Co-op Group: urgent reform needed to avoid ‘grave harm’
Governance structure at the Co-op has ‘lamentably failed’, says former City minister Lord Myners
THE CO-OPERATIVE Group risks “an accelerating decline into irrelevance” if it fails to undertake urgent radical reforms, according to the former City minister Lord Myners.
In a 184-page report published today, Myners warns that the organisation cannot continue with its “deplorable governance failures”. He recommends that the Group scraps its current board, which consists of 20 Co-op members including a nurse and lecturer, and replaces it with one small board comprised of people with business experience and a separate member-led council advising on ethics.
Myners urged the Co-op’s 600 elected members to vote in favour of the reforms, despite the fact that it would reduce their influence over the organisation, reports the Daily Telegraph.
He warned elected members that failure to take resolute action would “gravely harm” the Group’s “long term ability to survive” as well as “the true interests of its several million ordinary members, its employees and its pension scheme holders”.
Myners was brought in to reform the troubled Co-op Group in December, but handed in his resignation last month after his draft proposals were reportedly met with a barrage of opposition. He has nevertheless stayed on to complete his review.
“I have no interest in advocating the adoption of a plc model, as some of my critics have claimed,” he writes. “But I do want to see a governance structure that works; the present one has lamentably failed.”
He warns that the Co-op has “extremely high levels of debt” and a “junk” credit rating. Creditors are looking for assurance that it will undergo significant governance reform, otherwise they could choose to raise the interest rate and impose more stringent conditions, he says.
Members will vote on the proposals on 17 May in Manchester at their annual general meeting.
It has been a disastrous year for the Co-op, which revealed that its bank had a £1.5bn hole in its balance sheet last May. Its former chairman, the Reverend Paul Flowers, was also embroiled in allegations involving class A drugs. The report by Lord Myners follows a damning review by Sir Christopher Kelly, a former civil servant who exposed basic failures in virtually every aspect of the Co-op Bank.