CRACK, PORN AND VIDEOTAPE
Britain's new bank scandal
HE WAS a British bank boss, but had no banking qualifications. He was a Methodist clergyman, but was bust for allegedly buying cocaine and downloading porn at work.
The spectacular downfall of the Rev Paul Flowers, former chairman of Britain’s Co-operative Bank, was a tale made for the British tabloids.
His troubles began with the near-collapse of the bank he was heading, but came to a head a week ago when a Sunday newspaper released footage that showed him giving cash to a dealer selling drugs, including crystal meth and ketamine. On Friday, he was arrested as part of the drug investigation.
Flowers, 63, has apologised for his “stupid and wrong behaviour”, but his humiliation continues as more details of his seedy life are revealed.
It emerged this week that he was found with “inappropriate” adult material on his work computer when he was a councillor for the opposition Labour Party in 2011.
Northern England’s Bradford City Council confirmed that Flowers stood down from his position — which he held between 2002 and 2011 — after the “inappropriate but not illegal adult content” was discovered.
And on Thursday, the Methodist Church in Britain said that Flowers was disciplined and suspended briefly about 30 years ago after being convicted of drunk driving and an act of gross indecency.
Those revelations, together with Flowers’s poor leadership of his bank, left many wonder- ing how someone like him had been appointed a bank chairman in the first place.
That was the question asked by Prime Minister David Cameron, who on Wednesday ordered an independent inquiry into Flowers’s role at the co-op and how the bank had been “driven into the wall”.
“There are clearly a lot of questions that have to be answered,” Cameron told a raucous parliamentary session.
“Why weren’t alarm bells rung earlier, particularly by those who knew? Why was Flowers judged suitable to be chairman of a bank?”
Even the Labour Party, from which he once hailed, appears to have abandoned him. Party leader Ed Miliband said Flowers “has deeply let down the people who entrusted him to be the chair of the bank”.
The irony is that Flowers’s bank was once punted as the “ethical alternative” to Britain’s investment banks.
The Co-operative Group is owned by its seven million consumer members, and includes various retail businesses.
Flowers — whose only banking experience was four years as a branch teller after leaving school — came under scrutiny in November when he failed to answer basic questions about the co-op during a parliamentary committee hearing. He told the treasury select committee that the bank had £3-billion (about R49-billion) of assets on its balance sheet, when the true figure was £47-billion — about R772-billion.
The company has had to plug a £1.5-billion hole in its finances, and recently agreed to a bailout plan by hedge funds.
Britain’s financial regulator will now be under pressure to explain its decision to approve Flowers’s appointment as a director of the bank in 2009 and later as its chairman.
The Financial Services Authority, which has since been
The irony is that the Methodist minister’s bank was once championed as the ‘ethical alternative’ to Britain’s investment banks
replaced by the Financial Conduct Authority, approved his appointment, but required the Co-op Bank to install two deputy chairmen with banking experience to advise him. Flowers said the authority had been “fully aware that my skills were not those of a banker”.
But even as the bank’s fortunes waned, it was his personal life that became the subject of scandal this week, when the Mail on Sunday said it had filmed Flowers buying the drugs in a car just days after the committee hearing.
In a statement afterwards, Flowers said: “This year has been incredibly difficult with a death in the family and the pressures of my role with the Cooperative Bank.
“I am sorry for this, and I am seeking professional help.”
Since the broadcasting of the footage, Flowers has been suspended from his church and the Labour Party. The chairman of the Co-op Group, which owns the bank, also resigned on Tuesday as the scandal grew.
Britain has had a string of bank scandals since the 2008 financial crisis, but the Co-op Bank is the last place many people would have expected failure.
Although the Co-op Bank is much smaller than other institutions the government has been forced to bail out — like the Royal Bank of Scotland or Lloyds TSB — its failure hit hard because the company behind it, the Co-op Group, is the country’s largest mutual society and had always stressed that sound values guided its work. — Sapa-