Relaunch for flawed mutual By ALEX BRUMMER

BUsINEss leaders have been unusually vocal of l ate, i nveighing against scottish independence, Labour’s assaults on free markets during the General Election campaign and now the Brexit debate.

In most cases views are framed by what is best for investors, who own the enterprise, and the workforce and suppliers without whom they couldn’t operate.

Much more toxic is when politics infiltrates an enterprise and distorts the decision that are made.

There can be few better examples of this than the Co-operative movement in the UK. It has been undone by two factors. Firstly, an overambitious management, uninhibited by normal commercial factors, that went on a ridiculous debtfuelled takeover spree buying grocer somerfield and the Britannia and embarking on a foolhardy attempt to snap up Lloyds’ ‘Project Verde’ branches – now the TsB.

And, secondly, a body of ‘member’ owners more interested in their own power base in the Labour Party, pet political causes and maintaining their own , positions in the hierarchy than the better management of the business. It was this utter confusion of roles that allowed deeply unethical Rev Paul Flowers to drift to the top of the ‘ethical’ Co-op Bank.

The Co- op membership has a chance to put the past behind it at today’s AGM in Manchester. The freshened Co- op management, chaired by former Royal Mail boss Allan Leighton and run by former Wm Morrison finance director Richard Pennycook, is in charge of a much diminished enterprise.

In the process of saving the Coop Bank from the knackers’ yard the Co-op had to cede control of the financial arm to hedge funds, sell off life insurance, pharmacies and land. Now it is seeking to end its affiliation to Labour and support for politicians. It is selling off larger stores to the likes of no-frills retailers Aldi and re- establishing itself as the nation’s corner shop.

so far it has also managed to hang on to funeral homes and general insurance.

Even after the traumas, the backwoodsmen, who allowed financial disaster to fester, have been fighting back. The powerful Midcounties Co-operative objected to three unexceptional choices for independent slots on the board – former Labour minister hazel Blears; Ruth spellman, chief executive of the Workers’ Educational Association; and Paul Chandler, former CEO of Traidcraft.

All this is a distraction for Pennycook as he seeks to steady a business that has a turnover of £9.4bn, 70,000 staff and 2.9m members.

There is nothing wrong with mutuality. Run like a proper business, retailer John Lewis and consumer finance group Nationwide show what careful husbandry can achieve after the most ferocious financial crisis for a century.

Without politics, the Co-op, with a sensible model of neighbourhood shopping and services, could become a store of choice despite the invasion of the space by Tesco, J sainsbury et al. But it doesn’t stand a chance unless it is detoxed of a poisonous political culture that has disgraced the brand.

Private Look

EARLIER this week I was invited to a glittering private equity dinner in aid of the enormously worthy cause of the care organisation Norwood Ravenswood, which looks after vulnerable children and families. The event, at the savoy in London, was well attended and raised £135,000. But I was struck by two aspects.

The first was a charity auction that included the prize of an Eden hazard-signed Chelsea shirt, where the bidding among some of the richest entrepreneurs in Britain was surprisingly weak.

secondly, that the private equity firms are sitting on large amounts of capital but are short of investment propositions. A consequence of this is that we find the private equity firms shuffling assets like a pack of cards.

The latest such asset is underperforming fashion retailer New Look that has been sold by Apax and Permira to south African investment house Brait for £780m. This is Brait’s second big deal in the UK having taken control of fitness chain Virgin Active from CVC and sir Richard Branson’s Virgin.

The money-go-round keeps turning but what is in it for the underlying enterprises, employees and capital investment, is less clear.

Women power

KAThERINE Garrett-Cox’s suggestion that the activist campaign against her and Alliance Trust attracted a great deal of media attention because she is a women has real validity.

Contrast the coverage of the row over the sub-optimal performance of Alliance with a similar dispute at private equity trust Electra, where Edward Bramson’s vehicle sherborne has been conducting guerrilla warfare. In comparison with Alliance, publicity has been negligible and photos non-existent.

QED.