Myners' strike

It was somewhat ironic that on the same day that Lord Paul Myners released his 184-page review into the corporate governance of The Co-operative Group, Paul Flowers – The Co-op Bank’s former chairman who sparked the review – was in court pleading guilty to possessing drugs.

Myners’ review was launched in the wake of the Flowers scandal last November. Flowers was caught on film buying drugs – a film that was exposed by the Mail On Sunday. But he was also elected to chair The Co-op Bank despite having no senior banking experience.

Yesterday, Flowers was fined £400 and ordered to pay £125 in costs after pleading guilty to charges of possessing cocaine, methamphetamine and ketamine.

However, as the Myners review points out, The Co-op Group is in far greater trouble. He says The Co-op’s present governance is “not fit for purpose”. He highlights “deplorable governance failures” that led to the “near collapse” of the society last year. And he warns: “Elected members need to understand that while autonomy and independence are cherished principles of co-operation, the harsh truth is that bad governance results directly in such autonomy being strictly curtailed.”

The hard-hitting report will not be easy reading for some, and Myners knows that. His interim report in March sparked a backlash in the co-operative movement.

But Myners also knows the movement has a history of failing to embrace change. In his review, he cites The Co-operative Independent Commission Report of 1958.

“This was a comprehensive, penetrating account of the challenges faced by the movement as it tried to respond to the competitive threats of the multiple retailers. Yet despite the accuracy of the diagnosis, its proposals were largely kicked into touch,” he says.

Myners has two theories for why the co-op movement seems resistant to change.

“The first is that co-operative ownership, when it reaches the scale and complexity of the current group, creates deep tensions,” he says.

“There is tension in determining the appropriate boundary between democracy and professionalism; there is tension between local or regional autonomy and central direction; and there is tension in resolving the respective interest of activist members and ‘shopping members’.”

The second reason is “more disturbing”, Myners says.

“It is that the resistance of traditionalists owes much to the culture of entitlement that has grown up within a very small but highly active proportion of the membership,” Myners explains.

“This has undoubtedly created strong vested interests and a reluctance to rethink ways of doing things. I have myself witnessed repeated instances where there has been denial of responsibility, corrosive suspicion, deliberate delay and a practice of hiding behind values in order to deflect or stifle criticism and protect self-interest.”

The Co-op Group has welcomed the review. Chair Ursula Lidbetter said it had “made clear its commitment to far-reaching and fundamental reform of our governance”, and a four-point resolution will be put to members at its agm on 17 May.

But Myners is still to be convinced this will result in action.

“I have no doubt that The Co-op Group can over the next five years reverse a decline that started over 50 years ago. But I am less confident it will choose to do so,” he warns.

“Much will depend on the small number of elected democrats, less than one in 10,000 of the group’s entire membership. Will they put their self-interest to one side for the greater good, acknowledging the collective failure of the current board and the crippling deficiencies of the entire governance system?”

It’s a key question, and one that only The Co-op Group can answer. But will their answer be the right one?