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Co-op Group members vote in favour of reforms | |
(about 9 hours later) | |
Members of the troubled Co-operative Group have voted in favour of reforming how the business is run. | |
The group has been in turmoil since a £1.5bn hole emerged in its finances last year, forcing it to sell off parts or all of its insurance, pharmacies and banking divisions. | |
Changes to the structure of the board were proposed, but had met stiff resistance from some key figures. | |
But 83% of members voted in favour of the changes. | |
The plans were proposed by former City minister Lord Myners and were accepted in principle in May. | |
Lord Myners had blamed the structure of the Co-op Group's board for much of the chaos surrounding the business. | |
Among the changes: | |
Ursula Lidbetter, chair of the Co-operative Group, called it a "momentous and defining moment". | |
"These reforms represent the final crucial step in delivering the change necessary to return the group to health," she said. | |
Patrick Gray, president of the Midcounties Co-op which opposed the changes, said the vote was "not necessarily the end of the matter but rather the beginning of a new phase". | |
He described the process as "exhausting". | |
"The effort now is to make new Co-op both commercial and ethical. It's possible but difficult to achieve and depends on how the new [commercially focused] board gets along with the also new [members'] council." | |
More business acumen | |
Following the discovery of the £1.5bn black hole in 2013, a deal was reached which saw the wider Co-op Group cede majority ownership of the bank to bondholders, including a number of US hedge funds. | |
In a separate scandal before the bank had to be rescued, revelations emerged about the bank's disgraced former chairman Paul Flowers, who pleaded guilty to drugs possession in May. | |
BBC business correspondent Joe Lynam said: "Today's vote is basically reinventing how the Co-op is run, putting it on a more commercial footing while retaining crucially the ethical background to the Co-Operative movement - the fact that it cannot be turned into a company at some stage in the future, that is one of the safeguards." | |
He added: "It will still very much be an ethically focused, members-driven organisation but with far more business acumen and experience going forward. | |
"That doesn't mean that there won't be a residue of a split-type movement - there are a lot of people who were very resistant to this change." |