Myners’ threat: banks will take control of the Co-op Group if reforms not accepted

co-op sgmRead the account of the meeting in the Co-operative News

This threat was reported by Jonathan Guthrie, City editor of the Financial Times, in an unpleasant article with deeply contemptuous gibes at the expense of the bank and retail sector – a milder sample:

“The Co-operative Group is good at arranging funerals. Just as well. Pessimists say it may need to arrange its own”.

It was passed with “a North Korean level of support,” noted one critic of the reforms, who did not wish to be named.

FT articles by Andrew Bounds, the FT’s northern correspondent and enterprise editor, were far more balanced and informative.

Mr Pennycook, the Group’s new finance director said the search for the Co-operative Group’s next chief executive after could start in the summer and believed that the business could be restored to health within five years. When it returned to profit its surplus would all be given back to where members live and work, not the City of London or Wall Street.

Ambitious chief executive virtually unchecked

The Guardian reported that Patrick Gray, president of the Midcounties Co-operative, said: “The obvious explanation of the disastrous events of the last decade is not that lay members of the board were too powerful, but that the merger between United and CWS in 2004 left an ambitious chief executive virtually unchecked. In these circumstances it seems paradoxical that the changes Lord Myners proposes would greatly strengthen the position of the chief executive by giving him or her, and the chief financial officer, voting rights on a small board made up entirely of individuals from a similar background.”

Sir Graham Melmoth, an earlier CEO of CWS, once stated in the Co-operative News that: “Peter Marks would not know a co-operative principle if it crept up and hit him in the face” – see Building Co-operation: A Business History of The Co-operative Group, 1863-2013.

co-op revival meetingAndrew Bounds also reported on the conference held a day before the SGM. The programme may be seen here.

Politicising the event?

He said it was held bya powerful lobby formed to fight proposals to eject all lay members from the board’. The only organisation he named was the Co-operative Party, though Co-operative Renewal 2 was actually sponsored by Co-operative Business Consultants (CBC), East of England Co-op, Midcounties Co-operative and North West Housing Services.

Feedback included:

  • The Co-operative party, which is linked to Labour but funded by the Co-operative movement, said any future chief executive should have “knowledge of, and commitment to, the mutual business sector”.
  • Meg Hillier, the Labour and Co-operative MP, told the meeting: “In rough seas, you need a captain who knows the ship, knows the crew and knows the water.”
  • The party also demanded that executive bonuses be cut and asked Sir Graham Melmoth, the former Co-op chief executive who saved it from takeover in the late 1990s, to chair a small group to discuss reform with members.

sir graham melmothIn his first public comments since the crisis at the Co-op, Sir Graham said he would be willing to lead debate and that Lord Myners had failed to create a “link between the board and membership”.

He also called for independent societies to be allowed to keep at least one of their five directors on the board. However, he noted it “had been found wanting” and that the £40,000 individual stipend was an “antidote to forensic inquiry”.

Sir Graham, who led the Co-op between 1996 and 2002, told a conference in Manchester it would be wrong to accept the reforms put forward by the former City minister without question. Instead, a series of public meetings should be held around the UK and a final draft approved by the board and members “in the shortest possible time . . . I see that as the Co-operative way, rather than ‘take it or leave it’ – with the possible consequences of deciding by default to leave it”.

Patrick Gray, president of the Midcounties Co-operative, the largest independent co-operative, said he backed many of Lord Myners’ proposals but democratic election was a must and without that, it would be better to split the group into smaller regional businesses:

“Better three or four genuinely democratic co-operatives than one behemoth with only a fig leaf of member control”.

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This entry was posted in Banking, Co-operative Group, Co-operative movement, Co-operative News, Democratic participation, Problems and tagged , , , , , , , , , , . Bookmark the permalink.

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