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| Lord Myners calls for radical overhaul of Co-operative Group | Lord Myners calls for radical overhaul of Co-operative Group |
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| Radical overhaul of the way the Co-operative Group is run is needed if the UK's largest mutual is to survive the traumatic shocks of the past year, the City veteran charged with its reform warned on Wednesday. | Radical overhaul of the way the Co-operative Group is run is needed if the UK's largest mutual is to survive the traumatic shocks of the past year, the City veteran charged with its reform warned on Wednesday. |
| Lord Myners, Labour's City minister during the banking crisis, set out in "stark terms" the need for urgent reforms to the chain of supermarkets, funeral homes and pharmacies as he warned that the banks – owed £1.2bn by the group which lost £2.5bn last year – could force the organisation to embark on fire sales of its prized businesses or increase the borrowing rate on loans without a commitment to change. | Lord Myners, Labour's City minister during the banking crisis, set out in "stark terms" the need for urgent reforms to the chain of supermarkets, funeral homes and pharmacies as he warned that the banks – owed £1.2bn by the group which lost £2.5bn last year – could force the organisation to embark on fire sales of its prized businesses or increase the borrowing rate on loans without a commitment to change. |
| Publishing a 180-page report, Myners said the board – which he wants to abolish, and currently made up of members of the co-operative movement such as nurses, farmers and public sector workers – was "stuck in denial" over what he described as a "near ruinous" failure of governance, which led to the near-collapse of its bank last year. | Publishing a 180-page report, Myners said the board – which he wants to abolish, and currently made up of members of the co-operative movement such as nurses, farmers and public sector workers – was "stuck in denial" over what he described as a "near ruinous" failure of governance, which led to the near-collapse of its bank last year. |
| "This board is not competent to perform the duties expected of it," he said, as he called for the Financial Conduct Authority to broaden the scope of its investigation into the bank. Myners said: "There must be a public policy question here, how a Group with eight million members could have become so badly managed and lost so much money. I think that's something the FCA needs to consider." | |
| The Co-op needed public attention, particularly in the light of the current row surrounding the potential takeover of drugs company Astra Zeneca, as it employs 90,000 in the UK compared with the 5,000 at the drugs company, he said. | |
| "Radical decisions on governance need to be taken soon – and with resolution – if the Co-op, as my mother knew it, is to be saved," the 66-year-old said. "The decision lies in the hands of elected democrats. I have done all I can do," he added ahead of an appearance before the Treasury select committee of MPs later on Wednesday. | "Radical decisions on governance need to be taken soon – and with resolution – if the Co-op, as my mother knew it, is to be saved," the 66-year-old said. "The decision lies in the hands of elected democrats. I have done all I can do," he added ahead of an appearance before the Treasury select committee of MPs later on Wednesday. |
| Chairman of Guardian Media Group until 2008, Myners hit out against the board for denying its responsibility, being saddled with "corrosive suspicion", riddled with procrastination and hiding behind the values of the Co-op for the problems facing the 150-year-old mutual which now owns just 30% of its banking arm after last year's fundraising. | Chairman of Guardian Media Group until 2008, Myners hit out against the board for denying its responsibility, being saddled with "corrosive suspicion", riddled with procrastination and hiding behind the values of the Co-op for the problems facing the 150-year-old mutual which now owns just 30% of its banking arm after last year's fundraising. |
| He admitted he had not fully explored the consequences of a "head in the sand mentality" of avoiding reform but warns one idea of winding the Co-op into a charitable foundation to fund its social purposes could leave little cash behind. Even so, he concluded it might be a "better outcome than continuing with today's governance practices". | He admitted he had not fully explored the consequences of a "head in the sand mentality" of avoiding reform but warns one idea of winding the Co-op into a charitable foundation to fund its social purposes could leave little cash behind. Even so, he concluded it might be a "better outcome than continuing with today's governance practices". |
| Setting out his plans for reform to current governance structure of "labyrinthine complexity" used to represent the 8 million owner-members of the group, Myners called for: | Setting out his plans for reform to current governance structure of "labyrinthine complexity" used to represent the 8 million owner-members of the group, Myners called for: |
| • board directors to accept their responsibility for what has gone wrong | • board directors to accept their responsibility for what has gone wrong |
| • an investigation by the City regulator into a report Co-op commissioned from investors Kroll into leaks from the boardroom | • an investigation by the City regulator into a report Co-op commissioned from investors Kroll into leaks from the boardroom |
