Baby Ace: Former city minister Lord Myners attacks the Co-Operative group and warns it to accept reform or die, as fears grow members will reject changes

Friday, March 14, 2014

Former city minister Lord Myners attacks the Co-Operative group and warns it to accept reform or die, as fears grow members will reject changes

By

James Salmon

Former City minister Lord Myners has attacked the old guard at the Co-operative Group and warned that the business will go into terminal decline unless they accept radical reform.

Outlining plans to overhaul the structure of the troubled mutual, the cross-bench peer criticised the lack of ‘any serious business experience’ of those on the group and regional boards.

And he expressed fears that they would act ‘in concert’ to block the changes and conceded that voting for the reforms would be like ‘turkeys voting for Christmas’.

Change or die: Myners revealed that one unnamed Co-op official had already boasted of having control of more than a quarter of the votes and threatened to reject the changes

Myners revealed that one unnamed Co-op official had already boasted of having control of more than a quarter of the votes and threatened to reject the changes.

In a hard-hitting report, he:

Myners was elected to the board in December and appointed to spearhead a review of the Co-operative Group’s complex structure.

The review was commissioned after the Co-op Bank fell to the brink of collapse when a £1.5billion black hole was discovered in its finance.

The findings of the first stage of his review have been rushed out, following the resignation of chief executive Euan Sutherland on Monday.

He quit after complaining the group had become ungovernable, his having been obstructed repeatedly by members of the 20-strong group board.

A desperate Sutherland posted a message on Facebook accusing board members of leaking details of his £3.7million pay package.

Yesterday Myners said: ‘I am deeply troubled by the disdain and lack of respect for the executive team that I have witnessed from some members of the group board.’

The Co-operative, which has 7.8million members, ‘does not function as a real democracy’, he said.

Ordinary members are not allowed to attend the Co-op’s annual general meeting and vote on major decisions, including the election of board members.

The real power lies with around 100 elected members of the group and regional boards, as well as independent Co-operative societies.

Myners said a more-democratic voting system should be introduced to empower ordinary members and a public company-style board be established.

A parallel board made up of elected members of the Co-operative movement should also be set up, he said.

The group’s board is made up exclusively of independent directors and dominated by veterans of the Co-operative movement.

Myners also called for the establishment of a National Membership Council responsible for ensuring the Co-op adheres to ethical principles.

Under a ‘one member, one vote’ system, all members would have a chance to vote on who should serve on this new body as well as on the election of board members and major deals.

The board has already provisionally backed Myners’ plans for a dual board system, which would see it forfeiting control of the day-to-day running of the business.

This will be put to a vote of regional board members as early as the annual general meeting in May.

But Myners raised fears that it would take fewer than 50 elected members to act ‘in concert’ to block the plans. A minimum of two thirds of elected members have to vote to pass any changes.

He said ‘few of [them] have any serious business experience, many of whom are drawing material financial benefits from their positions’.