bank because of the structural support it had needed in 2008. |
"Clearly they wanted a deal which would help them in terms of public finances. They actually said that they were keen on Co-op becoming a much more significant player, with more scale. | "Clearly they wanted a deal which would help them in terms of public finances. They actually said that they were keen on Co-op becoming a much more significant player, with more scale. |
"We would have had about 7-8% of the market if this had gone through. And there was pressure certainly from [junior minister] Mark Hoban, but I believe, and know, that that originated much higher up, with the chancellor himself." | "We would have had about 7-8% of the market if this had gone through. And there was pressure certainly from [junior minister] Mark Hoban, but I believe, and know, that that originated much higher up, with the chancellor himself." |
New shares | New shares |
A Treasury spokesman said: "The selection of the Co-op and the decision on whether to proceed with the Verde deal was a purely commercial matter for Lloyds Bank and the Co-op Bank, as the chairman and chief executive of Lloyds have consistently made clear. | A Treasury spokesman said: "The selection of the Co-op and the decision on whether to proceed with the Verde deal was a purely commercial matter for Lloyds Bank and the Co-op Bank, as the chairman and chief executive of Lloyds have consistently made clear. |
"Since the full extent of the situation at Co-op Bank became clear, the chancellor has ordered an independent investigation into the events at the Co-op Bank and the circumstances surrounding them." | "Since the full extent of the situation at Co-op Bank became clear, the chancellor has ordered an independent investigation into the events at the Co-op Bank and the circumstances surrounding them." |
Last November, the Co-op announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank for a 70% ownership stake. | Last November, the Co-op announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank for a 70% ownership stake. |
On Monday, the bank said it planned to raise another £400m by issuing new shares following the discovery of additional costs, the biggest part of which relates to PPI mis-selling and lapses in the provision of mortgages. | On Monday, the bank said it planned to raise another £400m by issuing new shares following the discovery of additional costs, the biggest part of which relates to PPI mis-selling and lapses in the provision of mortgages. |
The bank said the discovery meant it would make a loss of £1.2bn to £1.3bn for 2013. | The bank said the discovery meant it would make a loss of £1.2bn to £1.3bn for 2013. |
You can watch the interview in full on Newsnight on BBC Two, or later via the Newsnight website or BBC iPlayer. |