Food to funerals giant The Co-operative Group has raised the prospect of sweeping change at the business following weekend newspaper revelations.

In the wake of former Co-operative Bank chairman Paul Flowers being photographed apparently buying illegal drugs, the business is to launch a group-wide inquiry into any “inappropriate behaviour” and looks likely to change its structure.

The Co-operative said in a statement: “Given the serious and wide-ranging nature of recent allegations, the new executive management team has started a fact-finding process to look into any inappropriate behaviour at The Co-operative Group or The Co-operative Bank and to take action as necessary.

“In addition, the board of The Co-operative Group has launched a root and branch review of the democratic structure of the organisation.

“We need to modernise to ensure that the interests of all our seven million members are properly and directly represented in the oversight of our business activities.”

The controversy engulfing Flowers follows problems at the bank that had brought it close to collapse and led to the group losing control of its financial services arm.

The scandals that have afflicted The Co-operative are at odds with the group’s heritage. It was founded in 1844 as an explicitly ‘ethical’ business.

Earlier this year the retailer appointed former B&Q boss Euan Sutherland as chief executive and former Morrisons finance director Richard Pennycook as chief financial officer. The hirings marked a break with the past and the company’s tradition to promote from within the co-operative movement.


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