Co-op chairman quits over ex-bank boss drugs scandal
The chairman of Britain's Co-operative Group resigned on Tuesday as a drugs scandal involving its former bank chairman raised questions over governance standards and the ethical credentials of the mutually owned group.
Paul Flowers, a Methodist preacher who oversaw the Co-op bank's near collapse, was recently caught on film allegedly arranging to buy cocaine and crystal meth, prompting calls for an inquiry into how he had been appointed chairman of a bank.
Group chairman Len Wardle, a senior figure in the appointment of Flowers as chairman of the Co-op bank, said he was resigning now instead of next year as planned.
"I led the board that appointed Paul Flowers to lead the bank board, and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year," Wardle said in a statement.
Co-op said Wardle would be replaced by Ursula Lidbetter, currently group deputy chair and chief executive of the Lincolnshire Co-operative Society. Lidbetter will lead the group through a review prompted by the Flowers scandal.
Flowers, dubbed the "Crystal Methodist" by British tabloids, issued a statement last week saying he was seeking professional help. He has been suspended from his religious duties.
Flowers was chairman of the Co-op bank from 2010 until July this year, a period when it racked up huge losses and faced a 1.5 billion pound capital shortfall. The Co-op Group has since lost its majority stake in the bank to U.S. hedge funds that owned its debt.
Flowers's banking knowledge came under scrutiny when he appeared before lawmakers on the Treasury Select Committee earlier this month. At one point he told the committee that 3 billion pounds of assets sat on the bank's balance sheet when in fact it holds 47 billion.
Members of the committee now want the financial watchdog to be questioned over how Flowers became chairman of the bank.