The Co-op needs to bed in new board
DESPITE the disgraceful way its leaders led the group into the abyss, the Co-op is an important national institution, with more than 7m members – far more than any political party.
Gallingly for Co- op the report into the failures at its bank by Sir Christopher Kelly coincided with the 150th anniversary of John Lewis, a thriving mutual- style partnership beloved of the middle class. Co-op’s role in life ought to be providing the same sort of value and service for the less well-off.
Instead, executives fell into a Fred Goodwin frame of mind, chasing over-ambitious mergers and big bonuses, oblivious to their near-total lack of capability.
The individual with the most pressing worries as a result of Kelly’s detailed investigation is probably Barry Tootell, the former bank chief executive. He is said to have ordered the reversal of a £20m write- off against the 2011 accounts, a manoeuvre that prevented the executive bonus pool from being halved.
Tootell also has to answer for the affair of the ‘ Leek Notes’, where the accounting treatment of a series of bond issues was altered, with the effect of flattering the capital position.
These specific issues merit close examination by the regulators.
An unflattering portrait is painted of Peter Marks, the former group chief executive, who appears to have been an autocratic ruler, and of former Britannia boss Neville Richardson.
The group board must bear its share of the blame for failing to question or check the activities of executives. That is unfortunate, because most of the current members – including the chairman Ursula Lidbetter, who joined the board in 2009 – were in situ during the critical period. Lidbetter, and presumably her colleagues, did not realise the extent of the bank’s difficulties until as late as 2013 when it was slapped with a multiple credit downgrade.
The Co-op needs a proper, professional board just as John Lewis has. The current cohort should go back to counting the fair trade bananas. It needs to cut ties to Labour and needs proper democracy instead of the block-voting sham that disenfranchises ordinary members.
The 100 delegates at this month’s annual meeting must vote for reform, in the interests of their members and the mutual sector, and stop clinging to their narrow self-interest. Only then will the Co- op stop betraying its roots and principles and become an institution truly worth saving.
French exchange
WHAT about the other big takeover bid? The battle for control of Alstom, the French industrial giant, between America’s GE and Siemens of Germany is in some ways just as important to the UK as Pfizer’s opportunistic, taxdriven assault on AstraZeneca.
Alstom UK employs 6,500, around the same as Astra. French politicians have sprung into action on behalf of Alstom, declaring their ‘patriotic concern’, to loud derision from Anglo-Saxon corporate types.
The textbook case of French economic patriotism came in 2005 when the then government declared dairy group Danone a strategic industry because it feared a bid by PepsiCo.
This was mocked mercilessly as protectionism over yogurt, which does sound nutty. Looked at another way, though, it is not so absurd to see food security as an issue of national importance. In the case of Alstom, the French state is quite possibly too weak to indulge its instinct for interventionism due to President Hollande’s mismanagement of the economy. But governments in capitalist countries, including the US and Canada, can, and do, interfere in takeovers.
Our Coalition – which saw nothing wrong with selling the critical defence interests of BAE to a Franco- German alliance – has waffled limply that Pfizer’s bid will be good for Britain and that it vindicates George Osborne’s tax breaks for industry.
Nothing could be further from the truth. If Pfizer wants to set up new operations here, or perhaps re- open the Kent facility shuttered in 2011, then it should be welcomed.
But this is not what the US company is proposing. It is in fact contemplating an act of tax arbitrage on a grand scale that will add no value to the UK economy.
Britain takes a remarkably narrow view on which industries need protection in the national interest. Centrica, for instance, has no protection, even though millions rely on the company to keep the lights and heating on.
If Gazprom tabled a bid, you can be sure the same voices promoting the Astra deal would be telling us it was great for shareholder value and fears over the Kremlin’s grip on Britain’s energy security were groundless.
There must be a sensible course between harmful state interference and an indiscriminate selloff. The French, with their yogurts, may be at one extreme, but we are at the other.