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TMCNet:  Former Co-op chairman urges members to reject reforms

[July 20, 2014]

Former Co-op chairman urges members to reject reforms

(Guardian (UK) Via Acquire Media NewsEdge) The Co-operative Group chairman who resigned over the Paul Flowers scandal has broken his silence to urge members of the supermarkets-to-funeral homes group to reject the plans for corporate governance reforms.


Len Wardle, who quit in November after the former Co-op bank chairman Flowers was exposed for buying illegal drugs, is concerned that the way the Co-op board could be constituted in the future means it risks damaging the traditional status of a co-operative organisation.

He emailed members of the seven regional boards, which represent the views of the group's 7 million members, before a meeting on Saturday at which the reforms were debated as part of the process of drawing up final plans.

The UK's largest mutual organisation made losses of pounds 2.5bn last year after problems in its once-cherished banking arm, in which it now has just a 20% stake.

Although the group voted for reform at a crunch meeting in May after proposals were drawn up by the former City minister Lord Myners, who quit in the face of opposition to his ideas, his proposals are still being finalised.

Wardle, in an email to 100 regional members, said that the ideas as they stood would "remove any effective member control from the Co-operative Group" and he saw a "fundamental flaw" in the way new board members would be elected.

Plans are being discussed to replace the current board - made up entirely of Co-op members - with representatives from the regional boards, which own the bulk of the business, and from the independent societies that own the remaining 22%.

Under the proposals, the chief executive, and other full-time managers and non-executives would have a seat on the board. But they would be appointed by a subcommittee, which is proving controversial as the board is elected by members.

The way members are represented is being changed in turn, with a members' council replacing the area boards, which feed into the regional boards.

Wardle said: "If the numbers of elected members on the board are to be reduced, then it is imperative that the proposed members council has the power of appointment over Ineds [independent non-executive directors].

"It is not acceptable for the board . . . to retain control over nominations. That these would be presented for ratification to our members on a take it or leave it basis is not co-operative. It does not provide for a democratic control of our society." The Co-op said it was working on proposals that will be published and voted on by members later this year.

The ex-chairman's intervention follows remarks last week by Nick Eyre, a former company secretary of the Co-op.

Eyre told a meeting of the National Federation of Progressive Co-operators that if the management were given powers to name directors then "all who cherish the co-operative and mutual models in a diverse economy might as well pack up".

Len Wardle, former Co-op chairman argues proposed changes in the way new board members are to be elected is flawed (c) 2014 Guardian Newspapers Limited.

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