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Ex-City minister Lord Myners quits Co-op Group board Ex-City minister Lord Myners quits Co-op Group board
(about 2 hours later)
Former City minister Lord Myners has quit the board of the troubled Co-operative Group, amid criticism of his plans to reform the business.Former City minister Lord Myners has quit the board of the troubled Co-operative Group, amid criticism of his plans to reform the business.
His departure is another significant blow for the business, which is facing losses of up to £2bn.His departure is another significant blow for the business, which is facing losses of up to £2bn.
The largest of the group's independent societies has opposed his proposals, aimed at making the Co-op's governance more like a publicly listed company.The largest of the group's independent societies has opposed his proposals, aimed at making the Co-op's governance more like a publicly listed company.
But the Co-op says Lord Myners' review will continue, despite his resignation.But the Co-op says Lord Myners' review will continue, despite his resignation.
The group's chief executive, Euan Sutherland, resigned last month after he described the business as "ungovernable".The group's chief executive, Euan Sutherland, resigned last month after he described the business as "ungovernable".
'Democratic deficit''Democratic deficit'
Lord Myners' initial findings accused the Co-op of suffering from a significant "democratic deficit", in which ordinary members have surprisingly weak constitutional rights and a limited ability to influence the group's activities. Lord Myners' initial findings said the Group's elected directors had overseen "breathtakingly value-destructive" decisions, like the Co-op's takeovers of Britannia building society and supermarket chain, Somerfield.
He also found the group's three-tier system of elected member representation had "consistently produced governors without the necessary qualifications and experience to provide effective board leadership". He also found its three-tier system of elected member representation - made up of area committees, regional boards, and the Group board - had "consistently produced governors without the necessary qualifications and experience to provide effective board leadership".
Instead, he proposed bringing in outside directors and giving the Co-op some of the checks and balances more common to a publicly listed company. Too many directors, he said, did not have any serious business experience and were therefore not qualified to keep senior managers in check.
But some of the Co-op's most influential members are worried the changes would damage the group's values. Instead, he recommended new Group board directors should be appointed against a clear criteria of skills and experience.
And he proposed a new, smaller board, which would replace the current 20 elected directors with an independent chair, six or seven non-executive directors with business experience, and two executives from the group.
But some of the Co-op's most influential members are worried the changes could damage the group's values.
'Deeply concerned'
Its largest independent society, Midcounties, which along with about a dozen others accounts for 20% of board votes, has already said it will oppose Lord Myners' plans.Its largest independent society, Midcounties, which along with about a dozen others accounts for 20% of board votes, has already said it will oppose Lord Myners' plans.
Patrick Gray, president of Midcounties, told the Today programme that any changes would only take place with negotiation.
"Most of the independent societies are deeply concerned, as we are," he added.
"We all support reform, but we want it to be done in a measured way. We don't want to be pushed into a corner and told either you accept this, or nothing.
"If he [Lord Myners] puts forward simply a menu on a take it or leave it basis, then we will vote against it."
Bank troublesBank troubles
Lord Myners was appointed as a senior independent director by Co-op Group chair Ursula Lidbetter in December, to undertake a full review of the entire business.Lord Myners was appointed as a senior independent director by Co-op Group chair Ursula Lidbetter in December, to undertake a full review of the entire business.
It followed the collapse last year of Co-op Bank's deal to take over 632 Lloyds Bank branches and the arrest of the bank's chairman Reverend Paul Flowers on drugs allegations.It followed the collapse last year of Co-op Bank's deal to take over 632 Lloyds Bank branches and the arrest of the bank's chairman Reverend Paul Flowers on drugs allegations.
Its banking arm alone is preparing to announce a loss of about £1.3bn for 2013.Its banking arm alone is preparing to announce a loss of about £1.3bn for 2013.
In November last year, it announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank in exchange for a 70% ownership stake.In November last year, it announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank in exchange for a 70% ownership stake.
Last month it announced plans to raise another £400m by issuing new shares, following the discovery of additional costs related to past misconduct and poor documentation.Last month it announced plans to raise another £400m by issuing new shares, following the discovery of additional costs related to past misconduct and poor documentation.