City takes 5 years to ban Co-op chief in drugs scandal
THE drug-taking former Methodist minister who steered the Co-op Bank to the brink of collapse was finally banned from working in finance yesterday.
It has taken the financial regulator nearly five years to act since Paul Flowers, nicknamed ‘the Crystal Methodist’, was forced to quit as chairman of the bank after it declared a £600million loss.
He was later exposed as a user of hard drugs – including cocaine and crystal meth – and was said to have met rent boys for sex in expensive hotel rooms paid for by the bank.
Officials at the Financial Conduct Authority claimed its inquiry into Flowers had taken so long because of the amount of detail that had to be investigated, and because the regulator had waited until other inquiries had finished before starting its own. The FCA said Flowers’ conduct ‘demonstrated a lack of fitness and propriety’.
His work emails while at the bank discussed ‘purchasing, taking and offering to provide to others illegal drugs’, it found. Flowers, 67, left his £132,000-ayear job in June 2013, following the discovery of a £1.5billion black hole in its accounts.
He subsequently told MPs on the Treasury committee that the bank’s balance sheet was worth £3billion, when the correct figure was £ 47billion. Yesterday’s report from the FCA acknowledged that Flowers was vetted by its predecessor, the Financial Services Authority, before he took up the bank’s top job in April 2010.
The findings come at a time when the effectiveness of City regulators continues to be questioned.
There was criticism of the FCA last month after it picked as its new chairman corporate lawyer Charles Randell, who took part in a tax reduction scheme that collapsed after an investigation by HM Revenue and Customs.
Yesterday’s report cited three reasons for banning Flowers from the finance industry. One was that in a 25-day period in 2011 he made nine calls on his bank mobile to a premium rate chatline. He was given a formal warning and was required to pay back the cost of the calls.
A second reason was that during 2012 and 2013 he sent work emails ‘that contained sexually explicit and otherwise inappropriate content’. In the emails he discussed buying, using and supplying to others drugs including cocaine, ketamine and the date-rape drug GHB.
The FCA also noted that Flowers was convicted in 2014 of possessing cocaine, ketamine and methamphetamine, also known as crystal meth.
Flowers told the inquiry that his use of the company mobile was ‘foolish’. He blamed the emails on ‘difficult personal circumstances and pressures he was under at the time’.
He was dismissed as a minister by the Methodist Church last year.
The Co-op Bank, founded in 1872, had links to the co- operative and labour movements and continues to market itself as ‘committed to ethical banking’. When Flowers was in charge it was a Labour Party donor.
It got into trouble after buying Britannia building society and later needed a rescue from US hedge funds to stay afloat. The Co-op sold its final stake in the bank last September and the bank is now wholly in the hands of hedge funds.