The Co-operative Group has been slammed for its “deplorable governance failures” that have led to “near-collapse” in a review by Lord Myners.
Myners, who was appointed to the board in December to conduct a review of the business, has called for radical change and blasted the governance architecture and allocation of responsibilities as “not fit for purpose”.
Myners told the BBC: “Co-op’s discombobulating structure needs to be reformed. It’s been captured by insiders, they have destroyed value.”
In the report, released this morning, Myners urged the current elected democrats to “put their self-interest to one side for the greater good” and vote through his reforms. He said: “Radical decisions on governance structure need to be taken very soon – and with resolution – if the Co-op … is to be saved. The decision lies in the hands of the elected democrats.”
He warned that without change, the group’s level of debt will see its “autonomy and independence being strictly curtailed.”
“There is no short cut to recovery from its present weakened state,” said Myners. “It will require retrenchment and some painful choices. Financial health can only be restored through steady, step-by-step, rebuilding of the group’s profitability and repayment of its excessive debt.
He added: “Unless the group takes urgent steps to reform its governance and generate sustainable economic value, it will run out of capital to support its business.”
Myners’ report outlines the following reforms:
- To produce a “highly competent and qualified” group board with independent non-executive directors who possess the “skills and experience needed to exercise leadership”.
- To ensure that, without compromising the effectiveness of the group board, genuine co-operative values and principles are protected.
- To ensure that as a customer-owned organisation, the tangible benefits of membership are not deliberately restricted to a tiny and potentially quite unrepresentative body of elected members.
The Co-operative Group has welcomed the review and said it is “grateful to him and his team for producing such a detailed and comprehensive review so rapidly”.
The Co-operative Group chair Ursula Lidbetter said: “The Board of the Group has made clear its commitment to far-reaching and fundamental reform of our governance. A resolution containing four key principles on reform is being put to members at a General Meeting in May and we will build from there to ensure we put the right changes in place.
“Paul’s report will be an invaluable contribution to that work. As Group Chair, I see this as essential and urgent work that is critical to our future, enabling us to build a more effective organisation which can deliver for all our members, customers and colleagues.”