By
Simon Watkins, Financial Mail On Sunday
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Private detectives have been hired by the embattled Co-operative Group to investigate a series of boardroom leaks that triggered last week’s shock resignation of chief executive Euan Sutherland.
He quit the group after just ten months, describing it as ‘ungovernable’. Sutherland’s resignation followed a string of leaks that culminated in his £3.6million salary being made public.
The Co-op, now headed by interim chief executive Richard Pennycook, is understood to have called in leading private investigators Kroll to pinpoint the source of the leaks.
Shock departure: Euan Sutherland
The unauthorised disclosures are widely thought to have come from one or more members of the Co-op’s 21-strong board, some of whom are understood to be resistant to reform of the discredited group and attempts to cut links to the Labour Party.
The appointment of outside investigators is a sign of how the battle lines are being drawn inside the upper echelons of the Co-op.
It is believed that the probe may in part be aimed at shocking indisciplined board members into recognising the seriousness of the situation.
In an outburst on Facebook last week, Sutherland claimed the leaks had come from board members determined to undermine him.
Details of the group’s financial losses and its plan to sell its farms business were also leaked in recent weeks.
The Co-op runs supermarkets and funeral services and it has a 30 per cent stake in the Co-op Bank. It is owned by its members and has no shareholders.
One source said: ‘There have been the very serious board-level leaks by directors. The Co-op may not have any shares but it does have rated instruments and these are market-sensitive’. This was illustrated last week when the group’s 12-year bond, due for repayment in 2025, fell by almost 5 per cent after Sutherland’s resignation.
One Co-op insider said high-level leaks had been a long-running issue and Sutherland’s predecessor, Peter Marks, had also suffered during his tenure.
The board includes 15 lay members and five members drawn from independent Co-op societies affiliated to the group, plus the recently appointed Lord Myners, who has been drafted in to carry out a review of its structure.
One Co-op insider added: ‘Independent societies account for 10 per cent of the group so they have a disproportionate hold on the board.’
The failings of lay members was exemplified last year by Methodist minister Paul Flowers, a former board member, deputy chairman of the group and chairman of the bank, who was exposed by The Mail on Sunday for buying Class A drugs.
The Co-op Group declined to comment.
Comments (10)
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Deano,
Manchester,
moments ago
Labour numpties sabotaging what could be a national jewel. What decent CEO would go to the Coop under these circumstances? I hope it’s a genuine investigation and the culprit on the board is jailed!
premixman,
north, United Kingdom,
2 hours ago
Money to burn.
Bust Flush,
Scotland, United Kingdom,
6 hours ago
Kroll should investigate how much they are paying the Co-op Bank’s new executives – city rumours are doing the rounds that they are destroying any value left there and lining their own pockets. Sutherland’s cronies strike again – eh Mr Booker?
Clapham Omnibus,
Gainsborough, United Kingdom,
6 hours ago
To save them some time the stash of Crystal Meths is hidden behind the portrait of Michael Foot in the Boardroom
DJ,
Mazarron Spain, Spain,
11 hours ago
The precarious state of the Co-op is a great shame and it is largely the result of the archaic structure of its board and the Labour party activists therein. The nests of Labour Party simple-minded activists within the Co-op Group will eventually destroy the Co-op and the livelihood of everyone who works there. They only work to their own narrow agenda and apparently believe that they are somehow above the law. These activists may also have vested interests in maintaining the present conditions and are too stupid to realise that the leaking of sensitive information can be deemed unlawful. The Co-op is a business and politics should be pushed aside. There is an inbuilt potential for the Co-op Group to be a truly socially responsible company and it is quite capable of achieving this without the malign influence of Labour activists.
robert,
kent, United Kingdom,
11 hours ago
Utter balderdash and a cover up in the making. At a time of growing demand for more open-ness and scrutiny of boardroom pay levels the Co-op seeks to crush fair comment. Did Sutherland really believe he could “sneak” £3.6 million through the accounts without raising a questioning eyebrow or two amongst the members ?
“Ungovernable” is an excuse for the fact that Sutherland naively thought he could escape public questioning or debate over the size of his paypacket.
Mojo,
glasgow, United Kingdom,
13 hours ago
Panic tactics clean out the board, recruit new independant money orientated board as advised before the Lloyds debacle get a grip or buy buy Co-operative
tony,
sale, United Kingdom,
13 hours ago
It is a good job that someone decided to tell the truth – the Co-op claims to be transparent in its dealings yet was prepared to pay £3.6m to one man and extremely large increases to the cronies that he brought in – the members deserved to know the type of greedy executive that they now have.
Sutherland brought in a lot of new senior management – he quietly opened a new head office in London – totally unnecessary when the Co-op has Peter’s folly in Manchester.
The AGM in May should be looking closely at all the executive pay structures – as for the person who supposedly leaked the truth – good on you.
aduckers,
skelmersdale, United Kingdom,
19 hours ago
Shouldn’t they be investigating how a failing company can pay out these amounts?
Someone must have the authority to scrutinise the books.
Paul F,
Leeds, United Kingdom,
3 hours ago
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Co-op calls in private eyes to probe boardroom leaks: Hunt for directors who revealed pay secrets that led to chief"s resignation
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