| • a review by the Financial Conduct Authority into a new regulatory regime for co-operatives and other large non-financial mutuals | • a review by the Financial Conduct Authority into a new regulatory regime for co-operatives and other large non-financial mutuals |
| • a review the £1 membership fee – one and half week's salary when the Co-op was set up in the 19th century, the equivalent to £675 now | • a review the £1 membership fee – one and half week's salary when the Co-op was set up in the 19th century, the equivalent to £675 now |
| • a vote any future payments for "loss of office" following the row over a £6.6m two year deal for the former boss Euan Sutherland | • a vote any future payments for "loss of office" following the row over a £6.6m two year deal for the former boss Euan Sutherland |
| Myners first published an outline of his reforms in March after Sutherland walked out after just 10 months, branding the group ungovernable after his pay deals – and those of his new management team – were leaked to the Observer. | Myners first published an outline of his reforms in March after Sutherland walked out after just 10 months, branding the group ungovernable after his pay deals – and those of his new management team – were leaked to the Observer. |
| "The loss of Euan Sutherland is a catastrophe for the Co-op. He was the right man and forced out by some people who should lower their heads in shame," said Myners. | |
| His reforms are little changed from the original which recommended replacing the current 15-member board, the regional boards – which represent the views of 8 million members who own 78% of the group – and the 22 independent societies, which have their own Co-op stores around the UK, which own the remainder. | His reforms are little changed from the original which recommended replacing the current 15-member board, the regional boards – which represent the views of 8 million members who own 78% of the group – and the 22 independent societies, which have their own Co-op stores around the UK, which own the remainder. |
| Individuals with "skills and experience" should run the conglomerate, he said, describing a board with some members "clearly out of their depth when financial concepts and terminology are used". Some did not know the difference between credits and debts and he realised within 30 minutes of his first meeting that the board was not up to the job. | |
| He also wants to set up a national membership council to represent the views of members and hold the board to account, and create a one-member-one-vote system rather than the current system, which he says is more like one vote per 10,000 members. | He also wants to set up a national membership council to represent the views of members and hold the board to account, and create a one-member-one-vote system rather than the current system, which he says is more like one vote per 10,000 members. |
| Myners, appointed in December with a mandate to reform the troubled organisation in the wake of the scandal at its bank, quit himself last month although he insisted it was not because of opposition to those reforms. | Myners, appointed in December with a mandate to reform the troubled organisation in the wake of the scandal at its bank, quit himself last month although he insisted it was not because of opposition to those reforms. |
| "I have myself witnessed repeated instances where has been a denial of responsibility, corrosive suspicion, deliberate delay and a practice of hiding behind values in order to deflect or stifle criticism and protect self-interest. It was the combination of these factors, when discussing the approval of this year's accounts, that obliged me to resign as a director of the group after only four months," Myners said. | "I have myself witnessed repeated instances where has been a denial of responsibility, corrosive suspicion, deliberate delay and a practice of hiding behind values in order to deflect or stifle criticism and protect self-interest. It was the combination of these factors, when discussing the approval of this year's accounts, that obliged me to resign as a director of the group after only four months," Myners said. |
| "I resigned because of the unwillingess and incapacity of some group board members to take the responsibilities with the requisite diligence and accountability. I could not be part of a board which takes such a cavalier attitude," he said. | "I resigned because of the unwillingess and incapacity of some group board members to take the responsibilities with the requisite diligence and accountability. I could not be part of a board which takes such a cavalier attitude," he said. |
| He was defiant as he published his reforms: "It would be completely irresponsible to change my diagnosis because the prescription is unpalatable and hard for some elected members to accept." | He was defiant as he published his reforms: "It would be completely irresponsible to change my diagnosis because the prescription is unpalatable and hard for some elected members to accept." |
| The annual meeting of the Co-op is due to vote on resolutions related to his reforms on 17 May and Myners recommended the reforms be adopted by next year's annual meeting, with the new boardroom structure in place by November this year. He said he hoped the Co-op would allow the media entry to this month's AGM. | The annual meeting of the Co-op is due to vote on resolutions related to his reforms on 17 May and Myners recommended the reforms be adopted by next year's annual meeting, with the new boardroom structure in place by November this year. He said he hoped the Co-op would allow the media entry to this month's AGM. |