The Co-operative Group must take urgent steps to reform a “massive failure” of governance or it will go bust, former City minister Lord Myners has warned.
In a damning interim review of the way the group is run, Lord Myners slammed the Co-op’s board for its lack of adequate experience and oversight failings and said he was “deeply troubled by the disdain and lack of respect for the executive team” among some members.
He said members of the board who have been elected from within the Co-op have “simply not been up to their task”.
“The Co-operative Group suffers from acute systemic weaknesses in its governance framework that over many years have gravely damaged the organisation,” he said.
“Unless the group takes urgent steps to reform its governance so that it generates sustainable economic value, it will run out of capital to support its business.”
Lord Myners, who was appointed by the Co-op to conduct the governance review, said he published his findings early after the mutual was thrown back into crisis following the controversial resignation of chief executive Euan Sutherland.
Mr Sutherland quit last week claiming the Co-op was “ungovernable” and board members had repeatedly frustrated his efforts for reform. In an extraordinary Facebook rant, Mr Sutherland blamed “an individual, or individuals’’ at the top of the group for deliberately seeking to undermine him by revealing details of his £3.66m pay deal to a Sunday newspaper.
Lord Myners, who is also a new board member at the Co-op, heaped praise on Mr Sutherland and his team, saying it was “only due to the exceptional skill and tireless efforts of a new executive team, led by Euan Sutherland, that the group survived”.
But his report lays bare a board that is reluctant to accept change and unsupportive of executive management. He said: “There is a phrase frequently used in Co-operative Group circles that the executive should be ‘on tap but not on top’,” he revealed.
The Co-operative Group has strong historic links with Yorkshire, where it employs around 7,600 people.